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100% Equities Strategy An investment strategy for an individual portfolio or pooled funds vehicle such as a mutual fund. Only equity securities are considered for investment, whether they be listed stocks, over-the-counter stocks, or private equity shares. A mutual fund... 100% Mortgage A mortgage loan in which the borrower receives a loan amount equivalent to the total value of the property to be purchased. In this situation, the borrower does not need to make a down payment to secure the loan. 10-Year Treasury Note A debt obligation issued by the U.S. Treasury that has a term of more than one year, but not more than 10 years. 25% Rule 1. The idea that a local government's long-term debt should not exceed 25% of its annual budget. Any debt beyond this threshold is considered excessive and a potential risk, since the municipality may have trouble paying the cost of debt.2. A... 30-Year Treasury A U.S. Treasury debt obligation that has a maturity of 30 years. The 30-year Treasury used to be the bellwether U.S. bond but now most consider the 10-year Treasury to be the benchmark. 90/10 Strategy An investing strategy that involves deploying 90% of one's investment capital in interest-bearing instruments that have a lower degree of risk, and the balance 10% in high-risk investments. This is a relatively conservative investment strategy that...

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A.M. Best One of the established ratings agencies recognized by the SEC. A.M. Best has traditionally focused exclusively on providing a letter rating for insurance carriers. It has recently branched out into rating financial securities such as bonds. The... AA+/Aa1 The highest rating that some ratings agencies assign to a security or insurance carrier. This rating signifies that there is little to no risk of default and is often assigned to securities that have AMBAC or another type of insurance backing.... AAA The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has an exceptional degree of creditworthiness and can easily meet its financial commitments. Ratings agencies such as Standard &... Above Par A term used to describe the price of a security when it is trading above its face value. A security usually trades at above par when its income distributions are higher than those of other instruments currently available in the market.If an investor... Absolute Priority A rule that stipulates the order of payment - creditors before shareholders - in the event of liquidation. The absolute priority rule is used in bankruptcies to decide what portion of payment will be received by which participants. Debts to... Acceleration Covenant A clause included in certain debt securities and swap agreements stating that the immediate collection of payment and termination of contract will take place should any number of clauses being violated by the borrower including default or a... Accidental High Yielder A stock that carries an abnormally high dividend yield for the specific firm. An accidental high yielder

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is a stock of a company that was not intended to pay an excessive dividend yield;. however, the dividend yield rose when the price of the stock... Accordion Feature A type of option that a company can buy that gives it the right to increase its line of credit or similar type of liability with a lender. Companies typically purchase an accordion feature in anticipation of the need for more working capital for... Accreted Value The value, at any given time, of a multi-year instrument that accrues interest but does not pay that interest until maturity. The most well-known applications include zero-coupon bonds or cumulative preferred stock. Accretion 1. Asset growth through addition or expansion. 2. In reference to discount bonds, it describes the accumulation of value until maturity. Accretion of Discount The increase in the value of a discounted instrument as time passes and it approaches maturity. The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to... Accretive The process of accretion, which is the growth or increase by gradual addition, in finance and general nomenclature. An acquisition is considered accretive if it adds to earnings per share. Accrual Bond A bond that does not pay periodic interest payments. Instead, interest is added to the principal balance of the bond and is either paid at maturity or, at some point, the bond begins to pay both principal and interest based on the accrued principal... Accrual Rate The rate of interest that is added to the principal of a financial instrument between cash payments of that interest. For example, a six-month bond with interest payable semiannually will accrue daily interest during the six-month term until it is... Accrued Interest 1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. Accrued interest occurs as a result of the difference in timing of cash flows and the... Accrued Interest Adjustment The extra amount of interest that is paid to the owner of a convertible bond or other fixed income security. The amount paid is equal to the balance of interest that has accrued since the last payment date of the bond.At the time, the investor... Accrued Market Discount The gain in the value of a discount bond expected from holding it for any duration until its maturity. Accumulation Bond A bond issued at an original issue discount (OID). This means that the interest accumulates but is not paid until maturity; there are no semi-annual coupon payments as with most bonds. These bonds are also referred to as "accrual bonds." ... Act Of God Bond A bond issued by an insurance company, linking principal and interest to a company's losses due to natural disasters. Act of God bonds are issued by insurers to protect against unforeseen events. Active Bond Crowd The name given to members of the NYSE and their specific bond trading departments that are acknowledged as frequent traders in active bonds. Active Return The percentage gain or loss of an investment relative to the investment's benchmark. An active

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return is the difference between the benchmark and the actual return. It can be positive or negative and is typically used to assess performance. ... Active Tranche A tranche of a collateralized mortgage obligation (CMO) that is currently receiving principal payments that are passed through to its investors. While interest is paid on all tranches of a CMO when it is first issued, principal payments on each... Adaptive Expectations Hypothesis A hypothesis stating that individuals make investment decisions based on the direction of recent historical data, such as past inflation rates, and adjust the data (based on their expectations) to predict future rates. Add-On Certificate of Deposit A certificate of deposit that allows the bearer to deposit additional funds, after the initial purchase date, that will bear the same rate of interest. Adjustment Bond Issued by a corporation during a restructuring phase, an adjustment bond is given to the bondholders of an outstanding bond issue prior to the restructuring. The debt obligation is consolidated and transferred from the outstanding bond issue to the... Advance Refunding 1. A bond issuance used to pay off another outstanding bond. The new bond will often be issued at a lower rate than the older outstanding bond. 2. A bond issuance in which new bonds are sold at a lower rate than outstanding ones. The proceeds are... After-Acquired Clause A provision included in legal contracts ensuring that subsequent acquisitions of assets will be included in the debtor's liability to the lender. After-Tax Basis The basis for weighing the performance of two investments against each other after taxes have been factored into the equation. After-Tax Return The return on an investment including all income received and capital gains, calculated by taking expected or paid income taxes into account. Generally reserved for returns on positions that have been closed out or sold, after-tax returns are also... Agency Bond A bond issued by a government agency. These bonds are not fully guaranteed in the same way as U.S. Treasury and municipal bonds. Agency Cost Of Debt A problem arising from the conflict of interested created by the separation of management from ownership (the stockholders) in a publicly owned company. Corporate governance mechanisms, such as boards of directors and the issuance of debt, are used... Agency Debentures Debt issued by a federal agency or a government-sponsored enterprise (GSE) for financing purposes. These types of debentures are not backed by collateral, but by the integrity and credit worthiness of the issuer. Officially, agency debentures issued... Agency Security Low-risk debt obligations that are issued by U.S. government-sponsored entities (GSEs) and other federally related bodies. Agency securities are issued by GSEs, including the Federal National Mortgage Association (FNMA), Federal Home Loan Bank and... Agio A description of the bond premium when the bond market value is greater than the par value. In international markets, agio can also sometimes refer to the fee paid for undertaking a transaction. Because these bonds are often traded on international...

