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Positive convexity |
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Definition of Positive convexityPositive convexity property of option-free bonds whereby the price appreciation for a large upward change
Related Terms:ConvexityA measure of the rate of change in duration; measured in time. Effective convexityThe convexity of a bond calculated with cash flows that change with yields. Extraordinary positive valueA positive net present value. Negative convexityA bond characteristic such that the price appreciation will be less than the price Positive carryRelated:net financing cost Positive covenant (of a bond)A bond covenant that specifies certain actions the firm must take. Also called Positive floatSee:float. Positive Loan CovenantsLoan covenants expressing minimum and maximum financial measures Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateInterest rate that is annualized using compound 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 Effective call priceThe strike price in an optional redemption provision plus the accrued interest to the Effective dateIn an interest rate swap, the date the swap begins accruing interest. Effective durationThe duration calculated using the approximate duration formula for a bond with an Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. Effective Interest RateThe rate of interest actually earned on an investment. It is Effective margin (EM)Used with SAT performance measures, the amount equaling the net earned spread, or Effective rateA measure of the time value of money that fully reflects the effects of compounding. Effective spreadThe gross underwriting spread adjusted for the impact of the announcement of the common Effective Tax RateThe total tax provision divided by pretax book income from continuing effectivenessa measure of how well an organization’s goals Panel on Audit EffectivenessA special committee of the Public Oversight Board that was created Policy-Ineffectiveness PropositionTheory that anticipated policy has no effect on output. Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Asset activity ratiosRatios that measure how effectively the firm is managing its assets. BackdatingA procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age of the consumer at policy issue lower than it actually was in order to get a lower premium. BackwardationA market condition in which futures prices are lower in the distant delivery months than in Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how Bond equivalent yieldBond yield calculated on an annual percentage rate method. Differs from annual business process reengineering (BPR)the process of combining information technology to create new and more effective CFTCThe Commodity Futures Trading Commission is the federal agency created by Congress to regulate common body of knowledge (CBK)the minimum set of knowledge needed by a person to function effectively in a particular field Defined benefit planA pension plan in which the sponsor agrees to make specified dollar payments to Formula basisA method of selling a new issue of common stock in which the SEC declares the registration In the boxThis means that a dealer has a wire receipt for securities indicating that effective delivery on them Insured Retirement PlanThis is a recently coined phrase describing the concept of using Universal Life Insurance to tax shelter earnings which can be used to generate tax-free income in retirement. The concept has been described by some as "the most effective tax-neutralization strategy that exists in Canada today." internal accounting controlsRefers to forms used and procedures Internal rate of return a. The average annual yield earned by an investment during the period held. Internal rate of return (IRR)A discounted cash flow technique used for investment appraisal that calculates the effective cost of capital that produces a net present value of zero from a series of future cash flows and an Lock-outWith PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With Magic of diversificationThe effective reduction of risk (variance) of a portfolio, achieved without reduction Market conversion priceAlso called conversion parity price, the price that an investor effectively pays for NominalIn name only. Differences in compounding cause the nominal rate to differ from the effective Nominal annual rateAn effective rate per period multiplied by the number of periods in a year. PairoffA buy-back to offset and effectively liquidate a prior sale of securities. performance evaluationthe process of determining the degree practical standarda standard that can be reached or slightly Precautionary motiveA desire to hold cash in order to be able to deal effectively with unexpected events Receivables turnover ratioTotal operating revenues divided by average receivables. Used to measure how Settlement rateThe rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the Side LetterA separate agreement that is used to clarify or modify the terms of a sales agreement. Stated conversion priceAt the time of issuance of a convertible security, the price the issuer effectively supply-chain managementthe cooperative strategic planning, Swap buy-backThe sale of an interest rate swap by one counterparty to the other, effectively ending the swap. Tax differential view ( of dividend policy)The view that shareholders prefer capital gains over dividends, YieldThe percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest
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