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A measure of the actual volatility (a statistical measure of dispersion) observed in the marketplace.

Also called junk bonds, these bonds have a credit rating of BB or lower. A high yield bond is considered a speculative grade bond or below investment grade bond and is issued by companies with a higher credit risk. As the name suggests, a high yield bond earns high gross…

The number of units of a hedging instrument that must be held to minimize the overall portfolio variance (cash position and hedge combined) of a portfolio or individual instrument.

Pooled investor funds that are aggressively managed by professionals with the goal of generating high returns. Hedge funds use leverage and derivative instruments to aid in generating high returns and attract a more sophisticated type of investor, ie, requiring minimum amounts of income and money to invest, to be eligible.

A position taken in order to offset the risk associated with some other position. Most often, the initial position is a cash position and the hedge position involves a risk-management instrument such as a swap or a futures contract.

Government National Mortgage Association, pronounced Ginnie Mae, is a wholly owned U.S. government agency guaranteeing government issued or guaranteed mortgages.

A measure of the compounded rate of return of the market value of the initial portfolio during the evaluation period, assuming that all cash distributions are reinvested in the portfolio. Geometric Return is given by the nth root of the product of the returns for n number of years.

The amount that a sum of money invested today, earning a simple or compounded interest, will be worth at a future date

A series of futures contracts with successive delivery (settlement) months. In the interest rate market, it is most often used to refer to a series of interest-rate futures such as SOFR and the respective quarterly cycle.

All futures contracts having identical terms (including the same delivery month) and trading on the same exchange constitute a series.

An exchange is a central meeting place where buyers and seller come together to exchange goods and services. A futures exchange is where buyers and sellers meet to buy and sell futures and options contracts. Must be designated a futures exchange by the Commodities Futures Trading Commission (CFTC).

Also known as futures. Standardized contracts for deferred delivery (or cash settlement) of commodities and financial instruments. Always traded on a designated futures exchange and regulated by the Commodity Futures Trading Commission.