D

Deferred Payment Option

An option where the price paid is deferred until the end of the option's life (see also options).

Deferred Swap

An agreement to enter into a swap at some point in future (also called a forward swap).

Delivery Month

The month in which an underlying commodity us to be delivered. (see also maturity).

Delta

Rate of change in the value of a derivative in response to a change in value of the underlying asset.

Delta Hedging

A hedging strategy designed to make the price of a portfolio of derivatives insensitive to small changes in the price of the underlying asset.

Delta-neutral Portfolio

A portfolio with a delta of zero (ie small price changes in the underlying asset have no impact upon the value of the portfolio).

Density

Mass of a product divided by its volume.

Derivatives

Financial product derived from something else, and having greater leverage than the product it is derive from.

Differential Swap

A swap where a floating rate in one currency is exchanged for a floating rate in another and both rates are applied to the same principal.

Discount Bond

Debt sold for less than its principal value. If a discount bond pays no interest it is called a "pure" discount bond. (Refer to zero coupon bond).

Discount Rate

The annualised dollar return on a Treasury bill or similar instrument expressed as a percentage of the final face value.

DividendA cash payment made tot he owner of a stock.

Dividend YieldThe dividend as a percentage of its stock price.

DoreUnrefined gold and silver bullion bars which will be further refined to almost pure metal

DurationA measure of the average life of a bond. It is also an approximation to the ratio of the proportional change in bond price to the absolute change in its yield. (see also modified duration).

Duration MatchingA procedure for matching the durations of assets and liabilities in financial institutions.

Dynamic HedgingA procedure for hedging an option position by periodically changing the position held in the underlying assets. The objective is usually to maintain a delta-neutral position.

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