Treasury ABC Part II
| 14-07-2016 | Jan Doosje |
For many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. Last week I started off with the first part of the treasury ABC which I’ll call the Treasury ABC for normal citizens.
F is for Floor
A floor is a technical term for an interest option. When buying a floor you are “ensured” to receive an interest rate at the level you pay for. Even if the actual interest is lower, you will be compensated for the difference.
G is for Gold Standard
A Gold standard is the monetary system where a currency unit is equal to a certain weight of gold. So, for every banknote the central bank has a stock in its bank safes. The system of the Gold Standard no longer exists.
H is for Hedge fund
A Hedge fund is a fund that has the purpose of lowering risk for a restricted group of investors by buying and selling shares. When the market as a whole goes down, a hedge fund tries to keep on the same level/rate as the hedge fund started with so the investors are “ensured” to get their investment back without a loss. Nowadays hedge funds are also sometimes speculating and can be confronted with big losses when the hedge fund manager doesn’t do his job right. Be sure of all risks and opportunities before you step into a hedge fund.
I is for Instrument
Not every instrument is made for the making of music. Looking in the perspective of treasury an instrument is used to achieve a goal from the investor e.g. lowering risk or optimize rentability. Treasury instruments can be divided for the following purposes:
- Interest risks
- Interest swaps
- Forward rate agreements
- Options
- Currency risks
- Options
- Currency swaps
- Forward contract
- Money market instrument
J is for Jumbo.
In 1972 the United States Department of the Treasury issued a Jumbo Bronze medeal Huge 8 ounces. This is the category of useful information.
Talking to our readers and contributors we have noticed that there are treasury related words with many different understandings. We’ve asked Jan Doosje to kick off a treasury ABC. Of course this is not binding and there are letters which can be connected to several treasury related words We need your input to make a complete treasury ABC. Would you like to contribute to the treasury ABC? Please contact our community manager Stephanie Derkse.
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