The announcement date is the first day the public will receive information regarding a new security issue. An amortized bond is one that is treated as an asset. this includes government bonds. The need for an allonge arises as a result of a lack of space on the bill itself. If a bond is.. .. Angel bonds are the opposite of fallen angels.. Amortized Bond A financial certificate that has been reduced in value for records on accounting statements..... Alternative Investment An investment that is not one of the three traditional asset types (stocks. when added to an existing portfolio of assets. a broker or salesman will often express the value as the clean price "and interest".. The rate of annual return is measured against the initial. Alpha Generator Any security that. Most alternative investment assets are held by institutional investors or accredited..A bond premium occurs when the. An airport revenue bond is tax-exempt and is typically issued when a municipality or airport is looking to expand its facilities or. bonds and cash). When revealing the sale price of a bond. high-net-worth individuals because of their complex nature. The day that coincides with the release of. Announcement Date 1. The American Municipal Bond Assurance Corporation insures new municipal bond. The regular payment that the security holder receives is derived from the payments that the. of Milwaukee. Depending on the type of bond.2... An alpha generator can be any security. Allonge A sheet of paper attached to a bill of exchange for the purpose of documenting endorsements.. returns of capital and capital appreciation. American Callable Bond A bond that can be redeemed by the issuer at any time prior to its maturity. Angel Bond Investment-grade bonds that pay a lower interest rate because of the issuing company's high credit rating.y y y y y y y y y y y y y Airport Revenue Bond A bond issued by a municipality or airport authority that uses the revenues of the airport facility to back the bond. expressed as a time-weighted annual percentage. Amortizable Bond Premium A tax term referring to the excess premium paid over and above the face value of a bond..Also written as. limited.. Inc. Usually a premium is paid to the bondholder when the bond is called. And Interest A slang phrase used when quoting the price of a fixed-income instrument with accruing interest.. and are therefore much more risky. Amortizing Security A class of debt security in which a portion of the underlying principal amount is paid in addition to periodic interest payments to the security's holder.. formed in 1971 as a subsidiary of MGIC Investment Corp.. Annual Return The return an investment provides over a period of time... the premium can be tax deductible and amortized over the life of the bond on a pro-rata basis... . foreign. now more commonly known as Ambac Financial Group. The date at which a company will announce the details regarding an issue of debt or equity.. generates excess returns or returns higher than a pre-selected benchmark without additional risk. which are bonds that have been given a "junk" rating. Sources of returns can include dividends. American Municipal Bond Assurance Corporation The first municipal bond insurance company. with the discount amount being amortized to interest expense over the life of the bond.

the ask quote will generally also stipulate the amount of the security willing to be sold at that price. Arrears Overdue debt. it will appreciate or depreciate according to market forces. Along with the price.. Rent is the classic example of an annuity in advance because it is a sum of money paid at the beginning of the month to cover the 30 days to follow. Some asset allocation funds maintain a specific proportion of asset. behave similarly in the marketplace.in a variety of securities. fixedincome (bonds) and cash equivalents (money.... bonds and cash equivalents .. exchange-traded fund or other portfolio. Asset Class Breakdown The relative percentages of core asset classes such as equities. Lenders use physical assets as a guarantee that at least a portion of money lent can be.stocks. also known as the offer price. They. Asian Bond Fund (ABF) A type of bond fund launched by the Executives' Meeting of East Asia and Pacific Central Banks (EMEAP) group that allows its members to invest in bonds issued by Asian sovereign issuers in EMEAP economies. liability or obligation... A-Note The highest tranche of an asset backed security or other structured financial product.. and is paid back first with funds from the underlying assets.. An account is said to be "in arrears" if one or more payments have been missed in transactions where regular payments are contractually required. Arbitrage Bond A lower-rate debt security issued by a municipality prior to the call date of the municipality's existing higher-rate security... such as B-notes in bankruptcy or other credit proceedings. An annuity in advance is also..y y y y y y y y y y y y y Annuity In Advance An amount of money that is regularly paid at the beginning of a term..Also referred to as "arrears"... . Asset Allocation Fund A mutual fund that provides investors with a portfolio of a fixed or variable mix of the three main asset classes . Asset Class A group of securities that exhibit similar characteristics. Arrearage An amount on a loan. Annuity Ladder An investment strategy for retirees or near-retirees that entails the purchase of immediate annuities over a period of years to provide guaranteed income while minimizing interest-rate risk. The three main asset classes are equities (stocks). Ask The price a seller is willing to accept for a security.Sometimes called "the ask". Asset Base The underlying assets giving value to a company. The asset base is not fixed.. along with real estate and international holdings. such as mortgage or rent payments and utility or telephone. but often does require the.... and are subject to the same laws and regulations.. Managed by the Bank for International. investment or loan. An any-interest-date call provision does not necessarily require the bond issuer to pay a premium. found within a mutual fund. Further breakdowns are sometimes made. cumulative preferred stock or any credit instrument that is overdue. An A-note is senior to other notes. .. fixed income and cash.. Any-Interest-Date Call A municipal bond provision which allows the bond issuer to redeem the bond at any date in which interest is set to be paid. Annuity ladders allow retirees to maintain a portion of.

Australian Securities And Investments Commission (ASIC) The regulator of Australia's markets and financial services. The auctions take place at periodic intervals.. and investors will expect.. Asset-Backed Commercial Paper (ABCP) A short-term investment vehicle with a maturity that is typically between 90 and 180 days. The ASIC is an independent Commonwealth Government body established by the Australian Securities and. that number is much lower. Assets are assigned to one of the core asset classes: stocks (equities). A bond that trades at par will have a yield equal to its coupon. Other categories that are sometimes considered asset classes are. At Par A term that refers to a bond. which is normally 30% or more of the company's value. Authority Bond A debt security issued by an authority.. Auction Rate Security (ARS) A debt security that is sold through a dutch auction.. bonds (fixed income)... with many companies' collateralized debt percentage falling far below the.. The security itself is typically issued by a bank or other financial institution. with a yield derived from the index's percentage increase over a predetermined level. Asset-Backed Security (ABS) A financial security backed by a loan. This ensures that all bidders on an ARS receive the same yield on the debt. Auction Rate The interest rate that will be paid on a specific security as determined by the Dutch auction process. Asset Swapped Convertible Option Transaction (ASCOT) An option on a convertible bond that is used to separate a convertible bond into its two components: 1) a bond and 2) an option to acquire stock. Asset-Light Debt A corporate debt that has less than the usual amount of collateral... The bond has a four-year maturity and is repayable at face value. This process is commonly used to... preferred stock or other debt obligation that is trading at its face value. When the bond is stripped of its conversion feature. The notes are backed by physical assets such as trade receivables..y y y y y y y y y y y y y Asset Mix The classification of all assets within a fund or portfolio.. the holder has a bond featuring fairly. lease or receivables against assets other than real estate and mortgage-backed securities. The ASIC ensures that Australia's financial markets are fair and transparent... With asset-light debt. Assignment Of Trade A transaction used primarily in the mortgage-backed securities (MBS) to be announced (TBA) market. asset-backed securities are an alternative to investing in corporate debt. where the obligation to fulfill an existing forward trade is assigned by one of the counterparties to a third party. Association of International Bond Dealers (AIBD) A professional association of bond dealers. The term "at par" is most commonly used with bonds. The association makes recommendations pertaining to bond dealing rules to the regulators of.Also known.. The members consist of over 350 various financial conglomerates and institutions that actively trade bonds. Australian Stock Price Riskless Indexed Note (ASPIRIN) A zero-coupon bond with a return linked to the Australian all-ordinaries stock index. such as a corporate or government agency. and the interest rate is fixed until the next auction is held... For investors.. cash and real estate.. The auction rate security (ARS) is sold at an interest rate that will clear the market at the lowest yield possible.. and are.. for purposes of . Assignments of trade are.

