Convergence

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Convergence

The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge. More generally, convergence trading involves taking two related assets that have different prices with the expectation that prices will converge (the cheaper asset is purchased and the more expensive is sold short).

Convergence

The fact that the futures price and the spot price for a given asset approach one another as a futures contract on that asset approaches maturity. At maturity, the two prices should be equal. The existence of convergence is the basis for the theory that forward rates equal future spot rates, though this idea is more controversial.

convergence

The process by which the futures price and the cash price of an underlying asset approach one another as delivery date nears. The futures and cash prices should be equal on the delivery date.
References in periodicals archive ?
OnRelay is a privately held Unified Communications software company focused on cellular Fixed Mobile Convergence (cellular FMC).
Reef Point supports the migration to global converged services by offering massively scalable, carrier-class multiservice security solutions for fixed mobile convergence networks.
This report examines the current state of 3G deployments across the globe, analyzes the drivers for convergence between fixed and mobile networks, and provides global forecasts for services and technologies built around fixed mobile convergence.
com announced the availability of a new white paper titled Fixed Mobile Convergence Options for the Enterprise, by Michael F.