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Definition of Par yield curve

Par Yield Curve Image 1

Par yield curve

The yield curve of bonds selling at par, or face, value.



Related Terms:

Non-parallel shift in the yield curve

A shift in the yield curve in which yields do not change by the same
number of basis points for every maturity. Related: parallel shift in the yield curve.


Parallel shift in the yield curve

A shift in the yield curve in which the change in the yield on all maturities is
the same number of basis points. In other words, if the 3 month T-bill increases 100 basis points (one
percent), then the 6 month, 1 year, 5 year, 10 year, 20 year, and 30 year rates increase by 100 basis points as
well.
Related: Non-parallel shift in the yield curve.


Bootstrapping, bootstrap method

An arithmetic method for backing an
implied zero curve out of the par yield curve.


administrative department

an organizational unit that performs management activities benefiting the entire organization;
includes top management personnel and organization
headquarters


Aggregate Demand Curve

Combinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium.



Aggregate Expenditure Curve

Aggregate demand for goods and services drawn as a function of the level of national income.


Aggregate Supply Curve

Combinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not.


Par Yield Curve Image 2

Annual percentage yield (APY)

The effective, or true, annual rate of return. The APY is the rate actually
earned or paid in one year, taking into account the affect of compounding. The APY is calculated by taking
one plus the periodic rate and raising it to the number of periods in a year. For example, a 1% per month rate
has an APY of 12.68% (1.01^12).


Bond equivalent yield

Bond yield calculated on an annual percentage rate method. Differs from annual
effective yield.


Bond-equivalent yield

The annualized yield to maturity computed by doubling the semiannual yield.


Bond Equivalent Yield

Bond yield calculated on an annual percentage rate method


BONDPAR

A system that monitors and evaluates the performance of a fixed-income portfolio , as well as the
individual securities held in the portfolio. BONDpar decomposes the return into those elements beyond the
manager's control--such as the interest rate environment and client-imposed duration policy constraints--and
those that the management process contributes to, such as interest rate management, sector/quality allocations,
and individual bond selection.


Capital gains yield

The price change portion of a stock's return.


CAPITAL IN EXCESS OF PAR VALUE

What a company collected when it sold stock for more than the par value per share.


Capital in excess par

Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.


Ceteris Paribus

Holding other things constant.


Collection Department

An internal department within a company staffed by specialists in collecting past due accounts or accounts receivable.


Comparative Advantage

A country has a comparative advantage over another country in the production of good A if to produce a unit of A it forgoes more of the production of good B than would the other country when it produces a unit of good A. Its efficiency in the production of good A relative to its efficiency in the production of good B is greater than is the case for the other country. See also absolute advantage.



Comparative credit analysis

A method of analysis in which a firm is compared to others that have a desired
target debt rating in order to infer an appropriate financial ratio target.


Comparison universe

The collection of money managers of similar investment style used for assessing
relative performance of a portfolio manager.


Convenience yield

The extra advantage that firms derive from holding the commodity rather than the future.


Conversion parity price

Related:Market conversion price


cost-benefit analysis the analytical process of comparing the

relative costs and benefits that result from a specific course
of action (such as providing information or investing in a
project)


Cost of limited partner capital

The discount rate that equates the after-tax inflows with outflows for capital
raised from limited partners.


Counterpart items

In the balance of payments, counterpart items are analogous to unrequited transfers in the
current account. They arise because the double-entry system in balance of payments accounting and refer to
adjustments in reserves owing to monetization or demonetization of gold, allocation or cancellation of SDRs,
and revaluation of the various components of total reserves.


Counterparties

The parties to an interest rate swap.


Counterparty Party

on the other side of a trade or transaction.


Counterparty risk

The risk that the other party to an agreement will default. In an options contract, the risk
to the option buyer that the option writer will not buy or sell the underlying as agreed.
Country economic risk Developments in a national economy that can affect the outcome of an international
financial transaction.



Coupon equivalent yield

True interest cost expressed on the basis of a 365-day year.


Current yield

For bonds or notes, the coupon rate divided by the market price of the bond.


current yield

Annual coupon payments divided by bond price.


Current Yield

The percentage return on a financial asset based on the current price of the asset, without reference to any expected change in the price of the asset. This contrasts with yield-to-maturity, for which the calculation includes expected price changes. See also yield.


Debt service parity approach

An analysis wherein the alternatives under consideration will provide the firm
with the exact same schedule of after-tax debt payments (including both interest and principal).


Departmental stocks

The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.


Discount curve

The curve of discount rates vs. maturity dates for bonds.


Dividend yield (Funds)

Indicated yield represents return on a share of a mutual fund held over the past 12
months. Assumes fund was purchased 1 year ago. Reflects effect of sales charges (at current rates), but not
redemption charges.


dividend yield ratio

Cash dividends paid by a business over the most
recent 12 months (called the trailing 12 months) divided by the current
market price per share of the stock. This ratio is reported in the daily
stock trading tables in the Wall Street Journal and other major newspapers.


Dividend yield (Stocks)

Indicated yield represents annual dividends divided by current stock price.


Earnings yield

The ratio of earnings per share after allowing for tax and interest payments on fixed interest
debt, to the current share price. The inverse of the price/earnings ratio. It's the Total Twelve Months earnings
divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is
shown in percentage.


Effective annual yield

Annualized interest rate on a security computed using compound interest techniques.


Effective Annual Yield

Annualized rate of return on a security computed using compound
interest techniques


Equivalent bond yield

Annual yield on a short-term, non-interest bearing security calculated so as to be
comparable to yields quoted on coupon securities.


