The interest rate that will make the net present value of the cash flows from an investment equal to the price (or cost) of the investment. The net present value is the present value of future cash flows, discounted at the present cost of capital.
The current yield relates the annual coupon yield to the market price by dividing the coupon by the price divided by 100, neglecting the time value of money or potential capital gains and losses.
The simple yield-to-maturity takes into account the effect of the capital gained or lost at maturity, as well as the current yield.
The Energy Risk Glossary, now in its eighth edition, provides an at-a-glance explanation of the myriad specialised terms and acronyms used in energy trading and risk management.
This year, the guide has been updated by Aviv Handler of ETR Advisory. Energy Risk would like to thank him for his input into this edition, which benefits greatly from his valuable experience and insight into energy markets.
The fast-changing nature of these markets means much has changed since our last edition – almost 200 new entries and revisions have been made this year. Reflecting the increasing importance of regulation, definitions of the Markets in Financial Instruments Directive (MiFid) and the Ljubljana-based Agency for the Cooperation of Energy Regulators (Acer) make it into the glossary for the first time. A focus on improving back-office infrastructure and mitigating counterparty risk is also apparent from the inclusion of terms such as ‘portfolio reconciliation’ and ‘portfolio compression’.
The glossary is extensively cross-referenced, making for easy and thorough searches. We hope you find it useful.
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