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Definition of Morbidity Tables
These are statistical tables used by life insurance companies showing the probability of disease of male and females at all ages.
tables that indicate how much each industry requires of the production of each other
tables of probability that individuals of various ages will die within one year.
This is a statistical table used by life insurance companies showing the probability of death of male and females at all ages.
a number (prefaced as a multiplier
The level of output produced by the economy when operating at the natural rate of unemployment.
The difference between full employment output and current output.
output produced when the economy is operating at its natural rate of unemployment.
The death rates for various age groups of the population.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
The discount rate that reflects only the business risks of a project and abstracts from the
Requirement that none of an order be executed unless all of it can be executed at the specified price.
Total costs, explicit and implicit.
An arrangement whereby a security issue is canceled if the underwriter is unable
The decision regarding how an institution's funds should be distributed among the
An option is at-the-money if the strike price of the option is equal to the market price of the
Also referred to as the weighted-average life (WAL). The average number of years that each
Any large principal payment due at maturity for a bond or loan with or without a a sinking
Base probability of loss
The probability of not achieving a portfolio expected return.
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
Builder buydown loan
A mortgage loan on newly developed property that the builder subsidizes during the
Buy limit order
A conditional trading order that indicates a security may be purchased only at the designated
Mortgages in which monthly payments consist of principal and interest, with portions of These
An option that gives the right to buy the underlying futures contract.
Call an option
To exercise a call option.
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
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Communication barrier between financiers (investment bankers) and traders. This barrier is
Refers to the fact that the merger of two firms decreases the probability of default on
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
The representing of accounting information over multiple years as percentages
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
The ability of the bankruptcy court to confirm a plan of reorganization over the objections of
Refers to the volatility of returns on international investments caused by events associated
A particularly profitable or otherwise particularly valuable corporate unit or asset of a firm.
Cumulative probability distribution
A function that shows the probability that the random variable will
An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.
A provision that prohibits the company from calling the bond before a certain date. During this
Deferred nominal life annuity
A monthly fixed-dollar payment beginning at retirement age. It is nominal
Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with
The product of modified duration and the initial price.
Dollar price of a bond
Percentage of face value at which a bond is quoted.
The return realized on a portfolio for any evaluation period, including (1) the change in market
Similar to the reverse repurchase agreement - a simultaneous agreement to sell a security held in a
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Barrier option that comes into existence if asset price hits a barrier.
Barrier option that expires if asset price hits a barrier.
A classic negative change in ratings for a stock, and or other rated security.
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Treating cash flows as if they occur at the end of a year as opposed to the date
This is an American dollar that has been deposited in a European bank or an U.S. bank branch
Eurobonds denominated in U.S.dollars.
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Extrapolative statistical models
Models that apply a formula to historical data and project results for a
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
Fill or kill order
A trading order that is canceled unless executed within a designated time period.
With CMOs, the start of the cash flow cycle for the cash flow window.
Conventional bonds for which the coupon rate is set as a fixed percentage of the par value.
A nonnegotiable debt security that can be redeemed at some fixed price or according to
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
Excess of the purchase price over the fair market value of the net assets acquired under purchase
Graduated-payment mortgages (GPMs)
A type of stepped-payment loan in which the borrower's payments
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
Money that moves across country borders in response to interest rate differences and that moves
The right of the homeowner to prepay, or call, the mortgage at any time.
Total amount of dividends that would be paid on a share of stock over the next 12 months
The yield, based on the most recent quarterly rate times four. To determine the yield, divide
The category describing a company's primary business activity. This category is usually determined
The sale of an asset in exchange for a specified series of payments (the installments).
The law of averages. The average outcome for many independent trials of an experiment
Internally efficient market
Operationally efficient market.
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
A put option that has a strike price higher than the underlying futures price, or a call option
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Law of one price
An economic rule stating that a given security must have the same price regardless of the
An order to buy a stock at or below a specified price or to sell a stock at or above a specified
Limit order book
A record of unexecuted limit orders that is maintained by the specialist. These orders are
A demand for additional funds because of adverse price movement. Maintenance margin
This is an order to immediately buy or sell a security at the current trading price.
Gold held by governmental authorities as a financial asset.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Related: Investment management.
Related: Investment manager.
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