Equivalent taxable yield

The yield that must be offered on a taxable bond issue to give the same after-tax
yield as a tax-exempt issue.


Fisher's separation theorem

The firm's choice of investments is separate from its owner's attitudes towards
investments. Also refered to as portfolio separation theorem.


Flattening of the yield curve

A change in the yield curve where the spread between the yield on a long-term
and short-term Treasury has decreased. Compare steepening of the yield curve and butterfly shift.


General partner

A partner who has unlimited liability for the obligations of the partnership.


General partnership

A partnership in which all partners are general partners.


Golden parachute

Compensation paid to top-level management by a target firm if a takeover occurs.


golden parachute

a benefits package that is triggered by the
termination of a manager’s employment


Heavenly Parachute Stock Option

A nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her
options.


High-yield bond

See:junk bond.


incremental separate cost

the cost that is incurred for each
joint product between the split-off point and the point of sale


Indicated yield

The yield, based on the most recent quarterly rate times four. To determine the yield, divide
the annual dividend by the price of the stock. The resulting number is represented as a percentage. See:
dividend yield.


Indifference curve

The graphical expression of a utility function, where the horizontal axis measures risk and
the vertical axis measures expected return. The curve connects all portfolios with the same utilities according
to g and s .


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
between the forward foreign exchange rate and the spot rate.


J-curve

Theory that says a country's trade deficit will initially worsen after its currency depreciates because
higher prices on foreign imports will more than offset the reduced volume of imports in the short-run.


labor yield variance

(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate);
it shows the monetary impact of using more or fewer total hours than the standard allowed


Laffer Curve

curve showing how tax receipts vary with the tax rate.


learning curve

a model that helps predict how labor time
will decrease as people become more experienced at performing
a task and eliminate the inefficiencies associated
with unfamiliarity


limited liability partnership

an organizational form that is a hybrid of the corporate and partnership organizational
forms and used to limit the personal liability of the owners;
it is typically used by large professional (such as accounting) firms


Limited partner

A partner who has limited legal liability for the obligations of the partnership.


Limited partnership

A partnership that includes one or more partners who have limited liability.


Limited partnership

A partnership that includes one or more partners who have limited liability.


Liquid yield option note (LYON)

Zero-coupon, callable, putable, convertible bond invented by Merrill


Liquid yield option note (LYON)

Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co.


Master limited partnership (MLP)

A publicly traded limited partnership.


material yield variance

(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price);
it computes the difference between the
actual total quantity of input and the standard total quantity
allowed based on output and uses standard mix and
standard prices to determine variance


No par value stock

Stock issued by the company that does not have an arbitrary value (par value) assigned to it.


Non-participating Policy

A type of insurance policy or annuity in which the owner does not receive dividends.


Nonsignificant part number

An identifying number assigned to a part that conveys
no other information.


Par value

Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.


PAR VALUE

An arbitrary value that a company may assign to its stock. par value has no relationship to what the stock is selling for on the open market.


Par value

An arbitrary value assigned by the company to each share of stock; it is used in the accounting for the sale of stock and in some jurisdictions for calculating taxes.


Par Value

Nominal value of a security. Same as face value.


Par value

The maturity or face value of a security or other financial
instrument.


Par value

The stated value of a stock, which is recorded in the capital stock account.
Equity distributions cannot drop the value of stock below this minimum amount.


par value

Value of security shown on certificate.


Par Value

See face value.


Paradox of Thrift

The result that an increase in saving by everyone causes a multiplied fall in income that could end up decreasing aggregate saving.


Parallel loan

A process whereby two companies in different countries borrow each other's currency for a
specific period of time, and repay the other's currency at an agreed maturity for the purpose of reducing
foreign exchange risk. Also referred to as back-to-back loans.


Parameter

A representation that characterizes a part of a model (e.g. a growth rate), the value of which is
determined outside of the model. See: exogenous variable.


Parent company

A company that retains control over one or more other companies.


Pareto analysis

a method of ranking the causes of variation
in a process according to the impact on an objective
pareto inventory analysis an analysis that separates inventory
into three groups based on annual cost-to-volume usage


Pareto analysis

The 80:20 ratio that states that 20% of the variables included in an
analysis are responsible for 80% of the results. For example, 20% of all customers
are responsible for 80% of all customer service activity, or 20% of all inventory
items comprise 80% of the inventory value.


Pareto principle

a rule which states that the greatest effects
in human endeavors are traceable to a small number of
causes (the vital few), while the majority of causes (the
trivial many) collectively yield only a small impact; this
relationship is often referred to as the 20:80 rule


Parity value

Related:conversion value


Part

A specific component of a larger assembly.


Part number

A number uniquely identifying a product or component.


Part standardization

The planned reduction of similar parts through the standardization
of parts among multiple products.


Participating fees

The portion of total fees in a syndicated credit that go to the participating banks.


Participating GIC

A guaranteed investment contract where the policyholder is not guaranteed a crediting
rate, but instead receives a return based on the actual experience of the portfolio managed by the life company.


Participating Policy

A policy offers the potential of sharing in the success of an insurance company through the receipt of dividends.


Participation Fee

Fee charged by a bank for taking part in providing a loan.


Participation Rate

Fraction of the noninstitutionalized population 16 years of age and over that is in the labor force.


participatory budget

a budget that has been developed
through a process of joint decision making by top management
and operating personnel


Partnership

Shared ownership among two or more individuals, some of whom may, but do not necessarily,
have limited liability. See: general partnership, limited partnership, and master limited partnership.


Partnership

A form of business organization in which owners have unlimited personal
liability for the actions of the business, though this problem has been mitigated
through the use of the limited liability partnership.



 

 

 

 

 

 

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