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Definition of Z bond
Also known as an accrual bond or accretion bond; a bond on which interest accretes interest but is not
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.
Rule in bankruptcy proceedings whereby senior creditors are required to be paid in full
Money owed to suppliers.
In portfolio accounting, a straight-line accumulation of capital gains on discount
A bond on which interest accrues, but is not paid to the investor during the time of accrual.
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
The discount rate that reflects only the business risks of a project and abstracts from the
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
Swap in which the principal or national amount rises (falls) as interest rates
The decision regarding how an institution's funds should be distributed among the
Categories of assets, such as stocks, bonds, real estate and foreign securities.
A statistical compilation formulated by a sovereign nation of all economic transactions
Net flow of goods (exports minus imports) between countries.
Also called the statement of financial condition, it is a summary of the assets, liabilities, and
Balance sheet exposure
Balance sheet identity
Total Assets = Total Liabilities + Total Stockholders' Equity
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
Balanced mutual fund
This is a fund that buys common stock, preferred stock and bonds. The same as a
Any large principal payment due at maturity for a bond or loan with or without a a sinking
Base interest rate
Related: Benchmark interest rate.
In a balance of payments, the basic balance is the net balance of the combination of the current
bonds that are not registered on the books of the issuer. Such bonds are held in physical form by
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
bonds are debt and are issued for a period of more than one year. The U.S. government, local
A contract for privately placed debt.
A contractual provision in a bond indenture. A positive covenant requires certain actions, and
Bond equivalent yield
bond yield calculated on an annual percentage rate method. Differs from annual
The contract that sets forth the promises of a corporate bond issuer and the rights of
Designing a portfolio so that its performance will match the performance of some bond index.
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face
With respect to convertible bonds, the value the security would have if it were not convertible
The method used for computing the bond-equivalent yield.
The annualized yield to maturity computed by doubling the semiannual yield.
A system that monitors and evaluates the performance of a fixed-income portfolio , as well as the
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
bonds issued by emerging countries under a debt reduction plan.
bond whose principal repayment is linked to the price of another security. The bonds are
Foreign bond issue made in London.
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
Cash flow after interest and taxes
Net income plus depreciation.
Communication barrier between financiers (investment bankers) and traders. This barrier is
Collateral trust bonds
A bond in which the issuer (often a holding company) grants investors a lien on
An excess balance that is left in a bank to provide indirect compensation for loans
Insurance that a construction contract will be successfully completed.
interest paid on previously earned interest as well as on the principal.
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
bonds that can be converted into common stock at the option of the holder.
A eurobond that can be converted into another asset, often through exercise of
Debt obligations issued by corporations.
The periodic interest payment made to the bondholders during the life of the bond.
Coupon equivalent yield
True interest cost expressed on the basis of a 365-day year.
A bond's interest payments.
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Related: Benchmark issues
High-coupon bonds that sell at only at a moderate premium because they are callable at a
An unsecured bond whose holder has the claim of a general creditor on all assets of the
A bond issued with a very low coupon or no coupon and selling at a price far below par
A provision that prohibits the company from calling the bond before a certain date. During this
Debt sold for less than its principal value. If a discount bond pays no interest, it is called a
Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with
Dollar price of a bond
Percentage of face value at which a bond is quoted.
Method of accelerated depreciation.
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Equilibrium rate of interest
The interest rate that clears the market. Also called the market-clearing interest
Equivalent bond yield
Annual yield on a short-term, non-interest bearing security calculated so as to be
A bond that is (1) underwritten by an international syndicate, (2) offered at issuance
Eurobonds denominated in U.S.dollars.
Eurobonds denominated in Japanese yen.
bond whose maturity can be extended at the option of the lender or issuer.
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
With CMOs, the start of the cash flow cycle for the cash flow window.
Flat price (also clean price)
The quoted newspaper price of a bond that does not include accrued interest.
Government bonds that are acceptable at par in payment of federal estate taxes when owned by
A bond issued on the domestic capital market of anther company.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
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