Strike price and Too Big To Fail: Difference between pages

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''Options''.
(TBTF).  


The price at which an option holder has the right to require the option writer to deal.
A financial firm for which the economic and or social consequences of its disorderly failure and liquidation are considered unacceptable to the society within which it operates.  


More specifically, the predetermined price in a contract at which the option holder can either purchase or sell the underlying security, instrument or commodity.
A consequence of the perceived TBTF status of a firm is that it is likely to be ‘rescued’ by the State if the relevant State has sufficient resources.  


The first recognised TBTF bank was the Continental Illinois (CI), the 7th largest US Bank, that was seized by the Federal Deposit Insurance Corporation (FDIC) in 1984 to protect the banking system and allow orderly continuation of the business while substantially wiping out shareholders.


Also known as the Exercise price.
 
The term "Too Big to Fail" was given currency in congressional testimony following the "rescue" of CI.
 
In similar vein the IMF uses the phrase "[[Too important to fail]]" (TITF).




== See also ==
== See also ==
* [[Derivative instrument]]
* [[Basel III]]
* [[In the money]] (ITM)
* [[Dodd-Frank]]
* [[Option]]
* [[G-SIB]]
* [[Out of the money]]  (OTM)
* [[G-SII]]
* [[Underlying asset]]
* [[International Monetary Fund]]  (IMF)
* [[Moral hazard]]
* [[Systemically Important Financial Institution]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Compliance_and_audit]]
[[Category:Ethics]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_products_and_markets]]

Latest revision as of 15:18, 25 June 2022

(TBTF).

A financial firm for which the economic and or social consequences of its disorderly failure and liquidation are considered unacceptable to the society within which it operates.

A consequence of the perceived TBTF status of a firm is that it is likely to be ‘rescued’ by the State if the relevant State has sufficient resources.

The first recognised TBTF bank was the Continental Illinois (CI), the 7th largest US Bank, that was seized by the Federal Deposit Insurance Corporation (FDIC) in 1984 to protect the banking system and allow orderly continuation of the business while substantially wiping out shareholders.


The term "Too Big to Fail" was given currency in congressional testimony following the "rescue" of CI.

In similar vein the IMF uses the phrase "Too important to fail" (TITF).


See also