Off-Balance Sheet Activity- Off-balance sheet activities, are not recorded on the balance sheet, and include asset, debt, or financing related activities such as derivatives or loan commitments and other contingent exposures that could pose a risk to the bank.

 

Operating Income- Used interchangeably with EBIT. Accountants will take issue with this... but...

 

Operating Margin (After-tax)- Estimated by dividing the after-tax operating income by the total revenues. This is an after-tax, pre-debt measure of operating profitability:

After-tax Operating Margin = EBIT(1-t) / Sales

To estimate the values for the sector, we use the cumulated values of EBIT(1-t) and sales. The tax rate used is the effective tax rate, averaged across the sector.

 

Operating Marign (Pre-tax)- Estimated by dividing the pre-tax operating income by the total revenues. This is a pre-tax measure of operating profitability:

Pre-tax Operating Margin = EBIT / Sales

 

Operational Loss Event- Operational loss event is a loss that is the result of operational failure.

 

Operational Risk- Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This definition includes legal risk, but excludes strategic and reputational risk.

 

Operational Risk Capital- Operational risk capital is capital allocated against possible operational losses.

 

Operational Risk Department- The operational risk department is the department within an organization who manages or owns the operational risk function of the entity.

 

Option- An option conveys certain rights to the buyer of an option; the two main types of options are a call option and a put option.

 

Option Price- Option price is the buyer of the options contract pays for the right to buy or sell a security at a specified price in the future.

 

Over-the-Counter (OTC) Market- The over-the-counter market is a decentralized market without a physical marketplace, where both standardized and non-standardized securities and other financial instruments are traded.

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