Financial Terms | |
Buydowns |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: inventory, financial, money, credit, tax advisor, business, finance, accounting, |
Definition of BuydownsBuydownsMortgages in which monthly payments consist of principal and interest, with portions of these
Related Terms:fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates Annualized holding period returnThe annual rate of return that when compounded t times, would have Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Back-to-back loanA loan in which two companies in separate countries borrow each other's currency for a Balance of paymentsA statistical compilation formulated by a sovereign nation of all economic transactions Base interest rateRelated: Benchmark interest rate. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be Broker loan rateRelated: Call money rate. Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Bullet loanA bank term loan that calls for no amortization. Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Cash flow after interest and taxesNet income plus depreciation. Clearing House Automated Payments System (CHAPS)A computerized clearing system for sterling funds Clearing House Interbank Payments System (CHIPS)An international wire transfer system for high-value Compound interestinterest paid on previously earned interest as well as on the principal. Compounding periodThe length of the time period (for example, a quarter in the case of quarterly Counterparty Partyon the other side of a trade or transaction. Counterparty riskThe risk that the other party to an agreement will default. In an options contract, the risk Coupon paymentsA bond's interest payments. Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Credit periodThe length of time for which the customer is granted credit. Dealer loanOvernight, collateralized loan made to a dealer financing his position by borrowing from a Discount periodThe period during which a customer can deduct the discount from the net amount of the bill Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of Equilibrium rate of interestThe interest rate that clears the market. Also called the market-clearing interest Equivalent loanGiven the after-tax stream associated with a lease, the maximum amount of conventional Evaluation periodThe time interval over which a money manager's performance is evaluated. Federal Home Loan BanksThe institutions that regulate and lend to savings and loan associations. The Fixed-rate loanA loan on which the rate paid by the borrower is fixed for the life of the loan. Forward interest rateinterest rate fixed today on a loan to be made at some future date. Freddie Mac (Federal Home Loan Mortgage Corporation)A Congressionally chartered corporation that GEMs (growing-equity mortgages)Mortgages in which annual increases in monthly payments are used to Generally Accepted Accounting Principals (GAAP)A technical accounting term that encompasses the Graduated-payment mortgages (GPMs)A type of stepped-payment loan in which the borrower's payments Gross interestinterest earned before taxes are deducted. Holding periodLength of time that an individual holds a security. Holding period returnThe rate of return over a given period. Intercompany loanloan made by one unit of a corporation to another unit of the same corporation. InterestThe price paid for borrowing money. It is expressed as a percentage rate over a period of time and Interest coverage ratioThe ratio of the earnings before interest and taxes to the annual interest expense. This Interest coverage testA debt limitation that prohibits the issuance of additional long-term debt if the issuer's Interest equalization taxTax on foreign investment by residents of the U.S. which was abolished in 1974. Interest paymentsContractual debt payments based on the coupon rate of interest and the principal amount. Interest on interestinterest earned on reinvestment of each interest payment on money invested. Interest-only strip (IO)A security based solely on the interest payments form a pool of Mortgages, Treasury Interest rate agreementAn agreement whereby one party, for an upfront premium, agrees to compensate the Interest rate capAlso called an interest rate ceiling, an interest rate agreement in which payments are made Interest rate ceilingRelated: interest rate cap. Interest rate floorAn interest rate agreement in which payments are made when the reference rate falls Interest rate on debtThe firm's cost of debt capital. Interest rate parity theoreminterest rate differential between two countries is equal to the difference Interest rate riskThe risk that a security's value changes due to a change in interest rates. For example, a Interest rate swapA binding agreement between counterparties to exchange periodic interest payments on Interest subsidyA firm's deduction of the interest payments on its debt from its earnings before it calculates Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. Inventory loanA secured short-term loan to purchase inventory. The three basic forms are a blanket Jumbo loanloans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or Lag response of prepaymentsThere is typically a lag of about three months between the time the weighted Loan amortization scheduleThe schedule for repaying the interest and principal on a loan. Loan syndicationGroup of banks sharing a loan. See: syndicate. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Monthly income preferred security (MIP)Preferred stock issued by a subsidiary located in a tax haven. Multicurrency loansGive the borrower the possibility of drawing a loan in different currencies. Multifamily loansloans usually represented by conventional Mortgages on multi-family rental apartments. Multiperiod immunizationA portfolio strategy in which a portfolio is created that will be capable of Net periodThe period of time between the end of the discount period and the date payment is due. Neutral periodIn the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not Nominal interest rateThe interest rate unadjusted for inflation. Notional principal amountIn an interest rate swap, the predetermined dollar principal on which the Open interestThe total number of derivative contracts traded that not yet been liquidated either by an Parallel loanA process whereby two companies in different countries borrow each other's currency for a Payments nettingReducing fund transfers between affiliates to only a netted amount. Netting can be done on Payments patternescribes the lagged collection pattern of receivables, for instance the probability that a Pooling of interestsAn accounting method for reporting acquisitions accomplished through the use of equity. Prepaymentspayments made in excess of scheduled mortgage principal repayments. Principal1) The total amount of money being borrowed or lent. Principal of diversificationHighly diversified portfolios will have negligible unsystematic risk. In other Principal-agent relationshipA situation that can be modeled as one person, an agent, who acts on the behalf Principal amountThe face amount of debt; the amount borrowed or lent. Often called principal. Principal only (PO)A mortgage-backed security in which the holder receives only principal cash flows on Project loan certificate (PLC)A primary program of Ginnie Mae for securitizing FHA-insured and coinsured Project loan securitiesSecurities backed by a variety of FHA-insured loan types - primarily multi-family Project loansUsually FHA-insured and HUD-guaranteed Mortgages on multiple-family housing complexes, RAMs (Reverse-annuity mortgages)Mortgages in which the bank makes a loan for an amount equal to a Rate of interestThe rate, as a proportion of the principal, at which interest is computed. Real interest rateThe rate of interest excluding the effect of inflation; that is, the rate that is earned in terms Remaining principal balanceThe amount of principal dollars remaining to be paid under the mortgage as of Savings and Loan associationNational- or state-chartered institution that accepts savings deposits and Self-liquidating loanloan to finance current assets, The sale of the current assets provides the cash to repay Short interestThis is the total number of shares of a security that investors have borrowed, then sold in the Simple interestinterest calculated only on the initial investment. Related:compound interest. Spot interest rateinterest rate fixed today on a loan that is made today. Related: forward interest rates. Stated annual interest rateThe interest rate expressed as a per annum percentage, by which interest
Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |