“to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and. Foreign exchange reserves are the foreign currencies held by a country's central bank. They are also called foreign currency reserves or foreign reserves. Each quarter, Treasury debt managers meet with primary dealers that trade with the Federal Reserve Bank of New York in the U.S. government securities market. EUR GBP INVESTING IN BONDS You can also a little out images to an just kept getting the function of. To delete a most of them. A Trainer assigned ready to pick the new Instructors.
The experts consider the age of the property, its current state, and the amenities it provides, as well as project maintenance costs that may be needed in the future. Because condominiums or HOAs do not always fully fund their reserves, the final figure determined by a reserve study is only a recommendation. The implications of a poorly managed reserve fund can translate to higher dues or assessments for members of a community association; so, potential buyers should investigate the efficacy of a particular HOA, or condominium community, before purchasing a home under its jurisdiction.
Real Estate Investing. Buying a Home. Retirement Planning. Home Ownership. Your Money. Personal Finance. Your Practice. Popular Courses. Alternative Investments Real Estate Investing. What Is a Reserve Fund? Key Takeaways A reserve fund is savings or a liquid asset set aside to cover unexpected costs or future financial obligations.
Many governments, financial institutions, and individuals regularly set aside funds into accounts that earn interest. Pensions are examples of reserve funds as money is invested on behalf of members and paid in the future. Homeowner's associations HOA and condominiums use reserve funds to address maintenance issues and large-scale projects. Related Terms. A homeowner's association HOA makes and enforces rules for a subdivision, planned community, or condominium building; its members are residents.
Homeowners Association HOA Fee An HOA fee is a recurring fee paid by some homeowners to an organization that helps maintain and improve their property and others in the same group. Weighing the Pros and Cons of Condominium Fees A condominium fee is charged by a condominium association to cover the cost of repairs, landscaping, or for amenities such as a gym or pool.
Condominium Condos or condominiums are housing units in a large property complex that are sold to buyers. While apartments are generally rented, condos are owned. As the United States printed more money to finance its spending, the gold backing behind the dollars diminished.
The increase monetary supply of dollars went beyond the backing of gold reserves, which reduced the value of the currency reserves held by foreign countries. As the United States continued to flood the markets with paper dollars to finance its escalating war in Vietnam and the Great Society programs, the world grew cautious and began to convert dollar reserves into gold.
The run on gold was so extensive that President Nixon was compelled to step in and decouple the dollar from the gold standard, which gave way to the floating exchange rates that are in use today. Soon after, the value of gold tripled, and the dollar began its decades-long decline.
The U. Backed by the safest of all paper assets, U. Treasuries, the dollar is still the most redeemable currency for facilitating world commerce. It for this reason that it's highly unlikely the U. The euro, introduced in , is the second most commonly held reserve currency in the world. International Monetary Fund. Monetary Policy. Your Money. Personal Finance. Your Practice.
Popular Courses. What Is a Reserve Currency? Key Takeaways A reserve currency is a large amount of currency held by central banks and major financial institutions to use for international transactions. A reserve currency reduces exchange rate risk since there's no need for a country to exchange its currency for the reserve currency to do trade.
Reserve currency helps facilitate global transactions, including investments and international debt obligations. A large percentage of commodities are priced in the reserve currency, causing countries to hold this currency to pay for these goods. Article Sources.
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If the fund is set up to meet the costs of scheduled upgrades, less liquid assets may be used. For example, a homeowner's association often manages a reserve fund to help maintain the community and its amenities using the dues paid by homeowners.
A reserve fund sets aside money for covering scheduled, routine and unscheduled expenses that would otherwise be drawn from a general fund. Governments, financial institutions, and private households may establish reserve funds. Although the fund size may vary, the typical goal is to deposit funds regularly in an account that accrues interest, thereby increasing the fund's value while not in use. Because expenses may arise unexpectedly, a reserve fund is typically kept in a highly liquid account, such as a savings account.
In pension funds, for example, money is invested on behalf of a fund's members and later paid out during retirement. When working employees sign up for a pension fund, they put money into a reserve fund that is used to ensure money is available for other employees who signed up to receive a payout when they retire.
Homeowners' associations and condominiums often use reserve funds in the event of large-scale maintenance or renovation projects, as well as for any costly community emergencies. Reserve funds are typically managed in tandem with operating funds, which more commonly fund the community's day-to-day expenses or recurring costs, such as housekeeping, taxes, insurance, and utilities.
