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Interest payments |
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Definition of Interest paymentsInterest paymentsContractual debt payments based on the coupon rate of interest and the principal amount.
Related Terms:Agency pass-throughsMortgage pass-through securities whose principal and interest payments are Bearer bondBonds that are not registered on the books of the issuer. Such bonds are held in physical form by Coupon paymentsA bond's interest payments. Debt reliefReducing the principal and/or interest payments on LDC loans. Default riskAlso referred to as credit risk (as gauged by commercial rating companies), the risk that an Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest GNMA-IMortgage-backed securities (MBS) on which registered holders receive separate principal and GNMA-IIMortgage-backed securities (MBS) on which registered holders receive an aggregate principal and Interest-only strip (IO)A security based solely on the interest payments form a pool of mortgages, Treasury 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. Level payThe characteristic of the scheduled principal and interest payments due under a mortgage such that MBS servicingThe requirement that the mortgage servicer maintain payment of the full amount of Modified pass-throughsAgency pass-throughs that guarantee (1) timely interest payments and (2) principal Notional principal amountIn an interest rate swap, the predetermined dollar principal on which the Other long term liabilitiesValue of leases, future employee benefits, deferred taxes and other obligations Pass-through securitiesA pool of fixed-income securities backed by a package of assets (i.e. mortgages) Registered bondA bond whose issuer records ownership and interest payments. Differs from a bearer bond Reinvestment rateThe rate at which an investor assumes interest payments made on a debt security can be Scheduled cash flowsThe mortgage principal and interest payments due to be paid under the terms of the Times-interest-earned ratioEarnings before interest and tax, divided by interest payments. times interest earnedA ratio that tests the ability of a business to make Zero-coupon BondA security that makes no interest payments; it is sold at a discount DurationThe expected life of a fixed-income security considering its coupon Issue dateThe date a security is first offered for sale. That date usually couponThe interest payments paid to the bondholder. interest tax shieldTax savings resulting from deductibility of interest payments. weighted-average cost of capital (WACC)Expected rate of return on a portfolio of all the firmâ€™s securities, adjusted for tax savings due to interest payments. BondA 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. BondUsually 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. bondA 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. 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. 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 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 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. Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign 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 Forward interest rateinterest rate fixed today on a loan to be made at some future date. Gross interestinterest earned before taxes are deducted. 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 on interestinterest earned on reinvestment of each interest payment on money invested. 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 Lag response of prepaymentsThere is typically a lag of about three months between the time the weighted Nominal interest rateThe interest rate unadjusted for inflation. Open interestThe total number of derivative contracts traded that not yet been liquidated either by an 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. 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 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 True interest costFor 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. InterestThe cost of money, received on investments or paid on borrowings. Profit before interest and taxes (PBIT)See EBIT. Interest incomeIncome 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 payableThe 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 Accrued InterestThe amount of interest accumulated on a debt security between Compound Interestinterest paid on principal and on interest earned in previous Effective Interest RateThe rate of interest actually earned on an investment. It is Nominal Interest RateThe rate of interest quoted, or stated, to be paid on a security Real Interest RateThe rate of interest paid on an investment adjusted for inflation Simple Interestinterest paid only on the principal; calculated by multiplying the Times Interest Earned RatioA measure of how well a company is able to meet its interest compound interesta 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 simple interesta method of determining interest in which interest is earned only on the original investment (or principal) amount InterestThe cost of funds loaned to an entity. It can also refer to the equity ownership Pooling of interestsAn method for accounting for a business combination. When used, the expenses of the combination are charged against income at once, and the net compound interestinterest earned on interest. effective annual interest rateinterest rate that is annualized using compound interest. interest rate parityTheory that forward premium equals interest rate differential. nominal interest rateRate at which money invested grows. real interest rateRate at which the purchasing power of an investment increases.
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