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Definition of maturity premium
Extra average return from investing in longversus short-term Treasury securities.
Yearly amount payable by a client for a policy or component.
A benefit that automatically forfeits premium payments.
The average time to maturity of securities held by a mutual fund. Changes in interest rates
Any large principal payment due at maturity for a bond or loan with or without a a sinking
the additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control
The percentage by which the conversion price in a convertible security exceeds the
Current time to maturity on an outstanding debt instrument.
A differential in promised yield that compensates the investor for the risk inherent in
Difference in promised yields between a default-free bond and a riskier bond.
A currency trades at a forward premium when its forward price is higher than its spot price.
A debt security for which the investing entity has both the positive
A premium that remains unchanged throughout the life of a policy
This is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
Forward rate minus expected future short-term interest rate.
Risk premium of market portfolio. Difference between market return and return on risk-free Treasury bills.
For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the
The date or the number of days until a security is due to be paid or
Time at which a bond can be redeemed for its face value.
The time when a policy or annuity reaches the end of its span.
The date when the issuer returns the final face value of a bond
Date on which a debt is due for payment.
Factoring arrangement that provides collection and insurance of accounts receivable.
A phase of company development in which earnings continue to grow at the rate of the
The spread between any two maturity sectors of the bond market.
Related: par value.
The option price.
maturity at issue. For example, a five year note has an original maturity of 5 years; one
1) Amount paid for a bond above the par value.
This is your payment for the cost of insurance. You may pay annually, semi-annually, quarterly or monthly. The least expensive method is annually. Using any of the other payment modes will cost you more money. For example, paying monthly will cost about 17% more. If you pay annually and terminate your coverage part way through the year, you may not receive a refund for the remaining months to the annual renewal date.
Annual amount payable, by a client, for selected product or service.
A bond that is selling for more than its par value.
Premium (Credit Insurance)
Annual or monthly amounts payable, by a client, for a selected insurance coverage to insure debt obligations to their creditors are protected.
A nonqualified stock option whose option price is set substantially
Payment schedule of policy premiums, usually selected by the policy owner (monthly, quarterly, annually).
After premiums have been paid for a number of years, further annual premiums may be paid by the current dividends and the surrender of some of the paid-up additions which have built up in the policy. In effect, the policy can begin to pay for itself. Whether a policy becomes eligible for premium offset, the date on which it becomes eligible and whether it remains eligible once premium offset begins, will all depend on how the dividend scale changes over the years. Since dividends are not guaranteed, premium offset cannot be guaranteed either.
Projected maturity date
With CMOs, final payment at the end of the estimated cash flow window.
The length of time remaining until a bond's maturity.
A variant of pure expectations theory which suggests that the return that an
The reward for holding the risky market portfolio rather than the risk-free asset. The spread
The additional rate of return required on a risky project
Expected return in excess of risk-free return as compensation for risk.
The difference between the yields of two bonds because of differences in their risk.
The difference between the required rate of return on a riskless asset with the same expected life.
Risk premium approach
The most common approach for tactical asset allocation to determine the relative
Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single
For the CMO tranche, the date the last payment would occur at zero CPR.
Tender offer premium
The premium offered above the current market price in a tender offer.
Excess of the yields to maturity on long-term bonds over those of short-term bonds.
Term to maturity
The time remaining on a bond's life, or the date on which the debt will cease to exist and
Term to Maturity
Period of time from the present to the redemption date of a bond.
Also called time value, the amount by which the option price exceeds its intrinsic value. The
Time to maturity
The time remaining until a financial contract expires. Also called time until expiration.
premiums paid for coverage not yet provided.
This term relates to participating whole life insurance and the use of the dividend to reduce or completely eliminate the need for future premiums. In the 1980's life insurance company's profits from investment were exceedingly high compared to historical experience. It became common for a salesperson to show new prospective clients how quickly his or her insurance company's dividends would cover the future cost of future premiums. In some cases more emphasis was put on the value of future dividends than on the fact that future dividends were not guaranteed and could only be projected based on current earnings. Many life insurance buyers have since learned that the dividends they expected in the 80's no longer exist in the 90's and they are continuing to dig into their pockets to pay insurance premiums.
Waiver of Premium
This is an option available to the applicant for life insurance which sets certain conditions under which an insurance policy will be kept in full force by the insurance company without the payment of premiums. Very specifically, a life insured would have to become totally disabled through injury or illness for a period of six months before the benefit kicks in. When it does, the insurance company retroactively pays premiums from the beginning of the disability until the time the insured is able to perform some form of regular activity. 'Totally disabled' is highlited here, because that is what is required to receive this benefit.
Waiver of Premium
A benefit that allows CLA to pay premiums on behalf of the insured.
Weighted average maturity
The WAM of a MBS is the weighted average of the remaining terms to maturity
Weighted average remaining maturity
The average remaining term of the mortgages underlying a MBS.
Yield to maturity
The percentage rate of return paid on a bond, note or other fixed income security if you
Yield to Maturity
The measure of the average rate of return that will be earned on a
Yield to maturity
A measure of the average rate of return that will be earned
yield to maturity
Interest rate for which the present value of the bond’s payments equals the price.
An option contract that gives its holder the right (but not the obligation) to purchase a specified
Corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
Preferred habitat theory
A biased expectations theory that believes the term structure reflects the
Graph of yields (vertical axis) of a particular type of security
Yield to call
The percentage rate of a bond or note, if you were to buy and hold the security until the call date.
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