Glossary – Finance
There are 18 names in this directory beginning with the letter D.
Deferred Payment Option
An option where the price paid is deferred until the end of the option’s life.
Delta Hedging
A hedging scheme that is designed to make the price of a portfolio of derivatives insensitive to small changes in the price of the underlying asset.
Delta-Neutral Portfolio
A portfolio with a delta of zero so that there is no sensitivity to small changes in the price of the underlying asset.
Diagonal Spread
A position in two calls where both the strike prices and times to maturity are different (A diagonal spread can also be created with put options).
Differential Swap
A swap where a floating rate in one currency is exchanged for a floating rate in another currency and both rates are applied to the same principal.
Discount Rate
The annualized dollar return on a Treasury bill or similar instrument expressed as a percentage of the final face value.
Down-and-In Option
An option that comes into existence when the price of the underlying asset declines to a prespecified level.
Downgrade Trigger
A clause in a contract that states that the contract will be terminated with a cash settlement if the credit rating of one side falls below a certain level.
Duration
A measure of the average life of a bond. It is also an approximation to the ratio of the proportional change in the bond price to the absolute change in its yield.
Duration Matching
A procedure for matching the durations of assets and liabilities in a financial institution.