Condo communities and HOAs typically establish and maintain the funds using the dues, or HOA fees , paid by owners to cover maintenance, repairs, and other expenses incurred by the community. The community association's board usually oversees the funds and decides how to allocate its use. For example, rather than tapping into the operating fund, the board may use part of the reserve fund money to cover biannual insurance payments.
If a condominium incurs a large expense that the reserve fund cannot cover, each member or owner may pay an assessment to cover the cost. For example, when a condominium's parking garage needs emergency repairs, unit owners may be asked for additional funds beyond their regular association dues. Often, HOA boards determine how much money should go into their reserve fund supply via a reserve study, where independent consultants assess the state of a property and make recommendations for the reserve fund based on physical and financial analysis.
The experts consider the age of the property, its current state, and the amenities it provides, as well as project maintenance costs that may be needed in the future. Because condominiums or HOAs do not always fully fund their reserves, the final figure determined by a reserve study is only a recommendation.
The implications of a poorly managed reserve fund can translate to higher dues or assessments for members of a community association; so, potential buyers should investigate the efficacy of a particular HOA, or condominium community, before purchasing a home under its jurisdiction. Real Estate Investing. Buying a Home. Retirement Planning. Home Ownership. When they buy the debt of a troubled company at a steep discount, they can turn a profit if the company recovers.
An investor who buys equity shares of a company instead of debt could make more money if the company does turn itself around, but shares could lose their entire value if the company goes bankrupt. Investors can walk away with payments even if a company goes bankrupt in many cases. Restructuring during bankruptcy can even result in distressed-debt investors becoming part owners of the troubled company. Distressed debt is often held by investment firms and hedge funds.
It can also be held by non-traditional investment funds, such as business development companies BDCs. BDCs are non-registered investment companies that invest in the debt and equity of small or medium-sized public and private companies. There is no strict rule that defines when a debt is distressed. The term often means that the debt is trading at a large discount to its par value. The discount comes because the borrower is at risk of defaulting.
Investors can lose money if the company goes bankrupt and is unable to meet its credit obligations. They can see the value of the debt go up a great deal if they believe there can be a turnaround and if it turns out that they're right. Distressed-debt investors can also achieve priority status in being paid back if a company goes bankrupt. A court will order the priority of creditors to receive payment when a company declares Chapter 11 bankruptcy.
Those involved in distressed debt are often some of the first to be paid back, ahead of shareholders and even ahead of employees. This process can result in creditors taking ownership of a company. It can allow them to make even more of a profit if they are then able to turn the company's finances around. Entities like hedge funds that buy large quantities of distressed debt will often negotiate terms that allow them to take an active role with the troubled company.
An investor runs the risk of having the borrower default when they purchase debt, whether that debt is a corporate bond or distressed debt. There is a very real risk of an investor walking away with nothing if the company goes bankrupt. The risk of default explains why debt from less creditworthy organizations will bring a higher return for the investor.
Investors who engage in distressed debt investing, such as larger hedge funds, perform robust risk analyses using modeling and test scenarios. These funds are often skilled at spreading out risk through diversified investments or partnering with other firms. Individuals are not likely to be involved in distressed debt investing. Most are safer investing in stocks and standard bonds, which are simple and come with lower levels of risk.
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RSI is an oscillator, which means its values change between 0 and It determines overbought and oversold levels in the prices. Bollinger bands BB refers to a volatility-based indicator developed by John Bollinger in the s. It has three bands that provide relative definitions of high and low according to the base Bollinger While the middle band is the moving average in a specific period, the upper and lower bands are calculated by the standard deviations in the price, which are placed above and below the middle band.
The distance between the bands depends on the volatility of the price Bollinger ; Ozturk et al. CCI is based on the principle that current prices should be examined based on recent past prices, not those in the distant past, to avoid confusing present patterns Lambert This indicator can be used to highlight a new trend or warn against extreme conditions.
Interest and inflation rates are two fundamental indicators of the strength of an economy. In the case of low interest rates, individuals tend to buy investment tools that strengthen the economy. In the opposite case, the economy becomes fragile. If supply does not meet demand, inflation occurs, and interest rates also increase IRD In such economies, the stock markets have strong relationships with their currencies.
The data set was created with values from the period January —January This 5-year period contains data points in which the markets were open. Table 1 presents explanations for each field in the data set. Monthly inflation rates were collected from the websites of central banks, and they were repeated for all days of the corresponding month to fill the fields in our daily records.
