MARKET: Derivatives
A long or short derivatives position initiated without any corresponding position in the underlying market or spot market. A naked position could include being long put options without an underlying position to hedge or being long a swap with no underlying liability or a smaller liability portfolio than the notional principal of the swap.
Naked Put
MARKET: Options
A put option where the seller of the option does not have a short position in the underlying asset. A naked put is also called an uncovered put. If the underlying asset price stays the same or increases slightly, the put option seller will profit from the strategy (premium received) as the option expires worthless. However, if the asset price falls, the option premium increases and it becomes more costly to close the put position. The total loss potential of the strategy is limited because the price of the underlying cannot drop below zero.
NASDAQ
Acronym for National Association of Securities Dealers Automated Quotations. Is the largest electronic screen-based equities securities trading market in the US
Negotiable Security
MARKET: Debt Markets
A financial instrument which can be sold by one party to another in the secondary market, i.e. the transaction or instrument is not registered in the original counterparty’s name. Negotiable securities are also sometimes referred to as bearer instruments.
Neoclassical Economics
MARKET: Economics
An approach to economics that relates supply and demand to an individual's rationality and his or her ability to maximise utility or profit. Neoclassical economics also increased the use of mathematical equations in the study of various aspects of the economy.
Net Borrowing Requirement
MARKET: Economics
This is the sum of the main budget balance as well as extraordinary receipts and payments. Deficits (surpluses) will increase (decrease) the borrowing requirement.
Net Carry Cost
MARKET: General
The total cost involved in entering into a financial transaction after taking into account the cost to enter the transaction and the income (interest, dividends etc.) that is earned on the instrument over the transaction period. Net funding will always represent the difference between the cost of funding a position and the income stream earned on the underlying asset.
Net Exchange Position
MARKET: FX
The difference between the amounts of foreign currency purchased and sold at a particular point in time or for a particular settlement date in the future, either spot or forward.
Net Open Foreign Currency Position (NOFP)
MARKET: Economics
The NOFP is calculated by deducting the oversold forward book from the gold and foreign exchange reserves. The figure is expressed in US dollars.
Net Present Value (NPV)
MARKET: TVM
A standard method for financial evaluation of long-term capital projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. By definition, NPV represents the present value of cash inflows less the present value of cash outflows (or minus initial investment).
New York Stock Exchange (NYSE)
Operates the world's largest and most liquid exchange group and offers the most diverse array of financial products and services.
Nominal Exchange Rates
The nominal exchange rate is the current exchange rate between the rand and foreign currencies.
NIKKEI 225
MARKET: General
The Nikkei 225 is a stock market index for the Tokyo Stock Exchange (TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1950. It is a price-weighted average and the components are reviewed annually. Currently, the Nikkei is the most widely quoted average of Japanese equities.
Nominal Interest Rate
MARKET: General
A standard method for financial evaluation of long-term capital projects. Used for capital budgeting, and widely throughoutA nominal interest rate is the interest rate "as stated" — that is, not adjusted for compounding. An interest rate is called nominal if the period of time after the interest is credited (e.g. a month) is not identical to the basic time unit (normally a year). The nominal interest rate basically shows how much interest will be eared/paid per compounding period in one year. A nominal interest rate of 6% compounded monthly is equivalent to an effective interest rate of 6.16%. (Effective interest rate is always calculated as if compounded annually). 6% monthly is credited as 6%/12 = 0.5% every month. After one year, the initial capital is increased by the factor (1+0.005)12 ≈ 1.0616.
Non-deliverable Forward (NDF)
MARKET: FX
An NDF is a short-term committed forward cash-settled currency derivative instrument. It is essentially an outright (forward) FX contract whereby on the contracted settlement (maturity/forward) date, settlement is made between the two counterparties based on the difference between the contracted NDF (forward) rate and the prevailing spot FX rate on the agreed notional principal amount. The NDF rate is the forward rate agreed between the two counterparties on the transaction date. This is essentially the outright (forward) rate of the currencies dealt. A specific notional amount is the face value of the NDF, which is also agreed between the two counterparties on the transaction date. These instruments are often used in markets where FX controls prohibit actual FX forwards.
Nostro Account
MARKET: FX
Bank accounts usually in the currency of the foreign country. This allows for easy payment/receipts of foreign currency because currency doesn't need to be converted. Nostro is derived from the Latin term "ours." A USD-denominated account, in New York, for a SA-based bank will be a nostro account in the books of the SA-based bank.
Notional Contract
MARKET: Derivatives
A commitment between two counterparties, but which involves no exchange of a principal amount. Only a differential amount (difference between an agreed or contract rate and the market rate) is paid by one party to another. The contract will specify an amount on which settlement is calculated, but the amount is not exchanged.
Notional Principal Amount (NPA)
MARKET: Derivatives
The nominal (transactional amount) value which is used to calculate the cash flows (settlement amounts) on cash-settled derivatives, such as Forward Rate Agreements (FRAs), Interest Rate Swaps (IRSs) and Non-deliverable Forwards (NDFs). This amount is only used for purposes of calculation of the settlement amount(s) and is not exchanged between the two counterparties to the transaction.
NYMEX
MARKET: Commodities
The New York Mercantile Exchange in its current form was created in 1994 by the merger of the former New York Mercantile Exchange and the Commodities Exchange (COMEX) in New York. NYMEX was founded in 1872 as the Butter and Cheese Exchange of New York to trade agricultural commodity contracts.
