Definition of Call date
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
for a specified call price.
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
specified call date.
The percentage rate of a bond or note, if you were to buy and hold the security until the call date.
This yield is valid only if the security is called prior to maturity. Generally bonds are callable over several
years and normally are called at a slight premium. The calculation of yield to call is based on the coupon rate,
length of time to the call and the market price.
The bond yield computed by using the lower of either the yield to maturity or the yield to call
on every possible call date.
The sum of cash, accounts receivable, and short-term marketable
investments (if any) is divided by
total current liabilities to compute this ratio. Suppose that the short-term
creditors were to pounce on a business and not agree to roll over the
debts owed to them by the business. In this rather extreme scenario, the
acid test ratio reveals whether its cash and near-cash assets are enough
to pay its short-term current liabilities. This ratio is an extreme test that
is not likely to be imposed on a business unless it is in financial straits.
This ratio is quite relevant when a business is in a liquidation situation
or bankruptcy proceedings.
date on which particular news concerning a given company is announced to the public.
Used in event studies, which researchers use to evaluate the economic impact of events of interest.
An option that gives the right to buy the underlying futures contract.
a. An option to buy a certain quantity of a stock or commodity for a
specified price within a specified time. See Put.
b. A demand to submit bonds to the issuer for redemption before the maturity date.
c. A demand for payment of a debt.
d. A demand for payment due on stock bought on margin.
To exercise a call option.
Also called the broker loan rate , the interest rate that banks charge brokers to finance
margin loans to investors. The broker charges the investor the call money rate plus a service charge.
An option contract that gives its holder the right (but not the obligation) to purchase a specified
number of shares of the underlying stock at the given strike price, on or before the expiration date of the
Premium in price above the par value of a bond or share of preferred stock that must be paid to
holders to redeem the bond or share of preferred stock before its scheduled maturity date.
A contract that gives the holder the right to buy an asset for a
specified price on or before a given expiration (maturity) date
Right to buy an asset at a specified exercise price on or before the exercise date.
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
writer therefore becomes the fixed-rate receiver/floating rate payer.
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
call the security.
A bond that allows the issuer to buy back the bond at a
predetermined price at specified future dates. The bond contains an embedded
call option; i.e., the holder has sold a call option to the issuer. See Puttable
Bond that may be repurchased by the issuer before maturity at specified call price.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
A federal Act
containing the requirements for offering insurance to departed employees.
The dates when the coupons are paid. Typically a bond pays
coupons annually or semi-annually.
A short call option position in which the writer owns the number of shares of the underlying
stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the
stock does not have to be bought at the market price, if the holder of that option decides to exercise it.
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
owns in his or her portfolio. See covered or hedge option strategies.
Date of payment
date dividend checks are mailed.
Date of record
date on which holders of record in a firm's stock ledger are designated as the recipients of
either dividends or stock rights.
Treating cash flows as being received on exact dates - date 0, date 1, and so forth - as
opposed to the end-of-year convention.
The date on which a firm's directors meet and announce the date and amount of the next
The date on which the board of directors has declared a dividend.
A provision that prohibits the company from calling the bond before a certain date. During this
period the bond is said to be call protected.
when the incremental revenue from the sale of reworked defective units is greater than
the incremental cost of the rework
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
In an interest rate swap, the date the swap begins accruing interest.
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
the most recently announced dividend payment. This date set by the NYSE (and generally followed on other
US exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is
marked with an x in newspaper listings on that date.
date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend.
The date on which a share of common stock begins trading ex-rights.
The last day (in the case of American-style) or the only day (in the case of European-style)
on which an option may be exercised. For stock options, this date is the Saturday immediately following the
3rd Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of
an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding
The day on which the first option either expires or is extended.
With CMOs, the start of the cash flow cycle for the cash flow window.
In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
referred to as the fixed dates.
The date on which holders of record in a firm's stock ledger are designated as the
recipients of either dividends or stock rights. Also called date of record.
The right of the homeowner to prepay, or call, the mortgage at any time.
Usually the date when goods are shipped. Payment dates are set relative to the invoice date.
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
sometimes not exercised when it is in the money (interest rates are below the threshold to refinance).
Sometimes exercised when not in the money (home sold without regard to the relative level of interest rates).
The date a security is first offered for sale. That date usually
determines when interest payments, known as coupons, are made.
date on which a policy is approved.
A demand for additional funds because of adverse price movement. Maintenance margin
requirement, security deposit maintenance
Margin of safety With respect to working capital management, the difference between 1) the amount of longterm
financing, and 2) the sum of fixed assets and the permanent component of current assets.
The date when the issuer returns the final face value of a bond
to the buyer.
date on which a debt is due for payment.
net income (also called the bottom line, earnings, net earnings, and net
This key figure equals sales revenue for a period
less all expenses for the period; also, any extraordinary gains and losses
for the period are included in this final profit figure. Everything is taken
into account to arrive at net income, which is popularly called the bottom
line. Net income is clearly the single most important number in business
The day the option is either exercised or expires.
The date on which each shareholder of record will be sent a check for the declared dividend.
The date established for the payment of a declared dividend.
date on which the insurance company assumes responsibilities for the obligations outlined in a policy.
Projected maturity date
With CMOs, final payment at the end of the estimated cash flow window.
Provisional call feature
A feature in a convertible issue that allows the issuer to call the issue during the noncall
period if the price of the stock reaches a certain level.
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the stock
and buying a put will deliver the exact payoff as buying one call and investing the present value (PV) of the
exercise price. The call value equals C=S+P-PV(k).
1) date by which a shareholder must officially own shares in order to be entitled to a dividend.
For example, a firm might declare a dividend on Nov 1, payable Dec 1 to holders of record Nov 15. Once a
trade is executed an investor becomes the "owner of record" on settlement, which currently takes 5 business
days for securities, and one business day for mutual funds. Stocks trade ex-dividend the fourth day before the
record date, since the seller will still be the owner of record and is thus entitled to the dividend.
2) The date that determines who is entitled to payment of principal and interest due to be paid on a security. The record
date for most MBSs is the last day of the month, however the last day on which they may be presented for the
transfer is the last business day of the month. The record date for CMOs and asset-backed securities vary with each issue.
The date used to decide which shareholders will receive the dividend. The owners of the shares at the end of this day are entitled to the dividend.
The date on which payment is made to settle a trade. For stocks traded on US exchanges,
settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs in the
U.S.the day following the trade. In some regional markets, foreign shares may require months to settle.
The date when money first changes hands; i.e., when a buyer
actually pays for a security. It need not coincide with the issue date.
In an interest rate swap, the date that the counterparties commit to the swap. Also, the date on
which a trade occurs. Trades generally settle (are paid for) 1-5 business days after a trade date. With stocks,
settlement is generally 3 business days after the trade.
A short call option position in which the writer does not own shares of underlying stock
represented by his option contracts. Also called a "naked" call, it is much riskier for the writer than a covered
call, where the writer owns the underlying stock. If the buyer of a call exercises the option to call, the writer
would be forced to buy the stock at market price.
date on which valuation occurs.
In the market for Eurodollar deposits and foreign exchange, value date refers to the delivery date
of funds traded. Normally it is on spot transactions two days after a transaction is agreed upon and the future
date in the case of a forward foreign exchange trade.
Certificate of deposit (CD)
Also called a time deposit, this is a certificate issued by a bank or thrift that
indicates a specified sum of money has been deposited. A CD bears a maturity date and a specified interest
rate, and can be issued in any denomination. The duration can be up to five years.
Change in Reporting Entity
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
Typically the cash, accounts receivable, and inventory accounts on the
balance sheet, or any other assets that are expected to be liquidated within a short
This is typically the accounts payable, short-term notes payable, and
accrued expense accounts on the balance sheet, or any other liabilities that are
expected to be liquidated within a short time interval.
