What Is a Cyclical Stock? A cyclical stock is a stock that’s price is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery. Most cyclical stocks involve companies that sell consumer discretionary items that consumers buy more
What Is Currency Risk Sharing? Currency risk sharing is a way of hedging currency risk in which the two parties of a deal or a trade agree to share in the risk from exchange rate fluctuations. Investors or companies that have assets or business operations across national borders are exposed to currency risk that may
What Is a Currency Strategist? A currency strategist is a financial professional who evaluates economic trends and geopolitical moves to forecast price changes and directions in the foreign exchange (FX) market. Mostly, a currency strategist has the same job as a financial analyst. However, they focus on predicting the value of foreign currencies to the U.S.
What Is a Currency Swap? A currency swap, sometimes referred to as a cross-currency swap, involves the exchange of interest—and sometimes of principal—in one currency for the same in another currency. Interest payments are exchanged at fixed dates through the life of the contract. It is considered to be a foreign exchange transaction and is
What Is a Currency Union? A currency union is when two or more economies (usually sovereign countries) share a common currency or mutually decide to peg their exchange rates to the same reference currency to keep the value of their monies similar. One goal of forming a currency union is to coordinate economic activity and monetary
What Are Currency Warrants? A currency warrant is a financial instrument used to hedge currency risk or speculate on currency fluctuations in foreign exchange (forex) markets. A currency warrant, like other options contracts, derives its value from the underlying exchange rate, where a warrant’s value goes up as the underlying rises and a put warrant’s
What Is a Current Coupon? A current coupon refers to a security that is trading closest to its par value without going over par. In other words, the bond’s market price is at or near to its issued face value. Put differently, a bond has a current coupon status if its coupon is set approximately
What Does Current Face Mean? Current face refers to the current par value of a mortgage-backed security (MBS). It reveals the remaining monthly principal on a group of home mortgages, providing investors with a snapshot of how an MBS, the vehicle collecting on these loans, is doing compared to when it started out. Current face is also referred to as current face
What Is the Current Account? The current account records a nation’s transactions with the rest of the world—specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments—over a defined period, such as a year or a quarter. The Q4 2021 current account deficit of the U.S. was
What Is a Current Account Deficit? The current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports. The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make
