From The Jolly Contrarian
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| {{eqderivsnap|5.8}}
| | #redirect[[Equity Swap Transactions - Equity Derivatives Provision]] |
| Used in {{eqderivprov|Rate of Return}}, which in turn is used in {{eqderivprov|Equity Amount}}, and also very relevant to the {{eqderivprov|Equity Notional Reset}} process. The {{eqderivprov|Initial Price}} is different to the {{eqderivprov|Equity Notional Amount}} in that it is expressed as a price ''per {{eqderivprov|Share}}'', whereas the {{eqderivprov|Equity Notional Amount}} tends to be {{eqderivprov|Initial Price}} * {{eqderivprov|Number of Shares}}.
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| Note there is an ''initial'' {{eqderivprov|Initial Price}} — the strike price in the {{isdaprov|Confirmation}} — but it is reset on every {{eqderivprov|Valuation Date}} to the {{eqderivprov|Final Price}} on that date — so the ''prevailing'' {{eqderivprov|Initial Price}} fluctuates over time.
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| The way the {{eqderivprov|Initial Price}} definition is drafted, you don’t need to say “... subject to adjustment on each {{eqderivprov|Valuation Date}}” in the {{isdaprov|Confirmation}}, although for many of you this is sure to prove an irresistible temptation.
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| {{sa}}
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| *{{eqderivprov|Equity Notional Amount}}
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| *{{eqderivprov|Equity Notional Reset}}, the process by which your trade is re-struck on each {{eqderivprov|Valuation Date}}.
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Latest revision as of 12:55, 11 May 2022