imported>Doug Williamson |
imported>Doug Williamson |
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| 1.
| | Mortgage-Backed Securities. |
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| A term used in foreign exchange rate quotation.
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| '''Example'''
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| Consider the historical FX quote:
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| GBP 1 = 1.4598 - 1.4602 USD.
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| The base currency is GBP.
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| This is the currency there is a single unit of, to be exchanged for a variable number of USD.
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| The inversion of this FX quote means expressing the same price, but with the other currency as the base currency (USD here):
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| USD 1 = (1 / 1.4602) - (1 / 1.4598) GBP
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| USD 1 = 0.6848 - 0.6850 GBP.
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| In the inverted FX quote, USD is the currency there is a single unit of (to be exchanged for a variable number of GBP).
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| The term FX ''inverse quote'' is also used to refer to an FX inversion.
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| 2.
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| In any market, the reversal of a normal - or commonly expected - relationship.
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| For example the situation of an Inverse yield curve, where longer maturities of funds are trading at LOWER yields than shorter-dated maturities (being the opposite of the normally expected upward-sloping relationship).
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| == See also == | | == See also == |
| * [[Base currency]] | | * [[CDO]] |
| * [[Foreign exchange]] (FX) | | * [[Collateralised Mortgage Obligation]] |
| * [[Inverse yield curve]] | | * [[Mortgage-backed securities]] |
| * [[Reciprocal]] | | * [[Quantitative easing]] |
| * [[Tax inversion]] | | * [[Refinancing risk]] |
| | * [[Covered bond]] |
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| [[Category:Manage_risks]] | | [[Category:Long_term_funding]] |
| | [[Category:Compliance_and_audit]] |
