Page 120 - PRIAA Glossary

NORMAL DISTRIBUTION
A continuous Gaussian probability distribution. Normal distributions are used in mathematical finance to describe random fluctuations in asset prices for models that assume such prices are normally distributed. Also known as the bell curve.
The mathematical form for a normal distribution is given by the equation below, where f(x) is the function for the normal distribution (also represented as N(μ, σ2)) for variable x, σ is the standard deviation of the distrib1ution _and μ is the mean of the distribution.
(x – μ) f(x) = N(μ, σ2 ) = σ√2πe 2σ2 2
NOSTRO/VOSTRO RECONCILIATION
The process performed to ensure that the expected cash movements of a transaction (or multiple transactions) are reconciled with the actual cash movements affected.
NOSTRO/VOSTRO SETTLEMENT BREAK
A mismatch of cash flows caused when the amount of cash expected by one party differs from the actual amount paid by the other party.
NOTE
A debt instrument with a maturity between one and ten years which mandates the issuer to make periodic payments of interest to the investor and return the principal amount at maturity.
NOTICE OF PHYSICAL SETTLEMENT (NOPS)
An irrevocable confirmation that the buyer of protection
will physically settle a credit default swap contract. An NOPS must be delivered within 30 calendar days of the event determination date (EDD) and must contain a detailed description of the intended deliverable obligation. The buyer may change the intended deliverable obligation, up to and including the physical settlement date by the issuance of another NOPS. However, the settlement period is calculated from the day on which the first NOPS was delivered.
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