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 ?
Verizon Business, part of the US telecom company Verizon Communications (NYSE:VZ)(Nasdaq:VZ) today announced the introduction of a new Global Fixed Mobile Convergence solution in the European market, designed to reduce mobile phone roaming charges for European workers who make and receive calls outside of their home service area.
Global IP Solutions (Oslo Bors: GIPS) a provider of media processing for mobile VoIP, announced today that it has been selected to provide HD voice for LG Electronics Mobile Communications Company's Fixed Mobile Convergence solution.
The collaborative research project will aim to give both Vodafone and Huawei a competitive edge in core network areas, such as Mobile Broadband, IMS (IP Multimedia Sub-system) and FMC (Fixed Mobile Convergence), eventually bringing new ideas to fruition, enabling timely market launches.