The main structure of the hybrid model, as shown in Fig. These technical indicators are listed below:. Our proposed model does not combine the features of the two baseline LSTMs into a single model. The training phase was carried out with different numbers of iterations 50, , and Our data points were labeled based on a histogram analysis and the entropy approach. At the end of these operations, we divided the data points into three classes by using a threshold value:.
Otherwise, we treated the next data point as unaltered. This new class enabled us to eliminate some data points for generating risky trade orders. This helped us improve our results compared to the binary classification results. In addition to the decrease and increase classes, we needed to determine the threshold we could use to generate a third class—namely, a no-action class—corresponding to insignificant changes in the data.
Algorithm 1 was used to determine the upper bound of this threshold value. The aim was to prevent exploring all of the possible difference values and narrow the search space. We determined the count of each bin and sorted them in descending order.
Then, the maximum difference value of the last bin added was used as the upper bound of the threshold value. As can be seen in Algorithm 1, it has two phases. In the first phase, which simply corresponds to line 2, the whole data set is processed linearly to determine the distributions of the differences, using a simple histogram construction function.
The second phase is depicted in detail, corresponding to the rest of the algorithm. The threshold value should be determined based on entropy. Entropy is related to the distribution of the data. To get balanced distribution, we calculated the entropy of class distribution in an iterative way for each threshold value up until the maximum difference value.
However, we precalculated the threshold of the upper bound value and used it instead of the maximum difference value. Algorithm 2 shows the details of our approach. In Algorithm 2, to find the best threshold, potential threshold values are attempted with increments of 0. Dropping the maximum threshold value is thus very important in order to reduce the search space.
Then, the entropy value for this distribution is calculated. At the end of the while loop, the distribution that gives the best entropy is determined, and that distribution is used to determine the increase, decrease, and no-change classes. In our experiments, we observed that in most cases, the threshold upper bound approach significantly reduced the search space i.
For example, in one case, the maximum difference value was 0. In this case, the optimum threshold value was found to be 0. The purpose of this processing is to determine the final class decision. If the predictions of the two models are different, we choose for the final decision the one whose prediction has higher probability. This is a type of conservative approach to trading; it reduces the number of trades and favors only high-accuracy predictions. Measuring the accuracy of the decisions made by these models also requires a new approach.
If that is the case, then the prediction is correct, and we treat this test case as the correct classification. We introduced a new performance metric to measure the success of our proposed method. We can interpret this metric such that it gives the ratio of the number of profitable transactions over the total number of transactions, defined using Table 2. In the below formula, the following values are used:. After applying the labeling algorithm, we obtained a balanced distribution of the three classes over the data set.
This algorithm calculates different threshold values for each period and forms different sets of class distributions. For predictions of different periods, the thresholds and corresponding number of data points explicitly via training and test sets in each class are calculated, as shown in Table 3. This table shows that the class distributions of the training and test data have slightly different characteristics.
While the class decrease has a higher ratio in the training set and a lower ratio in the test set, the class increase shows opposite behavior. This is because a split is made between the training and test sets without shuffling the data sets to preserve the order of the data points. We used the first days of this data to train our models and the last days to test them.
If one of these is predicted, a transaction is considered to be started on the test day ending on the day of the prediction 1, 3, or 5 days ahead. Otherwise, no transaction is started. A transaction is successful and the traders profit if the prediction of the direction is correct.
For time-series data, LSTM is typically used to forecast the value for the next time point. It can also forecast the values for further time points by replacing the output value with not the next time point value but the value for the chosen number of data points ahead. This way, during the test phase, the model predicts the value for that many time points ahead. However, as expected, the accuracy of the forecast usually diminishes as the distance becomes longer.
They defined it as an n-step prediction as follows:. They performed experiments for 1, 3, and 5 days ahead. In their experiments, the accuracy of the prediction decreased as n became larger. We also present the number of total transactions made on test data for each experiment.
Accuracy results are obtained for transactions that are made. For each experiment, we performed 50, , , and iterations in the training phases to properly compare different models. The execution times of the experiments were almost linear with the number of iterations. For our data set, using a typical high-end laptop MacBook Pro, 2. As seen in Table 4 , this model shows huge variance in the number of transactions.
Additionally, the average predicted transaction number is For this LSTM model, the average predicted transaction number is The results for this model are shown in Table 6. The average predicted transaction number is One major difference of this model is that it is for iterations. For this test case, the accuracy significantly increased, but the number of transactions dropped even more significantly.
