Dictionary
- Binomial Model
- The binomial options model provides a generalisable numerical method for the valuation of options. The model differs from other option pricing models, in that it uses a “discrete-time” model of the varying price over time of financial instruments.
- Black-Scholes Formula
- A formula developed to estimate the market value of option contracts which includes the stock price, the exercise price, the risk-free interest rate, the expiry date, as well as the standard deviation from the return on securities.
- Block Sale
- A transaction of more than 10,000 shares of stock.
- Block Transactions
- Large transactions in which at least 10,000 shares of stock are bought or sold. Brokers or "block houses" often search directly for other large traders rather than bringing the trade to the stock exchange.
- Bogey
- The return an investment manager is compared to for performance evaluation.