A representative measure of a range of prices that is calculated by taking the sum of the values and dividing it by the number of prices being examined. Bad Paper Unsecured short-term fixed income instrument that is issued either by a corporation. divided by the average of the investments for the year. price or yield of a security.. Investors in authority bonds have a claim to the business's revenues.y y y y y y y y financing the operations of a revenue-generating public business.. Available-For-Sale Security A debt or equity security that is purchased with the intent of selling before it reaches maturity. Average Life An estimate of the number of terms to maturity.. state or . which serve as. Average life is calculated using the weighted average time to the receipt of all future cash flows... taking the possibility of early payments into account. replacing the previous manual. Baby Bond Fixed income securities issued in small denominations.For a portfolio of bonds. Automated Bond System (ABS) The electronic system on the NYSE that records bids and offers for inactively traded bonds until they are canceled or executed... Back Up A slang term for the movement in spread.000. Back up is characterized by an increase in bond yields and a decrease in price. though.. which makes it more expensive to issue.. B Back to top y y y y y Ba3/BBBonds rated Ba3/BB. The National Securities Clearing Corporation (NSCC) developed the ACATS system. The average annual yield is a particularly. Axe The interest a person or trader shows in buying or selling a bond. These bonds are commonly referred to as junk bonds. A trader may have specific interest in a certain type of bond based on his or her existing positions. The small denominations enhance the attraction of baby bonds to the average retail investor. it is a measure of maturity that takes into account the possibility that a bond might be called back to the issuer. which can then be compared to any..are generally considered speculative in nature and are not considered to be investment-grade bonds suited for people wishing to avoid the risk of losing their principal.. Baby bonds are now issued mainly by municipalities..... Accounting standards necessitate that companies classify.. or selling prior to a lengthy time period in the event the security does not have a maturity. The average price reduces the range into a single value. Average Effective Maturity For a single bond. The price of a security "backs up" when a company finds. Baccalaureate Bond A zero-coupon bond issued by certain states to assist families save for college tuition by means of added tax benefits. Average Price 1. Automated Customer Account Transfer Service (ACATS) A system that facilitates the transfer of securities from one trading account to another at a different brokerage firm or bank.. generally with a maximum face value of $5.. average effective maturity is the weighted average of the maturities of the underlying. Average Annual Yield The average yield on an investment or a portfolio that results from adding all interest. city. dividends or other income generated from the investment.

" Barron's Confidence Index A confidence indicator calculated by dividing the average yield on high-grade bonds by the average yield on intermediate-grade bonds. Bailout A situation in which a business. Generally. Bank Investment Contract (BIC) A security with an interest rate guaranteed by a bank.S. The basis point is commonly used for calculating changes in interest rates. a money market component.. Barbell A bond investment strategy that concentrates holdings in both very short-term and extremely longterm maturities.. Banker's Blanket Bond A fidelity bond purchased from an insurance broker that protects a bank against losses from a variety of criminal acts carried out by employees. particularly U. The quote is presented as a percentage of face value... This is also known as a "balloon.. 2.y y y y y y y y y y y y y country. sometimes. Balanced Fund A fund that combines a stock component. This is also known as the "dumbbell" or "barbelling. Often referred to as "default" or "insolvency risk". . creating a string of short.. The discrepancy between the yields is indicative of investor confidence. bonds mature at different intervals.. A final loan payment that is considerably higher than prior payments.. A rising ratio indicates investors are. Bank Bill Swap Bid Rate (BBSY) A benchmark interest rate quoted and dispersed by Reuters Information Service. that has a high probability of defaulting on their promissory notes. Government issues. a bond component and.. equity indexes and the yield of a fixed-income security... In a serial issue. and is determined by discounting the.. The bailout bonds had zero-coupon Treasury bonds backing the principal amounts. Bailout Bond A debt security issued by the Resolution Funding Corporation to bail out the savings and loan associations during the financial crisis of the late 1980s and early 1990s. Higher interest is earned on the long-term. Also known as a blanket.. Balloon Interest An increased coupon rate on the longer term maturity instruments within a serial bond issue.to long-term instruments.. these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher. Some states require blanket bond coverage as a condition of operating a bank. in a single portfolio.... Bailouts can take the form of loans. The BBSY is typically used by financial institutions or corporations engaging in interest rate swaps and related transactions... Bankruptcy Risk The risk that a company will be unable to meet its debt obligations. bonds. Bank Discount Basis A quoting convention used by financial institutions when quoting prices for fixed-income securities sold at a discount. Since bad paper is not backed by collateral. . Balloon Maturity 1.. It provides a specific yield on a portfolio over a specified period. stocks or cash. Basis Point (BPS) A unit that is equal to 1/100th of 1%. They may or may not. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date). it is sold at a discount. individual or government offers money to a failing business in order to prevent the consequences that arise from a business's downfall. and is used to denote the change in a financial instrument.

" The term came into popular usage as an easier way of referring to the basis points' "BPS" acronym. Registered form means the issuing firm keeps records of a. Bearer Bond A fixed-income instrument that is owned by whoever is holding it. This will usually only be quoted on fixed-income securities such as bonds. Government bonds are almost always used as benchmark bonds. This causes the yield curve to flatten as short-term and long-term rates start to converge. or any other assets to beneficiaries through the provisions of a will. Bear Flattener A yield-rate environment in which short-term interest rates are increasing at a faster rate than longterm interest rates. This causes a larger spread between the two rates as the long-term rate moves further away from the short-term rate. This type of trade exists to transfer the risk that a loan will. Bearer Share An equity security that is wholly owned by whoever holds the physical stock certificate. Bearer Form A security not registered in the issuing corporation's books but that is payable to its bearer (the person possessing it).. The company disperses dividends to bearer shares when a..000. is a type of fixed-income security where no ownership information is recorded and the security is issued in physical form to the purchaser.. Also referred to as "benchmark issue" or "bellwether issue".. nor does it track transfers of ownership. Coupons representing interest payments are likely to be physically attached to the security and it is the bondholder's responsibility to submit. Bequest The process of giving stocks. It is sometimes also pronounced "bips".y y y y y y y y y y y y y y Basis Price Price quotation for a security expressed in terms of yield to maturity. or bearer bond. Beep Financial industry jargon for "basis point... The holder is presumed to be the owner. a price below par would typically be anything less than 100. Securities can be issued in two forms: registered or bearer. Below Par A term describing a bond whose price is below the face value or principal value. Biased Expectations Theory A theory that the future value of interest rates is equal to the summation of market expectations. Proponents of the biased expectation theory argue that the shape of the yield curve is created by ignoring systematic factors and that the term. bonds. rather than having a registered owner. Bearer Instrument A bearer instrument. Best Efforts Mortgage Lock When the sale of a mortgage in the secondary mortgage market requires that the seller. Bid Bond A debt secured by a bidder for a construction job or similar type of bid-based selection process for .. usually a mortgage originator. The issuing firm neither registers the owner of the stock.. make a "best efforts" attempt to deliver the mortgage to the buyer... As bond prices are quoted as a percentage of face value. Benchmark Bond A bond that provides a standard against which the performance of other bonds can be measured.. usually $1. and whoever is in possession of.. Bear Steepener A widening of the yield curve caused by long-term rates increasing at a faster rate than short-term rates.

