Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 33 terms
The price paid for an option, which rises with expected volatility.
What a VIX spike actually tells you: protection has become expensive. That is a statement about what to trade, not which way.
The extra return an investor expects for holding a risky asset rather than a risk-free one.
Compensation for enduring drawdowns, not a payment that arrives on schedule. It shows up over decades and can be absent for years at a stretch.
The gap between a currency’s forward or futures price and its spot rate, arising from the interest rate differential between the two currencies.
It shrinks to nothing at expiry by construction, so a currency futures chart can fall over a month in which the spot rate rose. Measure the premium as a distance and compare it with the move your setup expects.
An unofficial price quoted for an IPO share before listing, in an unregulated market that has no legal standing.
No exchange, no reporting requirement, no audit trail, and nobody accountable for the number — which can be moved by the very people who benefit from a heavily subscribed issue. A sentiment reading, and it has been wrong spectacularly.
Claims plus expenses divided by premiums, for a general insurer — below 100% means the underwriting itself is profitable.
Most general insurers run above 100 and earn their profit on the float instead, which quietly makes them part investment business and sensitive to interest rates.
An increase in the sum insured granted for each claim-free year, at no additional premium.
A ₹10 lakh policy can grow well beyond that over time. On a port, this accrued layer is generally treated as part of the cover you carry across.
Premiums an insurer holds between collecting them and paying out claims, invested in the meantime.
Where most general insurers actually earn their money, since underwriting itself frequently loses.
A window after receiving a new insurance policy in which it may be returned for a refund of premium, less small deductions.
It exists because policies are sold quickly and read slowly. It is the one moment when walking away from a mis-sold policy costs almost nothing.
The premium paid over fair value of net assets in an acquisition, carried on the balance sheet.
A standing candidate for future write-offs. Treat large goodwill with scepticism.
The gap between short-term interest rates in two currencies, which sets the forward premium and therefore the slope of a currency futures curve.
The same idea as cost of carry in an equity future, met on a currency chart. It is a financing number, not a view about either currency.
A life insurance contract on which premiums have stopped but which stays in force, with the benefit reduced in proportion to the premiums already paid.
The third door most people never consider. It stops the outflow without crystallising a punitive exit value, and it is not the same thing as letting a policy lapse.
An insurance contract ending because a premium was not paid within the time the policy allows.
Not a pause. Waiting periods and the clock after which a claim stops being contestable both count unbroken cover, and both restart.
The pool of premium money an insurer holds separately from shareholders’ funds, with regulatory limits on how it may be invested.
Premiums are not the shareholders’ money. A large proportion has to sit in government and other approved securities — the money backing a thirty-year promise cannot chase this year’s best return.
The old-regime deduction of up to ₹1.5 lakh covering EPF, ELSS, PPF, life premiums and home loan principal.
The reason offices fill with insurance agents every January. Useful for what you were paying anyway, expensive for anything bought to fill it.
A recurring automated debit from a bank account — an EMI, a SIP, an insurance premium or a utility mandate.
The point of automating them was to stop thinking about them, which is why they all fail together on their scheduled dates when an account freezes. Knowing which run from which account is a twenty-minute exercise you cannot do in a hurry.
The erosion of an option’s premium as expiry approaches, since the time and uncertainty the premium pays for are steadily running out.
It produces a falling chart in a market that is doing nothing, which is why a decay and a breakdown look identical on a premium chart. It accelerates close to expiry.
Value of new business as a percentage of the premium written on that business — a life insurer's core profitability ratio.
It stands in for net margin, because an insurer's reported profit falls precisely when it sells more. A fast-growing insurer looks worse on P/E than one that has stopped selling.
The collapse in an option’s premium after a scheduled event, as the expected volatility the price was carrying resolves into a known outcome.
It is why you can be right about the direction of the underlying and still lose on the option. The input that moved is not visible anywhere on the premium chart.
The proportion of tendered shares a company actually accepts in a buyback.
This, not the premium, decides what you earn. A 20% premium at 15% acceptance is a 3% return.
A firm appointed by a fund house and permitted to create and redeem an exchange-traded fund’s units in creation-unit blocks against the underlying basket.
The only party who can close a premium or a discount by making or unmaking units. Retail investors deal only in the secondary market, which is why the link between price and basket is a trade somebody has to want to do rather than a rule.
An option giving its buyer the right, but not the obligation, to buy the underlying at a set price by expiry.
The buyer's maximum loss is the premium, which is the whole appeal. The seller collects that premium and carries the entire remaining risk — the half most beginners never look at.
A fixed share of every claim the policyholder must bear.
Common on cheap and senior-citizen plans. A 20% co-pay on a ₹8 lakh bill is ₹1.6 lakh out of your pocket after the premium was paid.
The fixed periodic interest a bond pays, expressed as a percentage of its face value.
Not your return. Buy above face value and the premium is a loss spread across the holding period, which yield to maturity captures and the coupon does not.
The fixed large block in which an exchange-traded fund’s units are created or redeemed against the underlying basket at the official NAV, rather than one at a time on the exchange.
It is the mechanism that ties an ETF’s traded price to what it holds. When new units cannot be made, that tether is off and a premium can stand for weeks.
Separating a division into an independently listed company, with shares issued to existing holders.
No premium is paid and each business gets its own multiple, which is why the record is better than for acquisitions.
The Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank that insures deposits at covered banks.
Cover is automatic, the bank pays the premium and you cannot opt out. It pays up to the prescribed limit per depositor per bank, net of anything you owe that bank.
The agreed current value of a vehicle, which caps what the own-damage portion of a motor policy will pay and forms the basis of a total-loss settlement.
It falls every year as the vehicle depreciates, which is why the own-damage premium falls too — and why dropping that cover on an old car is a bounded, knowable decision.
An exchange-traded fund listed on an Indian exchange that tracks an overseas index, bought through an ordinary demat account.
The simplest of the three routes abroad. Liquidity can be thin, and the price sometimes trades at a noticeable premium to what it holds.
A transaction combining two companies into one entity.
The acquirer pays a premium today for benefits that are uncertain and deferred. Most disappoint.
How far an option’s strike sits from the current price of the underlying — in the money, at the money or out of the money.
It changes as the underlying moves, so the same underlying move produces a different premium response than it did an hour ago. A premium chart mixes that in with everything else.
A contract giving the right, but not the obligation, to buy (call) or sell (put) at a set price.
Buyers risk only the premium. Sellers take limited gain for potentially very large loss.
Book value with goodwill and intangible assets removed.
The conservative floor. Goodwill is the premium paid in past acquisitions, and it goes if those disappoint.
Pure life cover for a fixed period, with no maturity or investment value.
The only kind of life insurance worth buying: maximum cover, minimum premium, nothing bundled.