Financial Vocabulary

#221

Sales load

Example sentences

1. The mutual fund charged a sales load when she invested.
2. A sales load reduces the amount placed in the fund.
3. He selected a fund with no sales load.

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#222

Net asset value

Example sentences

1. The fund's net asset value is $15 per share.
2. Net asset value is calculated at the end of the trading day.
3. She bought shares at the current net asset value.

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#223

Total return

Example sentences

1. The investment's total return was 8%.
2. Total return includes income and price changes.
3. He compared the fund's total return over five years.

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#224

Capital gain

Example sentences

1. She made a capital gain when she sold the shares.
2. The $500 capital gain may be taxable.
3. A higher selling price created the capital gain.

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#225

Capital loss

Example sentences

1. He reported a capital loss after selling the stock.
2. A capital loss happens when an asset sells below its cost.
3. The investor used the capital loss to reduce taxable gains.

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#226

Derivative

Example sentences

1. The option is a derivative linked to a stock.
2. A derivative gets its value from another asset.
3. The company used a derivative to reduce price risk.

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#227

Futures contract

Example sentences

1. The farmer sold a futures contract for wheat.
2. A futures contract sets a price for a later date.
3. The trader closed the futures contract before expiration.

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#228

Forward contract

Example sentences

1. The company used a forward contract to buy euros later.
2. A forward contract is agreed directly between two parties.
3. The forward contract fixed the future exchange rate.

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#229

Option

Example sentences

1. She bought an option linked to the stock.
2. An option gives a right but not a duty to trade.
3. The option became more valuable when the price rose.

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#230

Call option

Example sentences

1. He bought a call option because he expected the stock to rise.
2. A call option gives the right to buy an asset.
3. The call option expired without value.

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#231

Put option

Example sentences

1. She bought a put option to protect against a price fall.
2. A put option gives the right to sell an asset.
3. The put option gained value when the market dropped.

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#232

Strike price

Example sentences

1. The call option has a strike price of $50.
2. The strike price is written in the option contract.
3. The stock moved above the strike price.

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#233

Expiration date

Example sentences

1. The option's expiration date is next Friday.
2. He sold the contract before the expiration date.
3. After the expiration date, the option cannot be used.

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#234

Option premium

Example sentences

1. She paid a $2 option premium per share.
2. The option premium is the price of the option.
3. Higher volatility increased the option premium.

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#235

Underlying asset

Example sentences

1. The stock is the underlying asset of the option.
2. The derivative changes value with its underlying asset.
3. The trader checked the price of the underlying asset.

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#236

Swap

Example sentences

1. The two companies used a swap to exchange payments.
2. A swap can help manage financial risk.
3. The bank prepared the swap agreement.

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#237

Interest rate swap

Example sentences

1. The company used an interest rate swap to fix its borrowing cost.
2. In the interest rate swap, fixed and floating payments were exchanged.
3. The bank valued the interest rate swap every month.

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#238

Currency swap

Example sentences

1. The two firms used a currency swap for dollars and euros.
2. A currency swap can support foreign borrowing.
3. The currency swap reduced exchange-rate risk.

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#239

Credit default swap

Example sentences

1. The investor bought a credit default swap for protection.
2. A credit default swap may pay if a borrower fails.
3. The price of the credit default swap rose as risk increased.

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#240

Margin

Example sentences

1. The broker required margin before opening the trade.
2. He used cash in his account as margin.
3. Trading on margin can increase losses.

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