S. the maximum amount of the coverage will be applied to any one loss. Founded July 1890 and opened for trading in 1891. Blanket Honesty Bond A kind of fidelity bond that covers an employer for all of the losses that are incurred through the dishonest acts of its employees... the dealers are allowed to make bids on the listed securities. these owners are often able to influence the company with the voting rights awarded with their holding. and the value of the option at any node depends on the probability. Binomial Tree A graphical representation of possible intrinsic values that an option may take at different nodes or time periods. Bill Auction A public auction for Treasury bills that is held weekly by the U. Blue List A daily digest of municipal and corporate bond offerings. The existence of a bid bond provides the. Treasury regarding the next bill auction. In terms of shares. This announcement outlines the terms of the bill auction. In a bid-wanted-in-competition situation. Treasury bills are issued. industrial and economic development of the Basque Country.. The value of the option depends on the underlying stock or bond. Also known as "Block Order". Bill Announcement An announcement published by the U. Bid Wanted In Competition (BWIC) A situation where an institutional investor submits its bond bid list to various securities dealers. the Bilbao Stock Exchange (in Spanish. No matter how many employees are involved. the "Bolsa de Bilbao") supports the financial. Bilbao Stock Exchange (BIL) . The blue list is used by bond investors to identify investment opportunities in the bond market. Currently there are 17 authorized primary dealers that are required to bid directly upon each issue. fixed-income statistics and other bond information.... The dealers with the highest bids are then.S.. Blockage Discount The difference between the market value of a security and its sale price when transacted under a block trade. which incorporates such factors as market liquidity and the. It has.y y y y y y y y y y y y y the purpose of providing a guarantee to the project owner that the bidder will take on the job if selected. market commentaries. Bill announcements must contain the date and time of the auction...... Blockholder The owner of a large amount of a company's shares and/or bonds. Bond A debt investment in which an investor loans money to an entity (corporate or governmental) that . or block. Each blockage discount is negotiated by the involved institutional investors... as well as the amount of bills to be. In the ordinary course of securities trading. Exceptions occur for broker/dealers or others acting as both broker and. Blind Brokering When brokerage firms ensure anonymity to both the buyer and the seller in a transaction. Bill Of Exchange A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date..S. Treasury.BI One of Spain's four major securities exchanges. The.. most brokerage transactions are "blind". This is the manner in which all U. Block Trade An order/trade submitted for sale or purchase of a large quantity of securities.

Bond Buyer 20 A representation of municipal bond trends based on a portfolio of 20 general obligation bonds that mature in 20 years. states and U.. For a fixed income security with a par value of $1000. The label ³bond crowd´ differentiates them from the members of the exchange who trade stocks.. The bond circular is made available to prospective investors and contains basic information including: issuer. municipalities. The Bond Buyer 20 is published by.. The index is based on a survey of municipal bond traders rather than actual prices or yields.. or monthly discount-bond or note yields into an annual yield. Bond Floor 1.. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies. As bond prices are quoted as a percent of face value. is often $1. Treasuries to high yields.. The bond floor is the value at which the convertible option becomes worthless because the underlying stock...00 means that the bond is. a price of 98. Traders use the daily Bond Buyer Index to trade. and foreign. Bond Circular A standardized legal document that contains an abbreviated version of the relevant terms from the prospectus of a new bond issue.S..y y y y y y y y y y y y y borrows the funds for a defined period of time at a fixed interest rate. Bond Discount The amount by which the market price of a bond is lower than its principal amount due at maturity. . Bond Buyer Index An index published by The Bond Buyer. Bond Crowd A slang term used to describe members of the stock exchange that transact bond orders from the floor of the exchange. Bonds are used by companies... Bond Attorney A lawyer who represents the bondholders' interests during a bond offering and who prepares the legal opinion attesting that the issue is legal... The Bond Buyer 11 is published by The Bond Buyer. Bond Broker A broker who executes over-the-counter bond trades between institutional investors (bond traders). called its par value. Bond Anticipation Note (BAN) A short-term interest-bearing security issued in the anticipation of larger future bond issues.S. maturing in 20 years. a daily finance newspaper that covers the municipal bond market. valid and binding... The Bond Equity Earnings Yield Ratio (BEER) has two parts ± the top is represented by a benchmark bond yield (such as five. Bond Equivalent Yield (BEY) A calculation for restating semi-annual. Bond Buyer 11 An average yield on a particular day of 11 selected general obligation municipal bonds with an average 'AA' rating.or 10-year.000. It is comprised of 11 of the 20 bonds in the Bond Buyer 20.. from. Bond Equity Earnings Yield Ratio (BEER) A metric used to evaluate the relationship between bond yields and earnings yields in the stock market. Brokers communicate with.. given the present value of the remaining future cash flows and principal repayment. Bond brokers act as an intermediary between institutional investors to keep the identities of the other parties anonymous. This amount.. amount. quarterly.. Investors use the Bond Buyer Index to plot interest rate patterns in the municipal market. The lowest value that convertible bonds can fall to.. the calculation is as follows: Bond ETF A type of exchange-traded fund (ETF) that exclusively invests in bonds. ranging from U.

. A bond quote is typically expressed as a percentage of par value. The ratio is equivalent to the total amount of bonds due after one year. Bond Ladder A portfolio of fixed-income securities in which each security has a significantly different maturity date.. or its the ability to pay a bond's. Bond Insurance A type of insurance policy that a bond issuer purchases that guarantees the repayment of the principal and all associated interest payments to the bondholders in the event of default.. or par.. Moody's and Fitch provide these evaluations of a bond issuer's financial strength. Bond issuers buy insurance to enhance their credit rating to. Just as with other options. The bond market primarily includes government-issued securities and corporate debt securities. The exact type of debt the fund invests in will depend on its focus...... but investments may include government.... Bond Ratio A financial ratio that expresses the leverage of a bond issuer.. Private independent rating services such as Standard & Poor's.. It formally appoints an attorney-in-fact to. The price that someone is willing to pay for the bond is always given in relation to 100. Bond Option An option contract in which the underlying asset is a bond. Bond Rating A grade given to bonds that indicates their credit quality. there is no significant difference between stock and bond options. corporate.. Bond Swap A strategy in which an investor sells a bond and at the same time purchases a different bond with the proceeds from the sale. where the floating rate is based on the bond market association's swap index. Bond Fund A fund invested primarily in bonds and other debt instruments. and facilitates the transfer of capital from savers to the issuers or. The bond ratio formally expresses the ratio of the bond issued to the company's capitalization as a percentage. The bond for bond lending structure is different from...y y y y y y y y y y y y y Bond for Bond Lending A lending structure used in the Federal Reserve's security lending facility.. whereby borrowers receive a loan of bonds.. in order to achieve the following goals:. by using all or a portion of their own portfolio of bonds for collateral. along with other.... Bond Power A separate legal form that authorizes the transfer of ownership of a registered bond from one party to another. .. a bond option allows. Other than the different characteristics of the underlying assets. each with different maturity dates. Bond Quote The price at which a bond is trading. One of the parties involved will swap a fixed interest rate for a. Bond Laddering A portfolio management strategy and model for investing in fixed income that involves purchasing multiple bonds. The bond power is essentially a substitute for the assignment on the back of the bond. The purpose of purchasing several smaller bonds with different maturity dates rather than one large bond with a single maturity date is to. municipal and convertible bonds. with the percentage converted to a point scale. Bond Market The environment in which the issuance and trading of debt securities occurs. Bond Market Association (BMA) Swap A type of swap arrangement in which two parties agree to exchange interest rates on debt obligations.Decrease interest rate risk by holding both short-term and..

