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Glossary of Investment Terms: A

Accrual
The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.

Adjustment
Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or. Adjustment - Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate.

Appreciation
A currency is said to 'appreciate' when it strengthens in price in response to market demand.

American Option
An option which may be exercised at any valid business date through out the life of the option.

Arbitrage
A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets.

Adjustable Peg
An exchange rate system where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency. The official rate may be changed from time to time.

Aggregate Risk
Total amount of exposure a bank has with a customer for both spot and forward contracts.

Ask
The price at which the currency or instrument is offered.
Association Cambiste Internationale

The international society of foreign exchange dealers consisting of national "Forex clubs" affiliated on a worldwide basis.

Around
Used in quoting forward "premium / discount". "Five-five around" would mean five points on either side of the present spot value.

At Best
An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.

At Par Forward Spread
When the forward price is equivalent to the spot price.

At the Price Stop-Loss Order
A stop-loss order that must be executed at the requested level regardless of market conditions.

Average Rate Option
A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option".