Financial Terms | |
Zero curve, zero-coupon yield curve |
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Definition of Zero curve, zero-coupon yield curveZero curve, zero-coupon yield curveA yield curve for zero-coupon bonds;
Related Terms:Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually 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. Capital gains yieldThe price change portion of a stock's return. Convenience yieldThe extra advantage that firms derive from holding the commodity rather than the future. CouponThe periodic interest payment made to the bondholders during the life of the bond. Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Coupon paymentsA bond's interest payments. Coupon rateIn bonds, notes or other fixed income securities, the stated percentage rate of interest, usually Current couponA bond selling at or close to par, that is, a bond with a coupon close to the yields currently Current yieldFor bonds or notes, the coupon rate divided by the market price of the bond. Current-coupon issuesRelated: Benchmark issues Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest Effective annual yieldAnnualized interest rate on a security computed using compound interest techniques. Equivalent bond yieldAnnual yield on a short-term, non-interest bearing security calculated so as to be Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Flattening of the yield curveA change in the yield curve where the spread between the yield on a long-term Full coupon bondA bond with a coupon equal to the going market rate, thereby, the bond is selling at par. High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. High-yield bondSee:junk bond. Indicated yieldThe yield, based on the most recent quarterly rate times four. To determine the yield, divide Indifference curveThe graphical expression of a utility function, where the horizontal axis measures risk and J-curveTheory that says a country's trade deficit will initially worsen after its currency depreciates because Level-coupon bondBond with a stream of coupon payments that are the same throughout the life of the bond. Liquid yield option note (LYON)zero-coupon, callable, putable, convertible bond invented by Merrill Long coupons1) Bonds or notes with a long current maturity. Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. Liquid yield option note (LYON)zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co. Long coupons1) Bonds or notes with a long current maturity. Non-parallel shift in the yield curveA shift in the yield curve in which yields do not change by the same Parallel shift in the yield curveA shift in the yield curve in which the change in the yield on all maturities is Pass-through coupon rateThe interest rate paid on a securitized pool of assets, which is less than the rate Pure yield pickup swapMoving to higher yield bonds. Realized compound yieldyield assuming that coupon payments are invested at the going market interest Relative yield spreadThe ratio of the yield spread to the yield level. Reoffering yieldIn a purchase and sale, the yield to maturity at which the underwriter offers to sell the bonds Required yieldGenerally referring to bonds, the yield required by the marketplace to match available returns Riding the yield curveBuying long-term bonds in anticipation of capital gains as yields fall with the Spot rate curveThe graphical depiction of the relationship between the spot rates and maturity. Steepening of the yield curveA change in the yield curve where the spread between the yield on a long-term Stopping curveA curve showing the refunding rates for different points in time at which the expected value Stopping curve refunding rateA refunding rate that falls on the stopping curve. Theoretical spot rate curveA curve derived from theoretical considerations as applied to the yields of Weighted average couponThe weighted average of the gross interest rate of the mortgages underlying the Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. YieldThe percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest Yield curveThe graphical depiction of the relationship between the yield on bonds of the same credit quality Yield curve option-pricing modelsModels that can incorporate different volatility assumptions along the Yield curve strategiesPositioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve. Yield ratioThe quotient of two bond yields. Yield spread strategiesStrategies that involve positioning a portfolio to capitalize on expected changes in Yield to callThe percentage rate of a bond or note, if you were to buy and hold the security until the call date. Yield to maturityThe percentage rate of return paid on a bond, note or other fixed income security if you Yield to worstThe bond yield computed by using the lower of either the yield to maturity or the yield to call Zero coupon bondSuch a debt security pays an investor no interest. It is sold at a discount to its face price Zero prepaymentassumption The assumption of payment of scheduled principal and interest with no payments. Zero uptickRelated: tick-test rules. Zero-balance account (ZBA)A checking account in which zero balance is maintained by transfers of funds Zero-beta portfolioA portfolio constructed to represent the risk-free asset, that is, having a beta of zero. Zero-coupon bondA bond in which no periodic coupon is paid over the life of the contract. Instead, both the Zero-investment portfolioA portfolio of zero net value established by buying and shorting component Zero-one integer programmingAn analytical method that can be used to determine the solution to a capital Zero-sum gameA type of game wherein one player can gain only at the expense of another player. Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. dividend yield ratioCash dividends paid by a business over the most Bond Equivalent YieldBond yield calculated on an annual percentage rate method Coupon / CouponsThe periodic interest payment(s) made by the issuer of a bond Coupon RateThe rate of interest paid on a debt security. Generally stated on an Effective Annual YieldAnnualized rate of return on a security computed using compound Yield CurveA graphical representation of the level of interest rates for Yield to MaturityThe measure of the average rate of return that will be earned on a Zero-coupon BondA security that makes no interest payments; it is sold at a discount labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); learning curvea model that helps predict how labor time material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); process quality yieldthe proportion of good units that resulted from the activities expended yieldthe quantity of output that results from a specified input yield ratiothe expected or actual relationship between input and output zero-base budgetinga comprehensive budgeting process CouponDetachable certificate attached to a bond that shows the amount of Coupon datesThe dates when the coupons are paid. Typically a bond pays Coupon rateThe nominal interest rate that the issuer promises to pay the Discount curveThe curve of discount rates vs. maturity dates for bonds. Par yield curveThe yield curve of bonds selling at par, or face, value. Spot curve, spot yield curveSee zero curve. Yield a. Measure of return on an investment, stated as a percentage of price. Yield curveGraph of yields (vertical axis) of a particular type of security Yield to maturityA measure of the average rate of return that will be earned Zero-coupon bond, or ZeroA bond that, instead of carrying a coupon, is sold Production yield varianceThe difference between the actual and budgeted proportions couponThe interest payments paid to the bondholder. coupon rateAnnual interest payment as a percentage of face value. current yieldAnnual coupon payments divided by bond price. yield curveGraph of the relationship between time to maturity and yield to maturity. yield to maturityInterest rate for which the present value of the bond’s payments equals the price. zero-balance accountRegional bank account to which just enough funds are transferred daily to pay each day’s bills. Aggregate Demand CurveCombinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium.
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