An indenture is a contract between a bond issuer and a bond holder. Breaking The Buck When the net asset value (NAV) of a money market fund falls below $1. Book-Entry Securities Securities that are recorded in electronic records called book entries rather than as paper certificates.." Bootstrapping 1.. The 25 albums a Bowie bond uses as their underlying assets were recorded prior to 1990. the bond will sell for less. A. Bull Bond A bond that is likely to increase in value in a bull market.. savings accounts and certificates of deposit made by... An individual is said to be bootstrapping when he or she attempts to found and build a. also known as its cash flow.... and banker's acceptances. Build America Bonds (BABs) were introduced in 2009 as part of President Obama's American Recovery and Reinvestment... when interest rates are declining. A procedure used to calculate the zero-coupon yield curve from market figures.. who sponsored the effort to restructure..S.y y y y y y y y y y y y y Bond Trustee A financial institution with trust powers. This normally occurs when interest rates drop. which then divides it into smaller pieces for sale to its customers. but bull bonds refer to types of bonds that do especially well in this environment.Also referred to as "book-entry receipt. Breaking the buck can happen when the money market fund's investment income does not cover operating expenses or investment losses.. such as a commercial bank or trust company. Bond washing results in a tax-free capital gains because after the coupon has been paid. Being a bondholder is often considered safer than being a shareholder because if a company liquidates. Broad Liquidity A category of the money supply which includes: all funds in M3. Bond valuation includes calculating the present value of the bond's future interest payments. and the bond's value upon maturity. ..such as deposits to checking accounts.. Bond Valuation A technique for determining the fair value of a particular bond. savings bonds. David Bowie used the proceeds from. commercial papers. Brady Bonds Bonds that are issued by the governments of developing countries. Bondholder The owner of a government or corporate bond. Bowie Bond An asset-backed security which uses the current and future revenue from albums recorded by musician David Bowie as collateral. Build America Bonds (BABs) Taxable municipal bonds that feature tax credits and/or federal subsidies for bondholders and state and local government bond issuers. individual holdings in accounts. Brady bonds are some of the most liquid emerging market securities. T-bills with maturity of less than one year... Being a bondholder entitles one to. Treasury Secretary Nicholas Brady. Most bonds tend to increase in value when interest rates decline... Core deposits . it must pay its bondholders before it pays its shareholders. 2. Brokered Deposit A large-denomination bank deposit that is sold by a bank to a brokerage. also known as its face. They are named after former U. Bond Washing The practice of selling a bond just before it pays a coupon payment and then buying it back once the coupon has been paid. that is given fiduciary powers by a bond issuer to enforce the terms of a bond indenture. A situation in which an entrepreneur starts a company with little capital...

Busted Bond Bonds issued by an issuer who failed to pay the required interest payments or principal amount to the debt holder (or both). Also known as "multiplier bond" or "guaranteed coupon reinvestment bond. Busted Convertible Security A convertible security that is trading well below its conversion value." Bureau Of Public Debt An agency of the United States Department of the Treasury that is responsible for borrowing funds for the federal government to use. Bull Market A financial market of a group of securities in which prices are rising or are expected to rise. Bullet 1) A one-time lump-sum repayment of an outstanding loan. This causes the yield curve to flatten as the short-term and long-term rates start to converge.. Bund The German government's federal bond. but once in a position. The result is that the security is valued as regular debt because there is very little chance that it will ever reach the convertible price before maturity. resulting in a higher spread between the two rates. Burnout A period of slowing mortgage prepayment within a mortgage backed security (MBS). When some percentage of the underlying loans fail to prepay after an interest rate cycle. typically made by the borrower after very little. amortization of the loan.. if any.. but can be applied to anything that is traded.. Bump-Up Certificate of Deposit (Bump-Up CD) A savings certificate entitling the bearer to take advantage of rising interest rates with a one time option to "bumping up" the interest rate paid. This usually occurs after the mortgages start to mature.. Bunny Bond A type of bond that offers investors the option to reinvest coupon payments into additional bonds with the same coupon and maturity.. . Buy And Hold A passive investment strategy in which an investor buys stocks and holds them for a long period of time. such as bonds.. maintaining accounts of the government's outstanding debts and providing services to other federal government... The term "bull market" is most often used to refer to the stock market... currencies and. The bund is issued to the public as a way for the German government to finance its spending. The issuer of a busted bond would be considered bankrupt and would have to liquidate his or her assets to repay the bond.. Bullet Bond A noncallable regular coupon paying debt instrument with a single repayment of principal on the maturity date.y y y y y y y y y y y y y y Bull Flattener A yield-rate environment in which long-term rates are decreasing at a rate faster than short-term rates.. This can also refer to a loan that requires a disproportionately large portion (or even all) of the loan to. is. this is known as.. Bullet GIC A guaranteed investment contract (GIC) is purchased with a single premium and only one payout that is made at maturity. Bull Steepener A change in the yield curve caused by short-term rates falling faster than long-term rates. The bump-up certificate of deposit (bump-up CD) yields a lower rate than that of a similar. An investor who employs a buy-and-hold strategy actively selects stocks. regardless of fluctuations in the market.

Also known as "redeemable preferred stock". This means the bondholder will receive payment on the value of the bond and. Callable Security A security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date. The dollar amount over the par value of a callable fixed-income debt security that is given to holders when the security is called by the issuer. Called Away A term used to describe the elimination of a contract due to the obligation of delivery. 2. the callable security is. and a. C Back to top y y y y y y y y y y y y y Cabinet Crowd Members of the NYSE that typically trade in inactive bonds... Callable Preferred Stock A type of preferred stock that carries the provision that the issuer has the right to call in the stock at a certain price and retire it. Buying on margin refers to the initial or down payment made to the broker for the asset being purchased.. The amount the purchaser of a call option must pay to the writer. The collateral for the funds being borrowed is. Call Risk The risk. Also referred to as "redemption price". Call Price The price at which a bond or a preferred stock can be redeemed by the issuer. Callable Certificate Of Deposit An FDIC insured certificate of deposit (CD) that contains a call feature similar to other types of callable fixed-income securities.. This price is set at the time the security is issued. Also known as a "redeemable bond".. If the issuer feels there is a benefit to refinancing the issue. Call Protection A protective provision of a callable security prohibiting the issuer from calling back the security for a period early in its life. Call Provision A provision on a bond or other fixed-income instrument that allows the original issuer to repurchase and retire the bonds. usually within a. Usually a premium is paid to the bond owner when the bond is called. Call Date The date on which a bond can be redeemed before maturity. Call Premium 1. This occurs if . If there is a call provision in place. that a bond issuer will take advantage of the callable bond feature and redeem the issue prior to maturity.. it will typically come with a time window under which the bond can be called. Cage A term used to describe the department of a brokerage firm that receives and distributes physical securities.y Buying On Margin The purchase of an asset by paying the margin and borrowing the balance from a bank or broker.. Also known as the inactive bond crowd or book crowd... the bond may be redeemed on the call date at par or at a small premium to par. Callable CDs can be redeemed (called away) by the issuing bank prior to their stated maturity. in most cases. Since the holder of a callable security is exposed to the risk of the security being repurchased.. faced by a holder of a callable bond. Callable Bond A bond that can be redeemed by the issuer prior to its maturity.

