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FCP |
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Fonds Commun de Placement.
FCPs are a common fund structure in Luxembourg.
In contrast to SICAV, they are not companies, but
are organised as co-ownerships and must be managed
by a fund management company. |
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Feeder Fund |
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A fund which invests only
in another fund. The feeder fund may be a different
currency to the main fund and may be used to channel
cash in to the main fund for a different currency
class. |
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Fixed Income Arbitrage |
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Investment strategy that
seeks to exploit pricing inefficiencies in fixed
income securities and their derivative instruments.
Typical investment is long a fixed income security
or related instrument that is |
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perceived to be undervalued and
short a similar related fixed income security or related
instrument. Often highly leveraged. |
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Floating Rate |
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Any interest rate that changes
on a periodic basis. The change is usually tied to movement
of an outside
indicator, such as the Bank of England Base Rate. Movement
above or below certain levels is often prevented by a
predetermined floor and ceiling for a given rate. For
example, you might see a rate set at “base plus
2%". This means that the rate on the loan will always
be 2% higher than the base rate, which changes regularly
to take into account changes in the inflation rate. For
an individual taking out a loan
when rates are low, a fixed rate loan would allow him
or her to "lock in" the low rates |
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and not be concerned with fluctuations.
On the other hand, if interest rates were historically
high at the time of the loan, he or she would benefit
from a floating rate loan, because as the prime rate fell
to historically normal levels, the rate on the loan would
decrease. Also called adjustable rate. |
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Floor |
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A contract that protects the holder
against a decline in interes t rates or prices below a
certain point. |
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Forward |
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An agreement to execute a transaction
at some time in the future. In the foreign exchange market
this is a tailor made deal where an investor agrees to
buy or sell an am ount of currency at a given date. |
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