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Definition of Interest payments
Contractual debt payments based on the coupon rate of interest and the principal amount.
Mortgage pass-through securities whose principal and interest payments are
Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by
A financial asset taking the form of a promise by a borrower to repay a specified amount (the bond's face value) on a maturity date and to make fixed periodic interest payments.
Usually a fixed interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future, and a series of interest payments, either semi-annually or annually. interest payments may vary through the life of bond.
A debt security issued by a government or company. You receive regular interest payments at specified rates while you hold the bond and you receive the face value when it matures. Short-term bonds mature in less than five years; medium-term bonds mature in six to ten years; and long-term bonds mature in eleven years or greater.
The interest payments paid to the bondholder.
A bond's interest payments.
Reducing the principal and/or interest payments on LDC loans.
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
The expected life of a fixed-income security considering its coupon
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
Mortgage-backed securities (MBS) on which registered holders receive separate principal and
Mortgage-backed securities (MBS) on which registered holders receive an aggregate principal and
A security based solely on the interest payments form a pool of mortgages, Treasury
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.
interest tax shield
Tax savings resulting from deductibility of interest payments.
The date a security is first offered for sale. That date usually
The characteristic of the scheduled principal and interest payments due under a mortgage such that
The requirement that the mortgage servicer maintain payment of the full amount of
Agency pass-throughs that guarantee (1) timely interest payments and (2) principal
Notional principal amount
In an interest rate swap, the predetermined dollar principal on which the
Other long term liabilities
Value of leases, future employee benefits, deferred taxes and other obligations
A pool of fixed-income securities backed by a package of assets (i.e. mortgages)
A bond whose issuer records ownership and interest payments. Differs from a bearer bond
The rate at which an investor assumes interest payments made on a debt security can be
Scheduled cash flows
The mortgage principal and interest payments due to be paid under the terms of the
times interest earned
A ratio that tests the ability of a business to make
Earnings before interest and tax, divided by interest payments.
weighted-average cost of capital (WACC)
Expected rate of return on a portfolio of all the firm’s securities, adjusted for tax savings due to interest payments.
A security that makes no interest payments; it is sold at a discount
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
The amount of interest accumulated on a debt security between
The amount of interest owing but not paid.
Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates
Balance of payments
A statistical compilation formulated by a sovereign nation of all economic transactions
Balance of Payments
The difference between the demand for and supply of a country's currency on the foreign exchange market.
Balance of Payments Accounts
A statement of a country's transactions with other countries.
Base interest rate
Related: Benchmark interest rate.
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
interest incurred during the construction period on monies invested in
Cash flow after interest and taxes
Net 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
interest paid on previously earned interest as well as on the principal.
interest paid on principal and on interest earned in previous
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
interest earned on interest.
interest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest.
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
Daily Interest Accumulation
Account in which interest is accrued daily and credited to the account at the end of a specified time.
earnings before interest and income tax (EBIT)
A measure of profit that
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
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.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
effective annual interest rate
interest rate that is annualized using compound interest.
Effective Interest Rate
The rate of interest actually earned on an investment. It is
Equilibrium rate of interest
The interest rate that clears the market. Also called the market-clearing interest
Fixed Interest Rate
A rate that does not fluctuate with general market conditions.
Floating Interest Rate
A rate that fluctuates with general market condition.
Forward interest rate
interest rate fixed today on a loan to be made at some future date.
fractional interest discount
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.
interest earned before taxes are deducted.
Guaranteed Interest Annuity (GIA)
interest bearing investment with fixed rate and term.
Guaranteed Interest Certificate (GIC)
interest bearing investment with fixed rate and term.
In England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary.
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and
The cost of money, received on investments or paid on borrowings.
The cost of funds loaned to an entity. It can also refer to the equity ownership
A charge for the use of money supplied by a lender.
The cost of a loan or the compensation paid for the use of money. For example, you are paid interest for deposits you make into a savings account, and you pay interest for money that you borrow from a low-cost borrowing account.
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.
Numbers found in compound interest and annuity tables. Usually called the FVIF or PVIF.
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.
Interest on interest
interest earned on reinvestment of each interest payment on money invested.
One of several investment accounts in which your premiums may be invested within your life insurance policy.
The amount of interest that is owed but has not been paid at the end of a period.
Cost of using money, expressed as a rate per period of time, usually one year.
Rate charged or paid for the use of money, normally expressed as a percentage
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 Differential
The interest rate on our financial assets minus the interest rate on a foreign country's financial assets.
Interest rate floor
An interest rate agreement in which payments are made when the reference rate falls
Interest Rate, Nominal
Payment for the use of borrowed funds, measured as a percentage per year of these funds.
Interest rate on debt
The firm's cost of debt capital.
interest rate parity
Theory that forward premium equals interest rate differential.
Interest Rate Parity
Theory that real interest rates are approximately the same across countries except for a risk premium.
Interest rate parity theorem
interest rate differential between two countries is equal to the difference
Interest Rate, Real
Nominal interest rate less expected inflation.
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
Interest Rate Risk
Possibility that interest rates will rise during the term of a loan thereby increasing the annual cost of borrowing.
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