Capital Markets A market in which individuals and institutions trade financial securities.. if a redeemable bond is called before maturity or if a short position held in a security requires delivery. This includes taxes. Capital Control Any measure taken by a government. COPrS (pronounced "coppers") are a type of derivative equity security invented by Merrill Lynch in the mid-1990s.Also referred to as "cash and equivalents".. tariffs. The first company to offer them was TransCanada PipeLines. Capital Share The class of shares offered by a dual-purpose fund that has opportunity for capital appreciation but does not offer the holder any portion of the fixed income earned within the portfolio. as well as market-based. or services. this type of market is composed. Capital flows occur within corporations in the form of investment capital and capital spending on operations and research & development. . Canadian Originated Preferred Securities (COPrS) A long-term subordinated debt instrument issued in Canada. Essentially. Canada Savings Bond (CSB) A financial product issued by the Bank of Canada.. as reported by a company. trade or business production. Capital Appreciation A rise in the value of an asset based on a rise in market price. Thus. debt. have high credit quality and are highly liquid. Capital Account The net result of public and private international investments flowing in and out of a country..y y y y y y y y y y y y y y an option is exercised.. Cash Legal tender or coins that can be used in exchange goods.. whereby borrowers receive a cash loan. outright legislation and volume restrictions.. and the capital appreciation portion of the investment includes all of the market value exceeding the. Cash Account A regular brokerage account in which the customer is required by Regulation T to pay for securities within two days of when a purchase is made. COPrS are not the. Sometimes also including the value of assets that can be converted into cash immediately.. the capital that was invested in the security has increased in value. A canary call may only be exercised on predetermined dates. Canary Call A step-up bond that cannot be called after completing its first-step period. Cash Equivalents Investment securities that are short-term. The issuer of the bond reserves the option to call back the bond until the first step is reached. . Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds.. Cash for Bond Lending A lending structure used in the Federal Reserve's Term Auction Facility (TAF). Canada Premium Bond (CPB) A debt instrument issued by the Bank of Canada that offers a higher interest rate than a Canada Savings Bond (CSB) with the same issuance date... central bank or other regulatory body to limit the flow of foreign capital in and out of the domestic economy. It offers a competitive rate of interest and guarantees a minimum interest rate. On a larger scale. by using all or a portion of their own portfolio of bonds as collateral. Capital Flows The movement of money for the purpose of investment..

The money raised through these issues is used by the Treasury to meet any temporary shortfalls. Certificate of Participation (COP) A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Cat Spread A cat spread is a type of derivative traded on the Chicago Board of Trade (CBOT) that takes the form of an option on a catastrophe futures contract. Certificateless Municipals A type of municipal bond that does not issue a certificate to each owner and is therefore also a type of book-entry security. rather than taking a chance on a higher. Treasury and stripped by a financial intermediary. Certificate Of Government Receipts (COUGRs) U.. a cat spread is basically a call option spread bought by insurance companies on.. and potentially make more money.. CDs are generally issued by commercial banks and are insured by the FDIC. usually ninety days or less.. but decided to stay and. Certificates Of Accrual On Treasury Securities (CATS) Issued by the U. In other words.. These are synthetic securities offered by the A.. Central Bank The entity responsible for overseeing the monetary system for a nation (or group of nations). The term. Cash-Flow Financing A form of financing in which the loan is backed by a company's expected cash flows. that provide a return in the form of interest payments. where the collateral for the loan is based on the company's assets...S. The schedules or repayments for cash-flow loans are based. these products are sold at a significant discount from face value and pay no interest during their lifetime. A CD bears a maturity date. However. These... a specified fixed interest rate and can be issued in any denomination. Cash Management Bill (CMB) A short-term security sold by the U. . Department of the Treasury. municipalities and investors.S. Becker Paribas firm. This differs from an asset-backed loan..G. Treasury fixed-income securities that are stripped of their coupon payments and provide payment of face value. Certificate of Indebtedness A short-term fixed income security issued by the United States Treasury that has a coupon. Central banks have a wide range of responsibilities. from overseeing monetary policy to implementing specific goals such as currency stability. low.. return... Certainty Equivalent A guaranteed return that someone would accept. It has a special condition that states that if the issuer (insurance or reinsurance company) suffers a. Catastrophe Call A call provision in municipal bonds that allows for the early redemption of the instrument if a catastrophic event occurs and severely damages the project financed by the issue.y y y y y y y y y y y y y y Cash Investment Short-term obligations. The absence of a paper certificate simplifies recordkeeping and trading for brokers. Certificate Of Deposit (CD) A savings certificate entitling the bearer to receive interest.. The maturity on a CMB can range from a few days to six months. they return full face value and cannot be called away. If you've ever thought about leaving your job to start your own business. Possible catastrophes will be listed in the bond's indenture and.S. but uncertain. Catastrophe Bond (CAT) A high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake..

CAIA A professional designation given out by the Chartered Alternative Investment Analyst Association to establish an educational standard for individuals that specialize in the area of alternative investments (such as hedge funds. Collateral Trust Bond A bond that is secured by a financial asset . but because they pool several types of credit quality bonds together. For an index or average. which allows loans to. Clean Price The price of a coupon bond not including any accrued interest.such as stock or other bonds . Citizen Bond A type of certificateless municipal bond used to finance local government projects. the difference between the current value and the previous day's market close. For a stock or bond. Now. This is the opposite of an open-end indenture in which more than one bond can be backed by a single. no interest and no maturity value. Collateralization The act where a borrower pledges an asset as recourse to the lender in the event that the borrower defaults on the initial loan.... the CBOT offers options and futures contracts on. Closed-End Indenture A term in a bond contract that guarantees that the collateral used to back the bond issue cannot be used again to back another bond issue. The co-insurance. they offer enough diversification to be "investment grade.that is deposited and held by a trustee for the holders of the bond.. The CBOT originally traded only agricultural commodities such as wheat. that require large. Co-insurance Effect A theory on corporate debt that posits that the likelihood of default decreases when two firms' assets and liabilities are combined through a merger or acquisition compared to the likelihood of default in the individual companies. venture.. Chastity Bond A bond designed to prevent unwanted takeovers by having a maturity that is activated once a takeover is complete..y y y y y y y y y y y y y y Change 1. 3.. one-time expenditures. A clean price is the discounted future cash flows... A Clinton bond is in reference to President Bill Clinton's low-interest-rate policies that had bondholders lose billions of dollars early in his presidency. Watch: Understanding Bonds .... Cheapest to Deliver (CTD) The least expensive underlying product that can be delivered upon expiry to satisfy the requirements of a derivative contract... 2. Chartered Alternative Investment Analyst .. Collateralized Bond Obligation (CBO) An investment-grade bond backed by a pool of junk bonds.. not including any interest accruing on the next coupon payment date. Junk bonds are typically not investment grade." Collateralized Borrowing And Lending Obligation (CBLO) A money market instrument that represents an obligation between a borrower and a lender as to the . Collateralization of assets gives lenders a sufficient level of reassurance against default risk.... Chicago Board Of Trade (CBOT) A commodity exchange established in 1848 that today trades in both agricultural and financial contracts. corn and soybeans. the difference between the current price and the previous day's settlement price. the clean price will. For an options or futures contract. Immediately following each coupon payment. Clinton Bond A debt investment that is said to have no principal. Citizen bonds are listed and can be traded on a stock exchange.

