A contract happens when people or companies promise each other that the law will be enforced. These promises need both sides to give something of value. Many everyday activities involve contracts – buying a house, getting a job, or even purchasing coffee at a café. What Makes a Contract? Offer and Acceptance One person must…
Many people think buying shares always requires having money ready to pay. Contra-trading breaks this rule by letting traders buy and sell shares during the same settlement period without needing cash upfront. This trading method works because the purchase and sale happen close enough together that they settle on the same day. How Contra-Trading Really…
Trading in financial markets involves finding someone who wants to take the opposite side of your trade. This opposite side is called contra-liquidity. When you want to buy shares, you need to find someone willing to sell them. When you want to sell, you need to find a buyer. Modern financial markets use sophisticated computer…
Continuous discounting is a way to figure out how much money you will have in the future. It looks at money coming in, like your paycheck. This money is called a cash flow. Discounting means lowering the value of that future money. Why? Because money in the future will be worth less than money now….
Continuous compounding is a way of calculating interest. Interest is extra money a bank or other financial company pays you for keeping your money with them. With continuous compounding, the interest gets added to your original amount all the time, without stopping. Imagine you have a pile of money. Now imagine that pile of money…
Contingent surplus notes are a special kind of insurance thing called “pre-loss financing.” Here’s how they work: An insurance company or reinsurance company sells some notes to investors. But they don’t just sell them whenever they want. They wait until something bad happens that they agreed on ahead of time. This bad thing is called…
A contingent premium option is a special kind of financial contract. It’s a complex option bought and sold directly between two parties, not on a regular stock market. The unique thing about it is that the buyer only has to pay the seller the premium (price) for the option if it ends up being “in…
A contingent claim is a financial thing whose value depends on what happens with other things. Those other things could be assets a person or company owns that have value, like stocks, bonds, gold, or real estate. Or, the value of a contingent claim could be tied to an index, which tracks and measures how…
Companies face many unexpected events that can drain their financial resources. When disaster strikes, having access to emergency funds becomes vital for survival. This is where contingent capital comes into play – a special type of financial agreement that gives companies access to money right after they experience a significant loss. What is Contingent Capital?…
A contingency reserve is money insurance companies set aside if something unexpected happens. They use it to pay for things they didn’t plan for, like if many more people than usual make claims or the company doesn’t make as much money as they thought they would. Insurance companies take some of the money they have…
