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Definition of PickupPickupThe gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds.
Related Terms:Pure yield pickup swapMoving to higher yield bonds. Amortizing interest rate swapswap in which the principal or national amount rises (falls) as interest rates Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Asset for asset swapCreditors exchange the debt of one defaulting borrower for the debt of another Asset swapAn interest rate swap used to alter the cash flow characteristics of an institution's assets so as to Bond equivalent yieldBond yield calculated on an annual percentage rate method. Differs from annual Bond-equivalent yieldThe annualized yield to maturity computed by doubling the semiannual yield. Bond Equivalent YieldBond yield calculated on an annual percentage rate method Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The Capital gains yieldThe price change portion of a stock's return. Circus swapA fixed rate currency swap against floating U.S. dollar LIBOR payments. Convenience yieldThe extra advantage that firms derive from holding the commodity rather than the future. Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Currency swapAn agreement to swap a series of specified payment obligations denominated in one currency Current yieldFor bonds or notes, the coupon rate divided by the market price of the bond. current yieldAnnual coupon payments divided by bond price. Current YieldThe 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 swapA set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank Differential swapswap between two LIBO rates of interest, e.g. yen LIBOR for dollar LIBOR. Payments are Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 dividend yield ratioCash dividends paid by a business over the most Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest Effective annual yieldAnnualized interest rate on a security computed using compound interest techniques. Effective Annual YieldAnnualized rate of return on a security computed using compound Equity swapA swap in which the cash flows that are exchanged are based on the total return on some stock Equivalent bond yieldAnnual yield on a short-term, non-interest bearing security calculated so as to be Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Extension swapExtending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly Flattening of the yield curveA change in the yield curve where the spread between the yield on a long-term Foreign exchange swapAn agreement to exchange stipulated amounts of one currency for another currency High-yield bondSee:junk bond. Indicated yieldThe yield, based on the most recent quarterly rate times four. To determine the yield, divide Interest rate swapA binding agreement between counterparties to exchange periodic interest payments on Intermarket spread swapsAn exchange of one bond for another based on the manager's projection of a labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); Liability swapAn interest rate swap used to alter the cash flow characteristics of an institution's liabilities so 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. material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); Non-parallel shift in the yield curveA shift in the yield curve in which yields do not change by the same Par yield curveThe yield curve of bonds selling at par, or face, value. Parallel shift in the yield curveA shift in the yield curve in which the change in the yield on all maturities is process quality yieldthe proportion of good units that resulted from the activities expended Production yield varianceThe difference between the actual and budgeted proportions Pure-discount bondA bond that will make only one payment of principal and interest. Also called a zerocoupon Pure expectations theoryA theory that asserts that the forward rates exclusively represent the expected Pure index fundA portfolio that is managed so as to perfectly replicate the performance of the market portfolio. Put swaptionA financial tool in which the buyer has the right, or option, to enter into a swap as a floatingrate Quanto swapSee: differential swap. Rate anticipation swapsAn exchange of bonds in a portfolio for new bonds that will achieve the target Realized compound yieldyield assuming that coupon payments are invested at the going market interest Relative yield spreadThe ratio of the yield spread to the yield level. Reoffering yieldIn a purchase and sale, the yield to maturity at which the underwriter offers to sell the bonds Required yieldGenerally referring to bonds, the yield required by the marketplace to match available returns Riding the yield curveBuying long-term bonds in anticipation of capital gains as yields fall with the Spot curve, spot yield curveSee Zero curve. Steepening of the yield curveA change in the yield curve where the spread between the yield on a long-term Substitution swapA swap in which a money manager exchanges one bond for another bond that is similar in SwapAn arrangement whereby two companies lend to each other on different terms, e.g. in different SwapAn exchange of cash flows between two counterparties. The SwapA contract between two parties to exchange cash flows in the future swapArrangement by two counterparties to exchange one stream of cash flows for another. Swap assignmentRelated: swap sale. Swap buy-backThe sale of an interest rate swap by one counterparty to the other, effectively ending the swap. Swap optioSee: swaption. Swap rateThe difference between spot and forward rates expressed in points, e.g., $0.0001 per pound sterling. Swap reversalAn interest rate swap designed to end a counterparty's role in another interest rate swap, Swap saleAlso called a swap assignment, a transaction that ends one counterparty's role in an interest rate SwaptionOptions on interest rate swaps. The buyer of a swaption has the right to enter into an interest rate SwaptionA swap option; an option on an interest-rate swap. The option gives Tax swapswapping two similar bonds to receive a tax benefit. Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. YieldThe percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest yieldthe quantity of output that results from a specified input Yield a. Measure of return on an investment, stated as a percentage of price. YieldThe interest rate that makes the present value of a stream of future payments associated with an asset equal to the current price of that asset. Also called yield to maturity. See also current yield. Yield curveThe graphical depiction of the relationship between the yield on bonds of the same credit quality Yield CurveA graphical representation of the level of interest rates for Yield curveGraph of yields (vertical axis) of a particular type of security yield curveGraph of the relationship between time to maturity and yield to maturity. Yield curveA graph showing how the yield on bonds varies with time to maturity. Yield curve option-pricing modelsModels that can incorporate different volatility assumptions along the Yield curve strategiesPositioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve. Yield ratioThe quotient of two bond yields. yield ratiothe expected or actual relationship between input and output Yield spread strategiesStrategies that involve positioning a portfolio to capitalize on expected changes in Yield to callThe percentage rate of a bond or note, if you were to buy and hold the security until the call date. Yield to maturityThe percentage rate of return paid on a bond, note or other fixed income security if you Yield to MaturityThe measure of the average rate of return that will be earned on a Yield to maturityA measure of the average rate of return that will be earned yield to maturityInterest rate for which the present value of the bond’s payments equals the price. Yield to worstThe bond yield computed by using the lower of either the yield to maturity or the yield to call Zero curve, zero-coupon yield curveA yield curve for zero-coupon bonds;
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