BAX Contract

Dictionary Says

Definition of 'BAX Contract'

A BAX contract is a short-term investment instrument that uses a Canadian banker's acceptance (BA) as its underlying security. The specific BA underlying the contract has a nominal value of C$1 million and a maturity of three months. The contracts are traded on the Montreal Derivatives Exchange.

Also known as a "banker's acceptance contract".
Investopedia Says

Investopedia explains 'BAX Contract'

These contracts are great way for a company to hedge against a rise in interest rates. BAX contracts are becoming increasingly popular because they are a less expensive hedge than their over-the-counter competition, forward rate agreements. BAX contracts are also very liquid, flexible, and do not tie up credit lines.

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Related Definitions

  1. Banker's Acceptance - BA

    A short-term ...
  2. Hedge

    Making an ...
  3. Interest Rate Risk

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  4. Derivative

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  5. Forward Rate Agreement - FRA

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  6. Nominal Value

    The stated value ...
  7. Maturity

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  8. Risk Capital

    Investment funds ...
  9. Futures Contract

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Articles Of Interest

  1. Getting To Know The Money Market

    If you need liquidity and safety on a sum of money, don't forgo potential interest by keeping the funds as cash.
  2. Money Market: Banker's Acceptance

    A banker's acceptance (BA) is a short-term credit investment created by a non-financial firm and guaranteed by a bank to make payment.
  3. Compare Local Interest Rates

    Search and compare the best checking and savings rates nationwide from Bankrate.com. Click Here!
  4. A Beginner's Guide To Hedging

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  5. Derivatives 101

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  8. Simplify Your Portfolio

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  9. Hedging With ETFs: A Cost-Effective Alternative

    The benefits of ETFs for hedging are clear and investors of all sizes are taking notice.
  10. Minis Provide Low-Cost Entry To Futures Market

    These contracts provide access to commodities without a huge capital commitment.

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