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Definition of Redeemable
Eligible for redemption under the terms of the indenture.
The customer has the option to redeem (cash-in) part or all of an investment before it matures. Depending on the investment, early redemption may entail an interest rate penalty.
Not permitted, under the terms of indenture, to be redeemed.
A preferred stock issue that must be redeemed by the issuing enterprise or is redeemable at the option of the investor. Considered a debt security for accountingpurposes.
Money invested in a portfolio whose composition is fixed for the life of the fund.
Fiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category.
the rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in todayâ€™s dollars of cash flows that occur in different time periods.
The option of terminating an investment earlier than originally planned.
Schedule of depreciation rates allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
A strategy that uses available information and forecasting techniques to seek a
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money after-tax rate of return minus the inflation rate.
All equity rate
The discount rate that reflects only the business risks of a project and abstracts from the
All or none
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
An option that may be exercised at any time up to and including the expiration date.
An option contract that can be exercised at any time between the date of purchase and
Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
Arbitrage-free option-pricing models
Yield curve option-pricing models.
Arithmetic average (mean) rate of return
Arithmetic mean return.
option based on the average price of the asset during the life of the option.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
Average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income.
Any large principal payment due at maturity for a bond or loan with or without a a sinking
A strategy in which the maturities of the securities included in the portfolio are concentrated
Gives the lessee the option to purchase the asset at a price below fair market
Contracts with trigger points that, when crossed, automatically generate buying or selling of
Base interest rate
Related: Benchmark interest rate.
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
Packages that involve the exchange of more than two currencies against a base currency at
Before-tax profit margin
The ratio of net income before taxes to net sales.
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
The requirement that a claim holder voting against a plan of reorganization
Binomial option pricing model
An option pricing model in which the underlying asset can take on only two
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses
The contract that sets forth the promises of a corporate bond issuer and the rights of
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Broker loan rate
Related: Call money rate.
A strategy in which a portfolio is constructed so that the maturities of its securities are highly
A passive investment strategy with no active buying and selling of stocks from the
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.
interest that is not immediately expensed, but rather is considered as an asset and is then
The value of assets that can be converted into cash immediately, as reported by a company. Usually
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
Cash and carry
Purchase of a security and simultaneous sale of a future, with the balance being financed
Cash and equivalents
The value of assets that can be converted into cash immediately, as reported by a
The actual physical commodity, as distinguished from a futures contract.
Cash conversion cycle
The length of time between a firm's purchase of inventory and the receipt of cash
A company that pays out all earnings per share to stockholders as dividends. Or, a company or
In general, the time between cash disbursement and cash collection. In net working capital
Cash deficiency agreement
An agreement to invest cash in a project to the extent required to cover any cash
The provision of some futures contracts that requires not delivery of underlying assets but
An incentive offered to purchasers of a firm's product for payment within a specified time
A dividend paid in cash to a company's shareholders. The amount is normally based on
A short-term security that is sufficiently liquid that it may be considered the financial
In investments, it represents earnings before depreciation , amortization and non-cash charges.
Cash flow after interest and taxes
Net income plus depreciation.
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in
Cash flow per common share
cash flow from operations minus preferred stock dividends, divided by the
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Also called spot markets, these are markets that involve the immediate delivery of a security
A public equity issue that is sold to all interested investors.
The proportion of a firm's assets held as cash.
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
A transaction where exchange is immediate, as contrasted to a forward contract, which
Temporary investments of currently excess cash in short-term, high-quality
An amount the insurance company will pay if the policyholder ends a whole life
Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.
Communication barrier between financiers (investment bankers) and traders. This barrier is
A transaction in which the purchaser's intention is to reduce or eliminate a short position in
A strategy in which a put and with the same strike price and expiration are either both
An undertaking either (1) to complete a project such that it meets certain specified
interest paid on previously earned interest as well as on the principal.
option on an option.
A firm engaged in two or more unrelated businesses.
A merger involving two or more firms that are in unrelated businesses.
The acquisition of one firm by anther firm.
Debt obligations issued by corporations.
A legal document creating a corporation.
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