|Guaranteed Interest Annuity (GIA)|
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Definition of Guaranteed Interest Annuity (GIA)
Guaranteed Interest Annuity (GIA)
interest bearing investment with fixed rate and term.
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
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.
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
Swap in which the principal or national amount rises (falls) as interest rates
A regular periodic payment made by an insurance company to a policyholder for a specified period
An annuity with n payments, wherein the first payment is made at time t = 0 and the last
Present value of $1 paid for each of t periods.
An annuity with a first payment on full period hence, rather than immediately.
Related: 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
interest that is not immediately expensed, but rather is considered as an asset and is then
Net income plus depreciation.
interest paid on previously earned interest as well as on the principal.
A portfolio manager invests dollars in an instrument denominated in a foreign
Deferred nominal life annuity
A monthly fixed-dollar payment beginning at retirement age. It is nominal
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
Equilibrium rate of interest
The interest rate that clears the market. Also called the market-clearing interest
Equivalent annual annuity
The equivalent amount per year for some number of years that has a present
Forward interest rate
interest rate fixed today on a loan to be made at some future date.
GMCs (guaranteed mortgage certificates)
First issued by Freddie Mac in 1975, GMCs, like PCs, represent
interest earned before taxes are deducted.
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and
Interest coverage ratio
The ratio of the earnings before interest and taxes to the annual interest expense. This
Interest coverage test
A debt limitation that prohibits the issuance of additional long-term debt if the issuer's
Interest equalization tax
Tax on foreign investment by residents of the U.S. which was abolished in 1974.
Contractual debt payments based on the coupon rate of interest and the principal amount.
Interest on interest
interest 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 agreement
An agreement whereby one party, for an upfront premium, agrees to compensate the
Interest rate cap
Also called an interest rate ceiling, an interest rate agreement in which payments are made
Interest rate ceiling
Related: interest rate cap.
Interest rate floor
An interest rate agreement in which payments are made when the reference rate falls
Interest rate on debt
The firm's cost of debt capital.
Interest rate parity theorem
interest rate differential between two countries is equal to the difference
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
Interest rate swap
A binding agreement between counterparties to exchange periodic interest payments on
A firm's deduction of the interest payments on its debt from its earnings before it calculates
Interest tax shield
The reduction in income taxes that results from the tax-deductibility of interest payments.
Nominal interest rate
The interest rate unadjusted for inflation.
Normal annuity form
The manner in which retirement benefits are paid out.
The total number of derivative contracts traded that not yet been liquidated either by an
Pooling of interests
An accounting method for reporting acquisitions accomplished through the use of equity.
RAMs (Reverse-annuity mortgages)
Mortgages in which the bank makes a loan for an amount equal to a
Rate of interest
The rate, as a proportion of the principal, at which interest is computed.
Real interest rate
The rate of interest excluding the effect of inflation; that is, the rate that is earned in terms
This is the total number of shares of a security that investors have borrowed, then sold in the
interest calculated only on the initial investment. Related:compound interest.
Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single
Spot interest rate
interest rate fixed today on a loan that is made today. Related: forward interest rates.
Stated annual interest rate
The interest rate expressed as a per annum percentage, by which interest
Earnings before interest and tax, divided by interest payments.
True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
The cost of money, received on investments or paid on borrowings.
Profit before interest and taxes (PBIT)
Income that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies.
The amount of interest that is owed but has not been paid at the end of a period.
earnings before interest and income tax (EBIT)
A measure of profit that
times interest earned
A ratio that tests the ability of a business to make
The amount of interest accumulated on a debt security between
A series of payments or deposits of equal size spaced evenly over
annuity where the payments are to be made at the beginning of
interest paid on principal and on interest earned in previous
Effective Interest Rate
The rate of interest actually earned on an investment. It is
Nominal Interest Rate
The rate of interest quoted, or stated, to be paid on a security
An annuity where the payments are made at the end of each
Real Interest Rate
The rate of interest paid on an investment adjusted for inflation
interest paid only on the principal; calculated by multiplying the
Times Interest Earned Ratio
A measure of how well a company is able to meet its interest
a series of equal cash flows being received or paid at the beginning of a period
a method of determining interest in which interest that was earned in prior periods is added to the original investment so that, in each successive period, interest is earned on both principal and interest
a series of equal cash flows being received
a method of determining interest in which interest is earned only on the original investment (or principal) amount
A series of payments over a period of time. The payments are usually
The cost of funds loaned to an entity. It can also refer to the equity ownership
Pooling of interests
An method for accounting for a business combination. When used, the expenses of the combination are charged against income at once, and the net
Equally spaced level stream of cash flows.
Level stream of cash flows starting immediately.
Present value of an annuity of $1 per period.
interest earned on interest.
effective annual interest rate
interest rate that is annualized using compound interest.
interest rate parity
Theory that forward premium equals interest rate differential.
interest tax shield
Tax savings resulting from deductibility of interest payments.
nominal interest rate
Rate at which money invested grows.
real interest rate
Rate at which the purchasing power of an investment increases.
interest earned only on the original investment; no interest is earned on interest.
Interest Rate Differential
The interest rate on our financial assets minus the interest rate on a foreign country's financial assets.
Interest Rate, Nominal
Payment for the use of borrowed funds, measured as a percentage per year of these funds.
Interest Rate Parity
Theory that real interest rates are approximately the same across countries except for a risk premium.
Interest Rate, Real
Nominal interest rate less expected inflation.
Money Rate of Interest
See interest rate, nominal.
Real Rate of Interest
See interest rate, real.
Term Structure of Interest Rates
Relationship among interest rates on bonds with different terms to maturity.
Individual Retirement Annuity
An IRA comprised of an annuity that is managed
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