Glossary – Finance

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There are 13 names in this directory beginning with the letter F.
Financial Intermediary
A bank or other financial institution that facilitates the flow of funds between different entities in the economy.

Flat Volatility
The name given to volatility used to price a cap when the same volatility is used for each caplet.

Flex Option
An option traded on an exchange with terms that are different from the standard options traded by the exchange.

Foreign Currency Option
An option on a foreign exchange rate.

Forward Contract
A contract that obligates the holder to buy or sell an asset for predetermined delivery price at a predetermined future time.

Forward Exchange Rate
The forward price of one unit of a foreign currency.

Forward Price
The delivery price in a forward contract that causes the contract to be worth zero.

Forward Rate Agreement (FRA)
An agreement that a certain interest rate will apply to a certain principal amount for a certain time period in the future.

Forward Risk-Neutral World
A world is forward risk-neutral with respect to a certain asset when the market price of risk equals the volatility of that asset.

Forward Start Option
An option designed so that it will be at-the money at some time in the future.

Forward-Interest Rate
The interest rate for a future period of time implied by the rates prevailing in the market today.

Futures Option
An option on a futures contract.

Futures Price
The delivery price currently applicable to a futures contract.
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