In some experiments, the number of transactions is quite low. Basically, the total number of decrease and increase predictions are in the range of [8, ], with an overall average of When we analyze the results for one-day-ahead predictions, we observe that although the baseline models made more transactions Table 8 presents the results of these experiments.
One significant observation concerns the huge drop in the number of transactions for iterations without any increase in accuracy. Furthermore, the variance in the number of transactions is also smaller; the average predicted transaction number is There is a drop in the number of transactions for iterations but not as much as with the macroeconomic LSTM. The results for this model are presented in Table However, the case with iterations is quite different from the others, with only 10 transactions out of a possible generating a very high profit accuracy.
On average, this value is However, all of these cases produced a very small number of transactions. When we compare the results, similar to the one-day-ahead cases, we observe that the baseline models produced more transactions more than The results of these experiments are shown in Table Table 13 shows the results of these experiments. Again, the case of iterations shows huge differences from the other cases, generating less than half the number of the lowest number of transactions generated by the others.
Table 14 shows the results of these experiments. Meanwhile, the average predicted transaction number is However, the case of iterations is not an exception, and there is huge variance among the cases. From the five-days-ahead prediction experiments, we observe that, similar to the one-day- and three-days-ahead experiments, the baseline models produced more transactions more than This extended data set has data points, which contain increases and decreases overall. Applying our labeling algorithm, we formed a data set with a balanced distribution of three classes.
Table 16 presents the statistics of the extended data set. Below, we report one-day-, three-days-, and five-days-ahead prediction results for our hybrid model based on the extended data. The average the number of predictions is The total number of generated transactions is in the range of [2, 83]. Some cases with iterations produced a very small number of transactions.
The average number of transactions is Table 19 shows the results for the five-days-ahead prediction experiments. Interestingly, the total numbers predictions are much closer to each other in all of the cases compared to the one-day- and three-days-ahead predictions. These numbers are in the range of [59, 84]. On average, the number of transactions is Table 20 summarizes the overall results of the experiments.
However, they produced 3. In these experiments, there were huge differences in terms of the number of transactions generated by the two different LSTMs. As in the above case, this higher accuracy was obtained by reducing the number of transactions to Moreover, the hybrid model showed an exceptional accuracy performance of Also, both were higher than the five-days-ahead predictions, by 5.
The number of transactions became higher with further forecasting, for It is difficult to form a simple interpretation of these results, but, in general, we can say that with macroeconomic indicators, more transactions are generated. The number of transactions was less in the five-days-ahead predictions than in the one-day and three-day predictions. The transaction number ratio over the test data varied and was around These results also show that a simple combination of two sets of indicators did not produce better results than those obtained individually from the two sets.
Hybrid model : Our proposed model, as expected, generated much higher accuracy results than the other three models. Moreover, in all cases, it generated the smallest number of transactions compared to the other models The main motivation for our hybrid model solution was to avoid the drawbacks of the two different LSTMs i.
Some of these transactions were generated with not very good signals and thus had lower accuracy results. Although the two individual baseline LSTMs used completely different data sets, their results seemed to be very similar. Even though LSTMs are, in general, quite successful in time-series predictions, even for applications such as stock price prediction, when it comes to predicting price direction, they fail if used directly. Moreover, combining two data sets into one seemed to improve accuracy only slightly.
For that reason, we developed a hybrid model that takes the results of two individual LSTMs separately and merges them using smart decision logic. That is why incorrect directional predictions made by LSTMs correspond to a very small amount of errors. This causes LSTMs to produce models making many such predictions with incorrect directions. In our hybrid model, weak transaction decisions are avoided by combining the decisions of two LSTMs with a simple set of rules that also take the no-action decision into consideration.
This extension significantly reduced the number of transactions, by mostly preventing risky ones. As can be seen in Table 20 , which summarizes all of the results, the new approach predicted fewer transactions than the other models.
Moreover, the accuracy of the proposed transactions of the hybrid approach is much higher than that of the other models. We present this comparison in Table In other words, the best performance occurred for five-days-ahead predictions, and one-day-ahead predictions is slightly better than three-days-ahead predictions, by 0.
Furthermore, these results are still much better than those obtained using the other three models. We can also conclude that as the number of transactions increased, it reduced the accuracy of the model. This was an expected result, and it was observed in all of the experiments.
Depending on the data set, the number of transactions generated by our model could vary. In this specific experiment, we also had a case in which when the number of transactions decreased, the accuracy decreased much less compared to the cases where there were large increases in the number of transactions.
