What Is a Non-Deliverable Forward (NDF)? A non-deliverable forward (NDF) is a cash-settled, and usually short-term, forward contract. The notional amount is never exchanged, hence the name “non-deliverable.” Two parties agree to take opposite sides of a transaction for a set amount of money—at a contracted rate, in the case of a currency NDF. This means that counterparties
What Is Near-Field Communication (NFC)? Near-field communication (NFC) is a short-range wireless technology that makes your smartphone, tablet, wearables, payment cards, and other devices even smarter. Near-field communication is the ultimate in connectivity. With NFC, you can transfer information between devices quickly and easily with a single touch—whether paying bills, exchanging business cards, downloading coupons
What Is “Near the Money”? The phrase “near the money” refers to an options contract whose strike price is close to the current market price of the corresponding underlying security. Near-the-money is synonymous with at-the-money. It is very seldom that the underlying asset’s price will be exactly at the strike price. So, near-the-money is used
What Is a Neckline? The neckline is a level of support or resistance found on a head and shoulders pattern that is used by traders to determine strategic areas to place orders. A neckline connects the swing lows (which occur following the first two peaks) of the head and shoulders topping pattern. A move below
What Is the Needs Approach? The needs approach is a way of determining the appropriate amount of life insurance coverage an individual should purchase. This approach is based on the creation of a budget of expenses that will be incurred, including funeral expenses, estate settlement costs, and replacement of a portion of future income to
What Is Negative Convexity? Negative convexity exists when the shape of a bond’s yield curve is concave. A bond’s convexity is the rate of change of its duration, and it is measured as the second derivative of the bond’s price with respect to its yield. Most mortgage bonds are negatively convex, and callable bonds usually
What Are Negative Points? Negative points are essentially rebates that lenders pay to real estate brokers or borrowers to help them afford closing on mortgages that they issue. This system allows some qualified borrowers, who could not otherwise afford the expense of closing costs and settlement fees, to be able to purchase a home—usually in
What Is Negative Amortization? Negative amortization is a financial term referring to an increase in the principal balance of a loan caused by a failure to cover the interest due on that loan. For example, if the interest payment on a loan is $500, and the borrower only pays $400, then the $100 difference would
What is Negative Amortization Limit? The negative amortization limit is a provision in certain bonds or other loan contracts that limits the amount of unpaid interest charges that can be added to the loan’s principal balance. Key Takeaways Negative amortization limit is a provision that limits the amount of unpaid interest charges that can be
What Is Negative Arbitrage? Negative arbitrage is the opportunity lost when bond issuers assume proceeds from debt offerings and then hold that money in escrow for a period of time (usually in cash or short-term treasury investments) until the money is able to be put to use to fund a project, or to repay investors.