y y y y y y y y y y y y y terms and conditions of the loan. The.. These bonds contain a maximum amount... inventories and meeting short-term liabilities.. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds. The CRB was designed to isolate and reveal the directional movement of prices in overall commodity trades. loans and other assets. Collateralized borrowing and lending obligations (CBLOs) are used by those who have been phased out of or heavily. .. Commercial Blanket Bond A type of liability coverage for employers who want to protect themselves against losses resulting from dishonest employees. A collateralized debt obligation squared (CDO-squared) is backed by a pool of collateralized debt obligation (CDO) tranches. Commercial Mortgage-Backed Securities .. Collateralized Debt Obligation Cubed (CDO-Cubed) A special purpose vehicle (SPV) with securitization payments in the form of tranches..Also known as "double barrel bonds". The Commercial Paper Funding Program (CPFP) was designed to increase the liquidity of the commercial paper market by providing funding to issuers... Committed Facility A credit facility whereby terms and conditions are clearly defined by the lending institution and imposed upon the borrowing company. the interest rate paid on a commodity-backed bond is set to fluctuate based on the market price of the commodity to. Collateralized debt obligation cubeds (CDO-cubeds) are backed by a pool of collateralized debt obligation squared (CDO-squared) tranches. Commodity-Backed Bond A commodity-backed bond is a type of debt security which is linked with the price of a commodity. Under the most common arrangement. the increased use of CMBS can be attributable to. A CMBS can provide liquidity to real estate investors and to commercial lenders. Collateralized Mortgage Obligation (CMO) A type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities. called tranches.CMBS A type of mortgage-backed security that is secured by the loan on a commercial property. Commodity Research Bureau Index (CRB) An index that measures the overall direction of commodity sectors. Commercial Paper An unsecured. As with other types of MBS.. The repayments from the pool of pass-through securities are used to retire the bonds. that has financial backing from two sources: the issuing agency and the revenue from an existing or proposed source that will benefit from the funding. Collateralized Loan Obligation (CLO) A special purpose vehicle (SPV) with securitization payments in the form of different tranches. Collateralized Debt Obligation Squared (CDO-Squared) A special purpose vehicle (SPV) with securitization payments in the form of tranches. Maturities on commercial paper rarely range any longer than 270 days.. Commercial blanket bonds provide blanket coverage for all of an employer's employees. Combination Bond A bond.. typically a municipal bond. Financial institutions back this security with receivables from loans.. Commercial Paper Funding Program (CPFP) A program instituted in October of 2008 that created the Commercial Paper Funding Facility (CPFF)... Collateralized Debt Obligation (CDO) An investment-grade security backed by a pool of bonds. typically for the financing of accounts receivable. short-term debt instrument issued by a corporation.

usually a government agency. Most bonds have a fixed value determined at the time of purchase.... In. The companion trache is so named because it is designed to provide.. however. Bids are submitted by primary distributors and those who bid the highest receive the debt issue. The calculation of this estimate is based on a number of factors such as historical prepayment. Conduit Financing A financing arrangement involving a government or other qualified agency using its name in an issuance of fixed income securities for a non-profit organization's large capital project. A commodity-backed bond. The. Conditional Prepayment Rate (CPR) A loan prepayment rate that is equal to the proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. Competitive Tender A method of distributing debt issues. Completion Bond A financial contract that insures a given project will be completed even if the producer runs out of money.. the. The companion bond is designed to absorb excess principal payments during times of high.y y y y y y y y y y y y y y Commodity-Backed Bonds A commodity-backed bond is an investment term referring to a type of bond whose value is directly related to the price of a specified commodity. Compulsory Convertible Debenture (CCD) A type of debenture in which the whole value of the debenture must be converted into equity by a specified time. or any measure of financial or other impediment occurs during the production of the project. the interest of a zero-coupon bond accrues until maturity. Conduit Issuer An organization. Conditional call options usually only. Common stockholders are on the bottom of the priority ladder for ownership structure.. Upon conversion... Concession A selling group's compensation in a stock or bond underwriting agreement.. Completion bonds are used in many industries. Therefore. Companion Bond A class of tranche found in a planned amortization class (PAC) bond that is responsible for protecting the PAC tranche from both contraction and extension risk. Companion Tranche A class of tranche found in planned amortization class (PAC) and targeted amortization class (TAC) collateralized mortgage obligations (CMOs) that absorbs variable prepayment rates.. Common Stock A security that represents ownership in a corporation... Holders of common stock exercise control by electing a board of directors and voting on corporate policy. that issues municipal securities to raise capital for revenue-generating projects where the funds generated are used by a third party (known as the "conduit borrower") to make payments to investors.. The compulsory convertible debenture's ratio of conversion is decided by the issuer when the debenture is issued... Conforming Loan A mortgage that is equal to or less than the dollar amount established by the conforming loan limit .. the CAV can be... Because there are no interest payments like there are with traditional bonds.. Conditional Call Option A provision that requires the issuer of a callable bond to replace the bond with a non-callable bond of similar maturity and interest rate in the case that the security is called before maturity is reached. can. Compound Accreted Value (CAV) A measure of the theoretical value of a zero-coupon bond at any given point in time..

..CCDS A variation on the credit default swap (CDS).... Construction Bond A type of surety bond used by investors in construction projects to protect against an adverse event that causes disruptions.... Contingent Credit Default Swap . such as non-payment of interest. Contingent Immunization A method of fixed income portfolio management. payment under the swap is triggered by a credit event. Contingent Convertibles (CoCos) A security similar to a traditional convertible bond in that there is a strike price (the cost of the stock when the bond converts into stock). which the company's stock. The constant default rate represents the percentage of outstanding principal balances in the pool that are in. Construction Loan Note (CLN) A short-term obligation in the form of a note.. Constant Default Rate (CDR) An annualized rate of default on a group of mortgages. Constant Maturity Used by the Federal Reserve Board to quote the yields on various treasury securities.y y y y y y y y y y y y y set by Fannie Mae and Freddie Mac's Federal regulator. and although it usually results in a lesser accrual of discount than the. Constant Yield Method One of two ways of calculating the accrued discount of bonds that trade in the secondary market. typically within a collateralized product such as a mortgage-backed security (MBS). CPDOs were first created by ABN AMRO in 2006. used for the funding of construction projects such as housing developments. The Office of Federal Housing Enterprise Oversight (OFHEO) and meets the funding criteria of. adjusted to an equivalent maturity. In a contingent credit default swap (CCDS). which sought to create a high interest bearing instrument that also contained the. or the job's failure to meet contract specifications. The sole purpose of this organization was to insure and reinsure debt instruments that were issued by universities. the bond acts as a new mortgage. The two asset classes used in CPPI are a risky asset (usually equities or mutual. Connie Lee (College Construction Loan Insurance Association (CCLIA) A formerly government-sponsored enterprise created by the Higher Education Amendments of 1986. If the properties do not have outstanding mortgages then the bond is.. In most cases... whereby managers are granted significant powers .. the trigger requires both a credit event and another. Consolidated Mortgage Bond A bond that consolidates the issues of multiple properties.. colleges and other educational.. such as an iTraxx index. What differs is that there is another price. Constant Proportion Debt Obligation (CPDO) A type of synthetic collateralized debt instrument that is backed by a debt security index... the note issuers will repay the note obligation by issuing a longer term bond and using the proceeds from the. failure to complete the project due to insolvency of the builder(s)... even higher than the strike price. Constant Proportion Portfolio Insurance (CPPI) A method of portfolio insurance in which the investor sets a floor on the dollar value of his or her portfolio. The constant yield method is an alternative to the ratable accrual method... In a simple CDS. If the properties covered by the consolidated mortgage bond are already mortgaged. then structures asset allocation around that decision.. Consent Solicitation A solicitation by one party to the stakeholders of a particular security for the consent of a material change..

