Term: Difference between revisions
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Compare with [[cash product]]s, which have no term (or at least a very short term). | Compare with [[cash product]]s, which have no term (or at least a very short term). | ||
{{ | {{sa}} | ||
*[[Cash product]]s | *[[Cash product]]s | ||
*[[Transferable securities]] | *[[Transferable securities]] | ||
*[[Synthetic prime brokerage]] | *[[Synthetic prime brokerage]] | ||
*[[Spot contract]] | *[[Spot contract]] | ||
Revision as of 11:36, 18 January 2020
The length of time for which one is committed to any transaction or lending arrangement. The longer the term, the more risky the investment, because the time value of the option you have written on the counterparty's credit exposure increases.
One way of reducing this term exposure is to make an instrument transferable, so you can sell it to another investor and close out your own exposure.
Compare with cash products, which have no term (or at least a very short term).