What is a Put Swaption? A put swaption, also referred to as a payer swaption, involves the buyer being given the opportunity to enter into a rate swap, acting as the floating-rate payer. The party selling the swaption is the floating rate receiver. Because it is an interest rate swap, it means that the buyer…
What is a Call Swaption? A call swaption, also known as a receiver swaption, is an option that allows the holder to take part in a private tax rate swap. All swaptions are conducted over-the-counter (OTC), meaning they are not standardized contracts. In order to participate in a call swaption – or any swaption –…
What is the ISFORMULA Function? The ISFORMULA Function is categorized under Excel Information functions. It will test a specified cell to see if it contains a formula. If it does contain a formula, then it will return TRUE. If not, then it will return FALSE. The ISFORMULA function was introduced in MS Excel 2013. The purpose…
What are Forward Commitments? A forward commitment refers to a contractual agreement between two parties to carry out a planned transaction, i.e., a transaction in the future. Forward commitments differ in terms of their structure and the exact contracting mechanism. Some common forward commitments are forward contracts, futures contracts, and swaps. How They Work When…
What is the Put-Call Ratio (PCR)? The put-call ratio (PCR) is an indicator used by investors to gauge the outlook of the market. The ratio uses the volume of puts and calls over a determined time period on a market index to determine market sentiment. It can additionally be used for individual securities by looking…
What is Roy’s Safety-first Criterion? Roy’s safety-first criterion is a risk management technique used by investors to compare and choose a portfolio based on the criterion that the probability of a portfolio’s return dropping below a threshold level return is reduced. In Roy’s safety-first criterion, the optimal portfolio is one that minimizes the probability of…
What is a Zero-Coupon Bond? A zero-coupon bond is a bond that pays no interest and trades at a discount to its face value. It is also called a pure discount bond or deep discount bond. U.S. Treasury bills are an example of a zero-coupon bond. Understanding Zero-Coupon Bonds As a zero-coupon bond does not…
What is the Expiration Date? The expiration date, in derivatives trading, refers to the date on which options or futures contracts expire. In other words, the expiration date is the last day that a derivative contract is valid. On the date of expiration, the derivative contract is settled between the buyer and seller. What are…
What is the DATEVALUE Function? The DATEVALUE Function is categorized under Excel Date/Time functions. When doing financial analysis, we often need to import files from another source, which can be in PDF, text, or csv file format. The DATEVALUE function helps convert dates imported from external sources that are in text format to a proper…
