Mezzanine Financing
What is Mezzanine Financing? Mezzanine financing is a layer of financing that fills the gap between senior debt and equity in a company. It can be structured either as preferred stock or as unsecured debt, and it provides investors with an option to convert to equity interest. Mezzanine financing is usually used to fund growth...
Volatility Skew
What is a Volatility Skew? Volatility skew refers to a technical tool that informs investors about the preference of fund managers, whether they prefer to write call options or not. Factors that impact a volatility skew include investor sentiment about the market and the relationship between the supply and demand of given options in the...
Volatility Swap
What is a Volatility Swap? Volatility swap refers to a financial derivative, the payoff of which is based upon the volatility of the underlying asset of that security, which is a forward contract. Volatility swaps enable investors to trade the volatility of an asset without explicitly trading the underlying asset. The payoff, which is the...
Volatility Smile
What is a Volatility Smile? A volatility smile refers to a U-shaped graphical representation of the pattern created by the implied volatilities of multiple options contracts that share the same date of expiration. The geographical pattern obtained when the values of different implied volatilities are plotted against the strike prices of their corresponding options; a...
Market
What is a Market? A market refers to a space that facilitates an economic transaction between parties: the buyers and the sellers. An economic transaction may involve an exchange of goods, information, services, currency, etc., and does not necessarily involve legal tender. A market is not necessarily a physical space, such as a retail outlet....
