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Return-to-maturity expectations |
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Definition of Return-to-maturity expectationsReturn-to-maturity expectationsA variant of pure expectations theory which suggests that the return that an
Related Terms:Abnormal returnsPart of the return that is not due to systematic influences (market wide influences). In Absolute Right of ReturnGoods may be returned to the seller by the purchaser without restrictions. Accounting rate of return (ARR)A method of investment appraisal that measures accounting rate of return (ARR)the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. annual returnThe fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns. Annualized holding period returnThe annual rate of return that when compounded t times, would have Arithmetic average (mean) rate of returnArithmetic mean return. Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Biased expectations theoriesRelated: pure expectations theory. book rate of returnAccounting income divided by book value. Book ReturnsBook yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets. CARs (cumulative abnormal returns)a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock. Cumulative abnormal return (CAR)Sum of the differences between the expected return on a stock and the Current maturityCurrent time to maturity on an outstanding debt instrument. Dollar returnThe return realized on a portfolio for any evaluation period, including (1) the change in market Dollar-weighted rate of returnAlso called the internal rate of return, the interest rate that will make the Ex post returnRelated: Holding period return Exante returnThe expected return of a portfolio based on the expected returns of its component assets and Excess return on the market portfolioThe difference between the return on the market portfolio and the Excess returnsAlso called abnormal returns, returns in excess of those required by some asset pricing model. Expectations hypothesis theoriesTheories of the term structure of interest rates which include the pure expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. Expected future returnThe return that is expected to be earned on an asset in the future. Also called the Expected returnThe return expected on a risky asset based on a probability distribution for the possible rates Expected ReturnThe total amount of money (return) an investor anticipates to receive from an investment. Expected return-beta relationshipImplication of the CAPM that security risk premiums will be Expected return on investmentThe return one can expect to earn on an investment. See: capital asset Geometric mean returnAlso called the time weighted rate of return, a measure of the compounded rate of Held-to-Maturity SecurityA debt security for which the investing entity has both the positive Holding period returnThe rate of return over a given period. Homogenous expectations assumptionAn assumption of Markowitz portfolio construction that investors Horizon returnTotal return over a given horizon. Incremental internal rate of returnIRR on the incremental investment from choosing a large project Internal rate of returnDollar-weighted rate of return. Discount rate at which net present value (NPV) Internal rate of return a. The average annual yield earned by an investment during the period held. Internal rate of returnThe rate of return at which the present value of a series of future 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 internal rate of return (IRR)The precise discount rate that makes the Internal Rate of Return (IRR)The discount rate that equates the present value of the net cash internal rate of return (IRR)the expected or actual rate of internal rate of return (IRR)Discount rate at which project NPV = 0. Inventory returnsInventory returned from a customer for any reason. This receipt Leveraged required returnThe required return on an investment when the investment is financed partially by debt. Local expectations theoryA form of the pure expectations theory which suggests that the returns on bonds Market returnThe return on the market portfolio. MaturityFor a bond, the date on which the principal is required to be repaid. In an interest rate swap, the MaturityThe date or the number of days until a security is due to be paid or MaturityTime at which a bond can be redeemed for its face value. MaturityThe time when a policy or annuity reaches the end of its span. Maturity dateThe date when the issuer returns the final face value of a bond Maturity DateDate on which a debt is due for payment. Maturity factoringFactoring arrangement that provides collection and insurance of accounts receivable. Maturity phaseA phase of company development in which earnings continue to grow at the rate of the maturity premiumExtra average return from investing in longversus short-term Treasury securities. Maturity spreadThe spread between any two maturity sectors of the bond market. Maturity valueRelated: par value. Money rate of returnAnnual money return as a percentage of asset value. Multiple rates of returnMore than one rate of return from the same project that make the net present value Original maturitymaturity at issue. For example, a five year note has an original maturity of 5 years; one Portfolio internal rate of returnThe rate of return computed by first determining the cash flows for all the Projected maturity dateWith CMOs, final payment at the end of the estimated cash flow window. Purchase returnsA contra account that reduces purchases by the amount of items purchased that were subsequently returned. Pure expectations theoryA theory that asserts that the forward rates exclusively represent the expected rate of returnTotal income per period per dollar invested. Rate of Returnreturn on invested capital (calculated as a percentage). Often an investor has, as one of their investment criteria, a minimum acceptable rate of return on an acquisition. RATE OF RETURN ON STOCKHOLDERS’ EQUITYThe percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it: RATE OF RETURN ON TOTAL ASSETSThe percentage return or profit that management made on each dollar of assets. The formula is: Rate of return ratiosRatios that are designed to measure the profitability of the firm in relation to various Rational expectationsThe idea that people rationally anticipate the future and respond to what they see ahead. Rational ExpectationsThe best forecasts that can be made given the data available and knowledge of how the economy operates. Rational expectations implies random errors, no systematic errors. Realized returnThe return that is actually earned over a given time period. Remaining maturityThe length of time remaining until a bond's maturity. Required returnThe minimum expected return you would require to be willing to purchase the asset, that is, ReturnThe change in the value of a portfolio over an evaluation period, including any distributions made ReturnSee yield. return of capitalthe recovery of the original investment (or principal) in a project Return on assets (ROA)Indicator of profitability. Determined by dividing net income for the past 12 months return on assets (ROA)Although there is no single uniform practice for return on capitalincome; it is equal to the rate of return multiplied by the amount of the investment Return on capital employed (ROCE)The operating profit before interest and tax as a percentage of the total shareholders’ funds plus Return on Common Equity RatioA measure of the percentage return earned on the value of the Return on equity (ROE)Indicator of profitability. Determined by dividing net income for the past 12 return on equity (ROE)This key ratio, expressed as a percent, equals net return on investmenta ratio that relates income generated Return on investment (ROI)Generally, book income as a proportion of net book value. RETURN ON INVESTMENT (ROI)In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole. Return on investment (ROI)The net profit after tax as a percentage of the shareholders’ investment in the business. return on investment (ROI)A very general concept that refers to some return on salesThis ratio equals net income divided by sales revenue. Return on total assetsThe ratio of earnings available to common stockholders to total assets. Return on Total Assets RatioA measure of the percentage return earned on the value of the Right of ReturnA sales agreement provision that permits a buyer to return products purchased Riskless rate of returnThe rate earned on a riskless asset. Safety-net returnThe minimum available return that will trigger an immunization strategy in a contingent
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