VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, a measure of the implied volatility of S&P500 index options. A high value corresponds to a volatile market and therefore means options will be more costly. Often referred to as the fear index or fear gauge, it is a measure of expected volatility over the next 30 days. The VIX was below 30 for most of the time in the 15 years up to 2008. Global financial crisis drove it close to 90 in October 2008.
A long-term bond the interest rate of which is adjusted periodically typically based upon specific market indicators.
A bond which bears interest at a variable, or floating, rate established at specified intervals (e.g., flexible, daily, weekly, monthly or annually). It contains a put option permitting the bondholder to tender the bond for purchase when a new interest rate is established. VRDOs are also referred to as VRDNs (N=Notes), VRDBs (B=Bonds) or low floaters.
Venture capital funds or firms invest in small start-up companies or in the expansion of existing private, unlisted companies. Their investments are high risk; the returns can be high but so can the failure rate. Venture capital firms obtain their funding from private investors or institutional investors. Profits are often taken when the company is floated in an initial public offering (IPO).
The propensity of a security’s price to rise or fall sharply.
Volatility describes the degree to which the value of a security changes over time. High volatility means that the value changes dramatically, usually due to great market uncertainty. Traders thrive on market volatility because it presents opportunities to earn a profit. Low volatility means values change minimally, such as when all news has been priced into a market. Professional investors tend to benefit from low volatility because they are better able to lock in stable returns. Financial markets distinguish between historical volatility and implied volatility. Historical volatility is a measure of volatility based on past price or yield behavior, while implied volatility is an estimation of future behavior, implied by the price of an option.
The volatility the market expects in the price of a security. It is a measure of the extent, but not the direction, of the future price movements. It tends to increase in bearish markets and fall in bullish ones. It is expressed as an annualized percentage.