Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). What are the types of deflation? There are four types of deflation: 1. Cost-Push Deflation: This occurs when the cost of production rises, leading to higher prices for goods … Read more

Financial Stability Plan (FSP) Definition.

The Financial Stability Plan (FSP) is a set of policy measures designed to restore confidence in the financial system and support the flow of credit to the economy. The FSP was announced by the government on 12 October 2008 in response to the global financial crisis. The main components of the FSP are: 1. A … Read more

Mint Definition.

The Mint Definition refers to the specific characteristics that define a particular type of coin. This includes factors such as the metal content, weight, diameter, and thickness of the coin. The Mint Definition is important because it provides a clear and concise description of what a coin should look like. This allows for easy identification … Read more

What Is a Dirty Price?

A dirty price is the price of a security that includes all interest payments that have accrued since the last coupon payment. The dirty price is the price that is quoted when buying or selling a bond. The clean price is the dirty price minus the accrued interest. What is the bond yield curve? The … Read more

Adjustment Bond Definition.

A bond that is issued by a corporation in order to raise capital for working capital or other purposes. The issuer often uses the proceeds from the sale of the bonds to pay off existing debt. Adjustment bonds are typically issued with a face value of $1,000 and have a maturity of five to ten … Read more

Debenture Redemption Reserve.

A debenture redemption reserve is a fund created by a company out of its profits to redeem its debentures on maturity. The size of the reserve is generally equal to the face value of the debentures to be redeemed. The purpose of the reserve is to provide the company with a source of funds to … Read more

Best-Interest Contract Exemption (BICE).

The Best-Interest Contract Exemption (BICE) is a regulatory exemption that allows financial institutions to receive certain types of compensation when providing investment advice to retail customers, provided that the institution adheres to certain conditions designed to protect the customer’s best interests. The conditions imposed by the BICE include the following: The financial institution must enter … Read more

What Is the Implied Rate?

The implied rate is the interest rate that is implied by the price of a financial instrument. For example, if the price of a bond is $100, the implied rate is the interest rate that would make the price of the bond equal to $100. The implied rate can be different from the actual interest … Read more

Futures Commission Merchant (FCM) Definition.

A Futures Commission Merchant (FCM) is a broker that is registered with the Commodity Futures Trading Commission (CFTC). FCMs must also be members of the National Futures Association (NFA). An FCM is a broker that executes orders and trades for customers in the futures markets. FCMs must be registered with the CFTC and must also … Read more