This research focused on deciding to start a transaction and determining the direction of the transaction for the Forex system. In a real Forex trading system, there are further important considerations. For example, closing the transaction in addition to our closing points of one, three, or 5 days ahead can be done based on additional events, such as the occurrence of a stop-loss, take-profit, or reverse signal. Another important consideration could be related to account management.
The amount of the account to be invested at each transaction could vary. The simplest model might invest the whole remaining account at each transaction. However, this approach is risky, and there are different models for account management, such as always investing a fixed percentage at each transaction.
Another important decision is how to determine the leverage ratio to be chosen for each transaction. Simple models use fixed ratios for all transactions. Our predictions included periods of one day, three days, and 5 days ahead. We simply defined profitable transaction as a correct prediction of the decrease and increase classes. Predicting the correct direction of a currency pair presents the opportunity to profit from the transactions. This was the main objective of our study. We used a balanced data set with almost the same number of increases and decreases.
Thus, our results were not biased. Two baseline models were implemented, using only macroeconomic or technical indicator data. However, the difference was very small and insignificant. It reduced the number of transactions compared to the baseline models The increase in accuracy can be attributed to dropping risky transactions. The proposed hybrid model was also tested using a recent data set.
Macroeconomic and technical indicators can both be used to train LSTMs, separately or together, to predict the directional movement of currency pairs in Forex. We showed that rather than combining these parameters into a single LSTM, processing them separately with different LSTMs and combining their results using smart decision logic improved prediction accuracy significantly. Rather than trying to determine whether the currency pair rate will increase or decrease, a third class was introduced—a no-change class—corresponding to small changes between the prices of two consecutive days.
This, too, improved the accuracy of direction prediction. We described a novel way to determine the most appropriate threshold value for defining the no-change class. We used this feature to predict three days and 5 days ahead, with some decreases in accuracy values. Typically, the accuracy of LSTMs can be improved by increasing the number of iterations during training.
We experimented with various iterations to determine their effects on accuracy values. The results showed that more iterations increased accuracy while decreasing the number of transactions i. Additionally, a trading simulator could be developed to further validate the model. Such a simulator could be useful for observing the real-time behavior of our model. However, for such a simulator to be meaningful, several issues related to real trading e. Appel G Technical analysis: power tools for active investors.
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Int J Speech Technol — Download references. You can also search for this author in PubMed Google Scholar. DCY performed all the implementations, made the tests, and had written the initial draft of the manuscript. IHT and UF initiated the subject, designed the process, analyzed the results, and completed the final manuscript. All authors read and approved the final manuscript.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. In Eq. N is the period, and Close and Close previous, N are the closing price and closing price N periods ago, respectively. In Eqs. SMA Close, 20 is the simple moving average of the closing price with a period of 20, and SD is the standard deviation. Typical price is the typical price of the currency pair. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material.
Again, out of debt and equity, increasing the size of the debt required! As you can see, this results in some circularities — we could go on for a while! The DSRA will look different depending on whether your debt payments are sculpted or paid in an annuity-style. Not sure what sculpted repayments mean?
Check out our tutorial on debt sculpting here. In this case, the DSRA will be fairly level until the debt is fully amortised. It will be funded upfront — before debt payments even start to happen! In the graph below, you can see the DSRA vs.
The graph below shows the debt balance vs. As we can see above, the DSRA balance will decrease towards the end of the debt life, as the next 6 months payments will become 5 months, 4 months, 3 months, 2 months and in the final period 0 months as there will only be one payment left before the loan is fully amortised. With a sculpted loan profile, the DSRA balance will change over time in line with the sculpted debt payments. If the debt payments are increasing over time, so will the DSRA, as can be seen below.
Sculpted simply means that the debt payments match the revenue or CFADS line, not that debt payments increase over time more on that in my article on Debt Sculpting. So at the end of the life of the project, the remaining balance of the Reserve Fund belongs to lender right? What about the interest earned on the debt service reserve account. Who does that go to at the end of the project?
Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Matthew Bernath. A DSRA can be complicated! How do we resolve these DSRA calculation circularities? There are a few ways in which we can resolve these circularities — the easiest being a bit of VBA code.
What does a DSRA look like graphically? Below you can see the DSRA increasing in line with debt payments increasing. Note again that the DSRA is graphed on the right-hand axis and is much bigger than the monthly payments. Ok, but why have a Debt Service Reserve Account at all?