Vocab of the day #3

Finance, Business, Investment and Banking Terms

1. derivative : a financial instrument derived from some other asset; rather than trade or exchange the asset itself, market participants enter into an agreement to exchange money, assets or some other value at some future date based on the underlying asset. (derivative market)
   
2. futures contract : an agreement to exchange the underlying asset (or equivalent cash flows) at a future date.
3. speculator : a person who trades (i.e. derivatives, commodities, bonds, equities or currencies) with a higher-than-average risk, in return for a higher-than-average profit potential. Speculators take large risks, especially with respect to anticipating future price movements, or gambling, in the hopes of making quick, large gains.
4. hedge fund : an investment company that uses high-risk techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains.
5. depreciate : to diminish in price or value. (depreciation of yen)
6. option : right to buy or sell property that is granted in exchange for an agreed upon sum. If the right is not exercised after a specified period, the option expires and the option buyer forfeits the money.
7. barrier : a fixed value.
8. premium : extra payment usually made as an incentive.Price a put or call buyer must pay to a put or call seller (writer) for an option contract. The premium is determined by market supply and demand forces.