Definitions

• Arbitrage
  An arbitrage is a situation where by a person is able to take advantage of pricing differences in two separate markets. Ideally, there would be zero cost and zero risk to the person figuring out transaction
• Bonds
  A bond is a debt instrument issued by a company for a period of more than twelve months whose purpose is to raise capital by borrowing it from investors. The most typical bonds hold a promise to repay the principal amount (the amount of debt issued) along with an interest rate, which is referred to as a coupon. The promise to repay the principal is a function of all bonds, while a coupon is not necessary for each issue.
• Bond Futures
  A bond future is a contractual obligation in which the contract holder agrees to purchase or sell a bond on a specified date at a predetermined price. This type of contract can be purchased on a futures exchange market and the prices and dates for the future are determined at the time of purchase of the contract.
• Bond Options
  A bond option an instrument that is a contract between two parties which facilitates an ‘option’ to purchase or sell a particular debt/bond for an agreed upon price. This is instrument is exactly the same as an equity option with the difference being the underlying asset which is a bond. This is different from a bond future in that there is only an option to buy the underlying asset not an obligation to purchase the debt.
• Commercial Paper
• Commodities Futures
  A commodity future is a contract that is an agreement between two parties to buy or sell a set amount of a commodity at a predetermined price and a predetermined date. These instruments are used to reduce any price fluctuation risks associated with raw materials. Most common commodities traded are oil, natural gas, corn, sugar, coffee and frozen concentrated orange juice.
• Credit Default Swaps
  A credit default swap or CDS is an instrument designed transfer the credit risk of a fixed income product from one party to another. The purchaser of the swap receives the protection against a default or credit event while the seller of the swap guarantees the principal amount of the debt in return for a premium.
• Currency Futures
• Debt Instruments
• Equity Instruments
• Equity Options
  An equity option or stock option, is a financial instrument that provides the privilege of one party the right, not the obligation to buy or sell a stock at an agreed upon price with-in a certain period or a specific date. There is also standardization in these products so they can facilitate easily traded on an exchange. An option to purchase a stock is referred to as a call option and an option to sell a stock is referred to a put.
• Equity Security
  An equity security or stock is a financial instrument that represents actual ownership in that particular company. They are used by a company to raise money for expansion or operations where actually ownership in the company is sold. The value of the equity is composed of the net value of the assets and liabilities of the company along with investor confidence in future performance.
• Foreign Exchange (FX)
• Interest Rate Swaps
  An interest rate swap or IRS is an agreement between two parties where one line of interest payments is exchanged for another based on an agreed upon loan amount. The amount of the loan is referred to as the notional amount of the trade and the two parties. A company will typically use this type of instrument to limit or manage their exposure to any changes in interest rates or to get a lower interest rate than would normally be offered to them.
• Listed Stock
• Listed Stock Options
• Loans
• Term Deposits
• Treasury Bills
  A treasury bill or T-Bill a debt obligation that is issued by a national government. T-Bills have a maturity of less than one year. This debt is backed by the economic power of the issuing government and tends to be one of the safest investments in the world. A US T-Bill for example is a risk free investment. Debt issued by a sovereign entity with longer maturities are referred to as Treasury Notes (maturities of 1 to 10 years) and Treasury Bonds (maturities of over 10 years)
• Options on Bond Futures
• OTC Currency Swap
• OTC Forward
• OTC Forward Rate Agreements (FRA)
• OTC FX Options
• OTC Interest Rate Options
• OTC Interest Rate Swaps
• OTC Stock Options
• Private Equity
• Shorting
  Shorting is process in which a portfolio manager is selling a particular position that he does not own to another at a specified price. By shorting, an investor is looking to profit from the downward movement in the price of the instrument. For example, I could short IBM shares at yesterday’s closing price which we will say is $100. I short IBM at $100 which means I found an investor on the other side looking to purchase IBM at $100. A few days pass and the price of IBM moves down to $90. I have made money because I was able to sell my particular shares at the higher price as a result of this movement. A key piece of shorting is borrowing the product which you are betting against. The reason being there is an obligation of the party to deliver said shares once the short position is closed out. To help in this, there are facilities, usually in institutional banks or trading desks, in which you can borrow the shares for a fee. The practice is quite common in equity markets and in fact the term hedge fund originally described a portfolio that was setup with long and short positions.
• Single Stock Equity Futures
• Spot Foreign Exchange