• (1) For an option or futures contract, the difference between the current price and the previous day's settlement price. (2) For an index or average, the difference between the current value and the previous day's market close. (3) For a stock or bond quote, the difference between the current price and the last trade of the previous day.

 Embedded terms in definition
Bond quote
Futures contract
Settlement price
 Referenced Terms
 401 k plan: Is a retirement plan that the employee can set aside a portion of his or her income. The actual dollar amount is subject to annual Change. Benefits of the plan are that it affords portability, reduces the employee's annual gross income for tax purposes, and the employee's contributions are immediately vested. Balances are allowed to grow on a tax-free basis and there are provisions for employer contributions as well.A type of retirement savings plan, used by private firms or nonprofit employers. Also known as a cash-or-deferred.A tax-deferred defined contribution retirement plan offered by an employer.

 Accounting exposure: The Change in the value of a firm's foreign currency denominated accounts due to a change in exchange rates.The risk resulting from the effects of Changes in foreign exchange rates on the translated value of a firm's financial statement accounts denominated in a given foreign currency.

 Adjustable rate mortgage: Is a loan which has a coupon or interest rate that is subject to Change on predetermined reset dates. These loans use interest rate indices as the benchmark rate. Adjustable Rate Mortgages come in many variations. Typically, the reset dates recur every 1, 3, or 5 years; but there are other periods used as well. These loans may have cap and floor features which constrain each reset change in interest rates. There may also be lifetime cap and floor features. Adjustable Rate Mortgages may be strictly amortizing though some have negative amortization features.A mortgage whose interest rate Changes periodically based on the upward or downward movement of a specified benchmark, e.g. six month or one-year Treasury bills.

 Alpha: Is a measure of the incremental reward (or loss) that an investor gained in relation to the market. Typically, this is measured as performance of a selected portfolio relative to a market benchmark. An enhanced S&P 500 portfolio might have an alpha of .25 which means that the pickup was .25% or a quarter point better than the standard.A measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return. For example, an alpha of 0.4 means the fund outperformed the market-based return estimate by 0.4%. An alpha of -0.6 means a fund's monthly return was 0.6% less than would have been predicted from the Change in the market alone. In a Jensen Index, it is factor to represent the portfolio's performance that diverges from its beta, representing a measure of the manager's performance.

 Arbitrage: The simultaneous buying and selling of a security at two different prices in two different markets, resulting in profits without risk. Perfectly efficient markets present no arbitrage opportunities. Perfectly efficient markets seldom exist.Strictly defined, buying something where it is cheap and selling it where it is dear; for example, a bank buys 3-month CD money in the U.S. market and sells 3-month money at a higher rate in the Eurodollar market. In the money market, often refers: (1) to a situation in which a trader buys one security and sells a similar security in the expectation that the spread in yields between the two instruments will narrow or widen to his profit, (2) to a swap between two similar issues based on an anticipated Change in yield spreads, and (3) to situations where a higher return (or lower cost) can be achieved in the money market for one currency by utilizing another currency and swapping it on a fully hedged basis through the foreign-exchange market.Is a form of trading which attempts to profit by discrepancies in price due to location, funding, volatility, communications, response to information, or other differences. Typically, the price differences are small and only the quickest, most cost efficient or funding efficient parties participate. Compare with Risk Arbitrage.

 Related Terms
 Change in net working capital
Net change
Operating change restrictions

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