Don't Just Read it – Explore It
Mark-to-market updates an asset, liability, or trading position using current market information. This explainer covers quoted prices, fair-value hierarchy, daily futures settlement, variation margin, unrealized gains and losses, illiquid assets, model inputs, and procyclical cash pressure.
Contango describes a futures market in which later delivery prices are higher than nearer delivery prices. This explainer covers curve shape, storage and financing, convenience yield, convergence, contract rolling, exchange-traded products, seasonal effects, and why contango is not simply a bearish signal.
Backwardation describes a futures market in which later delivery prices are lower than nearer delivery prices. This explainer covers curve shape, immediate scarcity, convenience yield, convergence, positive roll effects, inventories, seasonality, and why the structure can reverse quickly.
Basis risk is the risk that a hedging instrument fails to offset the underlying exposure as expected. This explainer covers spot-futures basis, convergence, cross hedges, timing, location and quality mismatches, hedge ratios, accounting tests, and why a successful hedge can still show losses.
An interest rate swap is an agreement to exchange interest-payment streams calculated on a notional amount. This explainer covers fixed and floating legs, reference rates, reset dates, net settlement, hedging, valuation, collateral, clearing, basis risk, and counterparty exposure.
A credit default swap transfers specified credit-event risk from a protection buyer to a seller in exchange for periodic payments. This explainer covers reference entities, notional amount, credit events, premiums, physical and cash settlement, spreads, hedging, basis, clearing, and counterparty risk.
A zero-coupon bond is generally purchased at a discount and pays its face value at maturity without periodic coupons. This explainer covers accretion, compounding, duration, interest-rate sensitivity, reinvestment, credit risk, liquidity, call features, and phantom-income taxes.
A callable bond gives the issuer a contractual right to redeem debt before its stated maturity. This explainer covers optional redemption, call dates and prices, protection periods, premiums, yield to call, refinancing incentives, negative convexity, reinvestment risk, and disclosure review.
Municipal bonds are debt securities issued by states, local governments, agencies, and related entities to finance public purposes. This explainer covers general obligation and revenue bonds, coupons, maturities, tax treatment, credit and call risk, official statements, trading, and disclosure.
Treasury bills are short-term marketable U.S. government securities with maturities of one year or less. This explainer covers discount pricing, auctions, competitive and noncompetitive bids, investment yield, maturity proceeds, secondary-market sales, tax treatment, reinvestment risk, and the difference between bills and coupon-paying Treasury notes.
Treasury notes and bonds are marketable U.S. government securities that pay interest every six months and return principal at maturity. This explainer covers their maturity ranges, auctions, coupon rates, prices, yields, secondary trading, interest-rate risk, taxes, and the distinction between Treasury bonds and savings bonds.
Treasury Inflation-Protected Securities, or TIPS, are marketable Treasury debt whose principal changes with an inflation index. This explainer covers CPI adjustments, fixed coupon rates, inflation compensation, deflation floors, real yields, taxes on principal increases, secondary-market prices, and why TIPS may not match an individual household’s inflation.
