Forex Trading Course

Category: glossary , Asked by: Ainsley H. From Spokane, United States

A: "agency problem " is A conflict of interest arising between creditors, shareholders and management because of differing goals. For example, an agency problem exists when management and stockholders have conflicting ideas on how the company should be run.

Category: glossary , Asked by: Mckayla R. From Dublin, Ireland

A: the "errors and omissions insurance " is A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified on the insurance contract. E&O insurance can be obtained by insurance brokers/dealers, registered investment advisors and financial planners, among others. It is often required by regulatory bodies such as FINRA or company investors. In the financial industry, lawsuits will happen, regardless on how baseless the claims may be. Clients sometimes sue an advisor or broker after an investment goes sour, even if the risks were well known and within the guidelines established by the client. In these cases, even if a court or arbitration panel finds in favor of a broker or investment advisor, the legal fees can be very high and E&O insurance is vital in these situations. A person or company that has had numerous litigation problems has a higher underwriting risk and will find E&O insurance to be more expensive or less favorable in its terms as a result.

Category: glossary , Asked by: Q. Mcmahon from United States

A: An option with a strike price that is significantly above (for a call option) or below (for a put option) the market price of the underlying asset. To be deemed significantly above/below, an option's strike price should be at least one strike price below/above the market price of the underlying asset's option chain. For example, if the current price of the underlying stock is $10, a put option with a strike price of $5 would be considered deep out of the money. While a deep of out the money option seems worthless, the derivative still holds some value. All options, both in and out of the money, contain time value. Time value measures the benefit of having an option with time remaining until maturity. So, while a deep out of the money call or put has no intrinsic value, some investors may be willing to pay a small amount for the remaining time value. However, this time value decreases as the option moves closer toward its expiry date.