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Financial Terms | |
Subordinated Debenture |
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Definition of Subordinated DebentureSubordinated DebentureA bond having a claim on assets only after the senior debt has been paid off in the event of liquidation.
Related Terms:Subordinated debenture bondAn unsecured bond that ranks after secured debt, after debenture bonds, and Debenture bondAn unsecured bond whose holder has the claim of a general creditor on all assets of the Convertible DebentureAre debt instruments that are convertible into common or preferred shares, take secondary or no security against assets, have flexible terms of repayment and charge fixed or floating interest rates. DebentureA written acknowledgment of debt, usually secured by a lien on assets. Subordinated debtDebt over which senior debt takes priority. In the event of bankruptcy, subordinated subordinated debtDebt that may be repaid in bankruptcy only after senior debt is paid. Subordinated DebtDebt instruments that provide financing for acquisitions, expansion and restructuring, take secondary security against assets, have fixed or flexible terms of repayment and charge fixed or floating interest rates. ![]() Strip mortgage participation certificate (strip PC)Ownership interests in specified mortgages purchased Abusive Earnings ManagementThe use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result. Abusive Earnings ManagementA characterization used by the Securities and Exchange Accounting earningsearnings of a firm as reported on its income statement. Accrual bondA bond on which interest accrues, but is not paid to the investor during the time of accrual. Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. Additional paid-in capitalAmounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par. ![]() Additional paid-in capitalAny payment received from investors for stock that exceeds additional paid-in capitalDifference between issue price and par value of stock. Also called capital surplus. Adjusted EarningsNet income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss. After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the All-in costTotal costs, explicit and implicit. All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable allocateassign based on the use of a cost driver, a cost predictor, allocationthe systematic assignment of an amount to a recipient ![]() AllocationThe process of storing costs in one account and shifting them to other Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production Allowance for bad debtsAn offset to the accounts receivable balance, against which Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Alternative mortgage instrumentsVariations of mortgage instruments such as adjustable-rate and variablerate approximated net realizable value at split-off allocationa method of allocating joint cost to joint products using a Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the AssetsA firm's productive resources. ASSETSAnything of value that a company owns. AssetsThings that the business owns. AssetsItems owned by the company or expenses that have been paid for but have not been used up. Assets requirementsA common element of a financial plan that describes projected capital spending and the Bad debtAn account receivable that cannot be collected. Bad debtsThe amount of accounts receivable that is not expected to be collected. bad debtsRefers to accounts receivable from credit sales to customers Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market basic earnings per share (EPS)This important ratio equals the net Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how Bearer bondbonds that are not registered on the books of the issuer. Such bonds are held in physical form by Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Bondbonds are debt and are issued for a period of more than one year. The U.S. government, local BONDA long-term, interest-bearing promissory note that companies may use to borrow money for periods of time such as five, ten, or twenty years. BondA long-term debt instrument in which the issuer (borrower) is bondSecurity that obligates the issuer to make specified payments BondA financial asset taking the form of a promise by a borrower to repay a specified amount (the bond's face value) on a maturity date and to make fixed periodic interest payments. BondUsually a fixed interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future, and a series of interest payments, either semi-annually or annually. Interest payments may vary through the life of bond. bondA debt security issued by a government or company. You receive regular interest payments at specified rates while you hold the bond and you receive the face value when it matures. Short-term bonds mature in less than five years; medium-term bonds mature in six to ten years; and long-term bonds mature in eleven years or greater. BondFixed interest security issued by a corporation or government, having a specific maturity date. Bond agreementA contract for privately placed debt. Bond covenantA contractual provision in a bond indenture. A positive covenant requires certain actions, and Bond-equivalent basisThe method used for computing the bond-equivalent yield. 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 Bond indentureThe contract that sets forth the promises of a corporate bond issuer and the rights of Bond indexingDesigning a portfolio so that its performance will match the performance of some bond index. Bond pointsA conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible BONDPARA system that monitors and evaluates the performance of a fixed-income portfolio , as well as the Bonds payableAmounts owed by the company that have been formalized by a legal document called a bond. Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be Brady bondsbonds issued by emerging countries under a debt reduction plan. Bull-bear bondbond whose principal repayment is linked to the price of another security. The bonds are Bulldog bondForeign bond issue made in London. CallAn option that gives the right to buy the underlying futures contract. Call a. An option to buy a certain quantity of a stock or commodity for a Call an optionTo exercise a call option. Call dateA date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. Call protectionA feature of some callable bonds that establishes an initial period when the bonds may not be Call provisionAn embedded option granting a bond issuer the right to buy back all or part of the issue prior Call riskThe combination of cash flow uncertainty and reinvestment risk introduced by a call provision. Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The CallableA financial security such as a bond with a call option attached to it, i.e., the issuer has the right to Callable bondA bond that allows the issuer to buy back the bond at a callable bondbond that may be repurchased by the issuer before maturity at specified call price. Canada Savings BondsA bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value. Capital allocationdecision allocation of invested funds between risk-free assets versus the risky portfolio. Capital Consumption AllowanceSee depreciation. Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income Tax Act. Cash flow after interest and taxesNet income plus depreciation. Chinese wallCommunication barrier between financiers (investment bankers) and traders. This barrier is ClaimRequest for payment of benefits under the terms of an insurance policy. Claim dilutionA reduction in the likelihood one or more of the firm's claimants will be fully repaid, ClaimantA party to an explicit or implicit contract. ClaimantPerson or party making request for payment of benefits under the terms of an insurance policy. Closed-end mortgagemortgage against which no additional debt may be issued. Closing purchaseA transaction in which the purchaser's intention is to reduce or eliminate a short position in Collateralassets than can be repossessed if a borrower defaults. Collateralassets that are used to secure a loan. collateralA pledge of property or other assets by a customer who is borrowing from a financial institution. Financial institutions require collateral as security in the event that the customer defaults on his/her loan. Collateral trust bondsA bond in which the issuer (often a holding company) grants investors a lien on Collateralized mortgage obligation (CMO)A security backed by a pool of pass-throughs , structured so that Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |