Page 52 - PRIAA Glossary

DETERMINING PARTY
The party (or parties) determining the close-out amount under the ISDA Master Agreement. This is generally the non-defaulting party. The determining party must use commercially reasonable procedures to produce a commercially reasonable result.
DIAGONAL SPREAD
The purchase of both a long and a short position in two options of the same type (put or call) but with different strike prices and expiration dates.
DIGITAL OPTION
An option that has a pre-determined payout if the option is in- the-money and the payoff condition is satisfied. Also referred to as a “binary option” or an “all-or-nothing option”.
DIGITAL SETTLEMENT
A derivative payout following a credit event that is a fixed amount, as opposed to par less the recovery amount. Also known as a “binary settlement”.
DIRECT MARKET ACCESS (DMA)
A term used in financial markets to describe electronic trading facilities that give investors wishing to trade in financial instruments a way to interact with the order book of an exchange.
DIRTY PRICE
The price of a bond inclusive of accrued interest.
DISCOUNT
The price of a bond that is lower than par. The discount equals the difference between the price paid for a security and the security’s par value. If a bond with a par value of $1,000 is currently selling for $990 dollars (or 99% of par), it is selling at a discount.
DISCOUNT BASIS
Method of quoting the price of fixed-income securities. The price is expressed as an annualised discount from maturity value. It is also referred to as “discount yield”.
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