|Threshold for refinancing|
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Definition of Threshold for refinancing
Threshold for refinancing
The point when the WAC of an MBS is at a level to induce homeowners to
There is typically a lag of about three months between the time the weighted
The tendency of a pool of MBSs to reflect an especially high rate or prepayments the first time
As the MBS pool ages, or four to six months after it was passed at least once through the
Extending the maturity date or increasing the amount of existing debt or both. Also, revising a payment schedule, usually to reduce the monthly payments and often to modify interest charges.
Advertising designed to elicit sales to customers who can be
Payment of a financial obligation later than is expected or required, as in lead and lag. Also, the number
the cost of spoiled work less the estimated disposal value of that work
spoilage that has been planned or foreseen; is a product cost
Payments made in excess of scheduled mortgage principal repayments.
Spoilage arising from the production process that exceeds the normal
The amount of spoilage that naturally arises as part of a production
Schedule of depreciation rates allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
(1) The estimated useful life of the fixed asset being depreciated is
Any of several methods that recognize an increased amount
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
accepted quality level (AQL)
the maximum limit for the number of defects or errors in a process
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
Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
After-tax real rate of return
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
Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variablerate
Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates
date on which particular news concerning a given company is announced to the public.
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
annual percentage rate (APR)
Interest rate that is annualized using simple interest.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
A debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period.
An arithmetic mean of selected stocks intended to represent the behavior of the market or some
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Average (across-day) measures
An estimation of price that uses the average or representative price of a
Average age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices.
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Average Collection Period
average number of days necessary to receive cash for the sale of
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
Average-Cost Inventory Method
The inventory cost-flow assumption that assigns the average
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
The beginning inventory for a period, plus the amount at the end of
Also referred to as the weighted-average life (WAL). The average number of years that each
The average time to maturity of securities held by a mutual fund. Changes in interest rates
Average Propensity to Consume
Ratio of consumption to disposable income. See also marginal propensity to consume.
Average Propensity to Save
Ratio of saving to disposable income. See also marginal propensity to save.
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.
average tax rate
Total taxes owed divided by total income.
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
Base interest rate
Related: Benchmark interest rate.
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage
One one-hundredth of one percent
One hundredth of one percentage point, or 0.0001.
One one-hundredth of a percentage point, used to express variations in yields. For example, the difference between 5.36 percent and 5.38 percent is 2 basis points.
a cost that is caused by a group of things
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
Also called on-the-run or current coupon issues or bellwether issues. In the secondary
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face
book rate of return
Accounting income divided by book value.
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
break-even point (BEP)
the level of activity, in units or dollars, at which total revenues equal total costs
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Related: Premium payback period.
The point at which total costs equal total revenue, i.e. where There is neither a profit nor a loss.
The annual sales volume level at which total contribution
The sales level at which a company, division, or product line makes a
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
Buy limit order
A conditional trading order that indicates a security may be purchased only at the designated
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
A discount rate used to find the present value of a series of future cash receipts. Sometimes called discount rate.
cash burn rate
A relatively recent term that refers to how fast a business
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Cheapest to deliver issue
The acceptable Treasury security with the highest implied repo rate; the rate that a
mortgage against which no additional debt may be issued.
A transaction in which the purchaser's intention is to reduce or eliminate a short position in
Collateralized mortgage obligation (CMO)
A security backed by a pool of pass-throughs , structured so that
A strategy in which a put and with the same strike price and expiration are either both
A loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest.
a foundation for the compensation plan that addresses the role compensation should play in the organization
computer integrated manufacturing (CIM)
the integration of two or more flexible manufacturing systems through the use of a host computer and an information networking system
The degree of assurance that a specified failure rate is not exceeded.
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
an organizational strategy in which company management decides to confront, rather than avoid, competition; an organizational strategy in which company management still attempts to differentiate company
A firm engaged in two or more unrelated businesses.
A merger involving two or more firms that are in unrelated businesses.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
A federal Act
The percentage tax charged by a state to an employer to
A loan based on the credit of the borrower and on the collateral for the mortgage.
The acquisition of one firm by anther firm.
Debt obligations issued by corporations.
A legal document creating a corporation.
One of the three areas of the discipline of finance. It deals with the operation of the firm
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
Corporate taxable equivalent
rate of return required on a par bond to produce the same after-tax yield to
cost leadership strategy
a plan to achieve the position in a
The costs of (cross-functional) business processes, irrespective of the organizational structure of the business.
a collection of monetary amounts incurred either
A cluster of cost items.
The periodic interest payment made to the bondholders during the life of the bond.
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