Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: financial, money, financial advisor, business, finance, inventory control, accounting, stock trading,
Definition of Counterparties
The parties to an interest rate swap.
A binding agreement between counterparties to exchange periodic interest payments on
In an interest rate swap, the date that the counterparties commit to the swap. Also, the date on
An exchange of cash flows between two counterparties. The
Arrangement by two counterparties to exchange one stream of cash flows for another.
the rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
the 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.
Schedule of depreciation rates allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
A strategy that uses available information and forecasting techniques to seek a
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money after-tax rate of return minus the inflation rate.
The discount rate that reflects only the business risks of a project and abstracts from the
swap in which the principal or national amount rises (falls) as interest rates
date on which particular news concerning a given company is announced to the public.
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
Arithmetic average (mean) rate of return
Arithmetic mean return.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
Average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income.
Balance of trade
Net flow of goods (exports minus imports) between countries.
A strategy in which the maturities of the securities included in the portfolio are concentrated
Base interest rate
Related: Benchmark interest rate.
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
Related: Program trades.
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
The requirement that a claim holder voting against a plan of reorganization
A large trading order, defined on the New York Stock Exchange as an order that consists of
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Broker loan rate
Related: Call money rate.
A strategy in which a portfolio is constructed so that the maturities of its securities are highly
A passive investment strategy with no active buying and selling of stocks from the
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
interest that is not immediately expensed, but rather is considered as an asset and is then
Cash flow after interest and taxes
Net income plus depreciation.
A fixed rate currency swap against floating U.S. dollar LIBOR payments.
A strategy in which a put and with the same strike price and expiration are either both
interest paid on previously earned interest as well as on the principal.
A firm engaged in two or more unrelated businesses.
A merger involving two or more firms that are in unrelated businesses.
The acquisition of one firm by anther firm.
Debt obligations issued by corporations.
A legal document creating a corporation.
One of the three areas of the discipline of finance. It deals with the operation of the firm
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
Corporate taxable equivalent
rate of return required on a par bond to produce the same after-tax yield to
The exchange of goods for other goods rather than for cash; barter.
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
The interest rate offered on an investment type insurance policy.
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
The return at which two alternative projects have the same net present value.
An agreement to swap a series of specified payment obligations denominated in one currency
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
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
Treating cash flows as being received on exact dates - date 0, date 1, and so forth - as
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
The date on which a firm's directors meet and announce the date and amount of the next
Refers to multi-period cash flow matching.
swap between two LIBO rates of interest, e.g. yen LIBOR for dollar LIBOR. Payments are
The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is
The fixed or floating rate paid on preferred stock based on par value.
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
In an interest rate swap, the date the swap begins accruing interest.
A measure of the time value of money that fully reflects the effects of compounding.
Equilibrium rate of interest
The interest rate that clears the market. Also called the market-clearing interest
A swap in which the cash flows that are exchanged are based on the total return on some stock
The price of one country's currency expressed in another country's currency.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The last day (in the case of American-style) or the only day (in the case of European-style)
The day on which the first option either expires or is extended.
Extending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
The date on which a share of common stock begins trading ex-rights.
Federal funds rate
This is the interest rate that banks with excess reserves at a Federal Reserve district bank
In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
A country's decision to tie the value of its currency to another country's currency, gold
A loan on which the rate paid by the borrower is fixed for the life of the loan.
In an interest rate swap the counterparty who pays a fixed rate, usually in exchange for a
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
Floating exchange rate
A country's decision to allow its currency value to freely change. The currency is not
A guaranteed investment contract where the credit rating is tied to some variable
Floating-rate note (FRN)
Note whose interest payment varies with short-term interest rates.
In an interest rate swap, the counterparty who pays a rate based on a reference rate,
Preferred stock paying dividends that vary with short-term interest rates.
A member who generally trades only for his own account, for an account controlled by him or
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
Forward exchange rate
Exchange rate fixed today for exchanging currency at some future date.
Forward interest rate
interest rate fixed today on a loan to be made at some future date.
A projection of future interest rates calculated from either the spot rates or the yield curve.
Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.