An accounting statement that summarizes information about a company in the following format:
– Cost of goods sold
– Operating expenses
Earnings before income tax
– Income tax
= Net income or (Net loss)
Formally called a “consolidated earnings statement,” it covers a period of time such as a quarter or a year.
An obligation having a maturity of more than one year from the date it was issued. Also
called funded debt.
Nearby futures contract
When several futures contracts are considered, the contract with the closest
settlement date is called the nearby futures contract. The next futures contract is the one that settles just after
the nearby futures contract. The contract farthest away in time from settlement is called the most distant
Optimal redemption provision
Provision of a bond indenture that governs the issuer's ability to call the
bonds for redemption prior to their scheduled maturity date.
Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a
given date. Investors, not companies, issue options. Investors who purchase call options bet the stock will be
worth more than the price set by the option (the strike price), plus the price they paid for the option itself.
Buyers of put options bet the stock's price will go down below the price set by the option. An option is part of
a class of securities called derivatives, so named because these securities derive their value from the worth of
an underlying investment.
Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.
A system where funds are electronically debited from your account on a specified date by a financial institution (e.g., bill, mortgage or personal loan payments) or perhaps an insurance or an utility company.
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
stated date. A limit is placed on the value of the shares the investor receives.
A bond that allows the holder to redeem the bond at a
predetermined price at specified future dates. The bond contains an embedded
put option; i.e., the holder has bought a put option. See callable bond.
An agreement with a commitment by the seller (dealer) to buy a security back from
the purchaser (customer) at a specified price at a designated future date. Also called a repo, it represents a
collateralized short-term loan, where the collateral may be a Treasury security, money market instrument,
federal agency security, or mortgage-backed security. From the purchaser (customer) perspective, the deal is
reported as a reverse Repo.
Sometimes called seg funds, segregated funds are the life insurance industry equivalent to a mutual fund with some differences.The term "Mutual Fund" is often used generically, to cover a wide variety of funds where the investment capital from a large number of investors is "pooled" together and invested into specific stocks, bonds, mortgages, etc.
Since Segregated Funds are actually deferred annuity contracts issued by life insurance companies, they offer probate and creditor protection if a preferred beneficiary such as a spouse is named. Mutual Funds don't have this protection.
Unlike mutual funds, segregated funds offer guarantees at maturity (usually 10 years from date of issue) or death on the limit of potential losses - at times up to 100% of original deposits are guaranteed which makes them an attractive alternative for the cautious and/or long term investor. On the other hand, with regular mutual funds, it is possible to have little or nothing left at death or plan maturity.
For options, a combination of call or put options on the same stock
with differing exercise prices or maturity dates.
A strategy used in trading options or futures. It involves
simultaneously purchasing put and call options with the same exercise price
and expiration date, and it is most profitable when the price of the underlying
security is very volatile.
Variants of a straddle. A strip is two puts and one call on a stock, a strap is two calls and one put
on a stock. In both cases, the puts and calls have the same strike price and expiration date.
The value of a bond at maturity, typically its par value, or the value of an asset (or an entire
firm) on some specified future valuation date.
Net pay not collected by an employee, which is typically transferred
to the local state government after a mandated interval has passed from
the date of payment.
Variable rate CDs
Short-term certificate of deposits that pay interest periodically on roll dates. On each roll
date, the coupon on the CD is adjusted to reflect current market rates.
A security entitling the holder to buy a proportionate amount of stock at some specified future date
at a specified price, usually one higher than current market. This "warrant" is then traded as a security, the
price of which reflects the value of the underlying stock. Warrants are issued by corporations and often used
as a "sweetener" bundled with another class of security to enhance the marketability of the latter. Warrants are
like call options, but with much longer time spans -- sometimes years. In addition, warrants are offered by
corporations whereas exchange traded call options are not issued by firms.
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