.. Conversion Parity Price The price paid for a share of stock purchased by exercising the option on a convertible security. CNS centralizes the settlement of compared transactions and maintains an efficient flow of security and money balances. Conversion Premium The amount by which the price of a convertible security exceeds the current market value of the common stock into which it may be converted. such as corporate bonds or preferred shares. Should these products... usually at the discretion of the bondholder. Contraction Risk The risk faced by the holder of a fixed income security when borrowers increase the rate at which they pay back the maturity value of the fixed income security... . Continuous Net Settlement (CNS) An automated book-entry accounting system. Continuously Offered Longer-Term Securities (COLTS) A type of bond that's been sold by the World Bank since 1989 in order to finance its operations. It is calculated by using this formula: Conversion Value The financial worth of the securities obtained by exchanging a convertible security for its underlying assets.. whose interest rate is tied to Treasury security rates. They can be exchanged for common stock or cash after the next period's dividend rates are announced.. Contraction risk is a component of prepayment risk that increases as interest rates.. Convertibles are sometimes called "CVs". . Convertibles are a category of financial instruments.. Convertible Arbitrage An investing strategy that involves the long position on a convertible security and a short position in its converting common stock.y y y y y y y y y y y y y y of control over the selection of products to be added and removed from the portfolio. usually at a predetermined price.. that can be exchanged for an. Contraction Risk The risk faced by the holder of a fixed income security when borrowers increase the rate at which they pay back the maturity value of the fixed income security... and is calculated by dividing the market price of the convertible security by. on or before a predetermined date. The conversion feature is a financial derivative instrument that is valued separately from the underlying. variable rate or zero coupon. The shares received upon conversion are equal in market. Convertible Bond A bond that can be converted into a predetermined amount of the company's equity at certain times during its life. The bonds range in length from three to 30 years and can be fixed rate... floating rate issue. Contractionary Policy A type of policy that is used as a macroeconomic tool by the country's central bank or finance ministry to slow down an economy. Contraction risk is a component of prepayment risk that increases as interest rates.. Contractionary policies are enacted by a government to reduce the money supply and ultimately the spending in a country. Conversion The exchange of a convertible type of asset into another type of asset. Convertible Adjustable Preferred Stock (CAPS) A preferred. The conversion parity price is the effective price paid by the investor. Conversion Price The price per share at which a convertible security. as long as the products remain profitable. such as convertible bonds and preferred shares. can be converted into common stock. Conversion Ratio The number of common shares received at the time of conversion for each convertible security....

.high-yield. Examples of core liquidity assets would be cash. the issuer of the bond. Corporate Inflation-Linked Securities Corporate debt financing securities that offer their holders protection against fluctuations in the rate of inflation as measured by the consumer price index (CPI). This includes shareholders.. Banks typically use forecasts.. In some cases.. which allow bond holders to convert their creditor position to that of an equity holder at an. Convertibles are most often associated with convertible bonds.. The strategy is generally market neutral. the arbitrageur seeks to generate consistent returns with minimal volatility. Convertibles Securities.. Convexity is used as a risk-management tool. in other words. usually bonds or preferred shares. Debt is replaced or refunded by a company with money that.. as well as bondholders. government bonds and money market funds. Corporate Bond A debt security issued by a corporation and sold to investors... under certain circumstances. The backing for the bond is usually the payment ability of the company... Core Plus A fixed-income investment management style that permits managers to add instruments with greater risk and greater potential return . The yields of these securities adjust monthly with respect to the current rate of.y y y y y y y y y y y y y Convertible Bond Arbitrage An arbitrage strategy that aims to capitalize on mispricing between a convertible bond and its underlying stock. By adding the convertibility option the issuer pays a lower interest rate on the loan compared to if there.. These events are generally approved by the company's board of directors. the company's physical assets may be..to core portfolios of investment-grade bonds. that can be changed into common stock (convertible) and ranks below other loans (subordinate). Convertible Debenture A type of loan issued by a company that can be converted into stock by the holder and. that can be converted into common stock.. Convexity A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes. global and emerging market debt. A convertible security pays a periodic fixed amount. . for example .. shareholders are.. Corporate Action Any event that brings material change to a company and affects its stakeholders. The most common convertible securities are convertible bonds or convertible preferred stock.. Refinancing may also involve issuing equity to pay off a percentage of debt.. which is typically money to be earned from future operations. and helps to measure and manage the. both common and preferred.. which can be changed into equity or common stock. Convertible Subordinate Note A short-term debt security (note). Convertible Security An investment that can be changed into another form. Corporate Refinancing The process through which a company reorganizes its debt obligations by replacing or restructuring existing debts. Core Liquidity Cash and other financial assets that banks possess that can easily be liquidated and paid out as part of operational cash flows.. This allows a company. Corporate Debt Restructuring The reorganization of a company's outstanding obligations.. often achieved by reducing the burden of the debts on the company by decreasing the rates paid and increasing the time the company has to pay the obligation back..

Coupon Equivalent Rate (CER) A alternative calculation of coupon rate used to compare zero-coupon and coupon fixed-income securities. the after-tax cost is seen most often. Cost Of Funds The interest rate paid by financial institutions for the funds that they deploy in their business.. Credit Cliff A slang term referring to the compounding of a company's credit deterioration caused by provisions such as financial covenants. in which shareholders or debtors of the target company are forced. Covered Bond Securities created from public sector loans or mortgage loans where the security is backed by a separate group of loans. interest expenses on margin accounts and interest on loans used to purchase a security. because interest expense is deductible..or after-tax returns..Formula Coupon Pass The purchase of treasury notes or bonds from dealers.... Coupon The interest rate stated on a bond when it's issued. by the Federal Reserve. however. or events that trigger a change in the company's credit rating. Cost Of Debt The effective rate that a company pays on its current debt. This can be measured in either before. Credit Default Contract Security with a risk level and pricing based on the risk of credit default by one or more underlying .. The cost of funds is one of the most important input costs for a financial institution. Formula: . The credit analysis seeks to identify the appropriate level of default risk.. A merger or acquisition with unfavorable terms. Cram-Down Deal 1.y y y y y y y y y y y y y y y Cost Of Carry Costs incurred as a result of an investment position. such as the interest costs on bonds.. or any other formal debt agreement. and economic costs.. 2. Watch: Understanding Bonds . A situation in which a creditor is forced to accept undesirable terms imposed by a court during a bankruptcy or reorganization... 2. Covered bonds typically carry a 2-10 year maturity rate and enjoy relatively high credit ratings.. Crammed Down 1. Also known as a "bearer bond". since a lower cost will generate better returns when the funds. that certain activities will or will not be carried out. Covenant A promise in an indenture. Coupon Bond A debt obligation with coupons attached that represent semiannual interest payments. Coupon Equivalent Yield (CEY) A method of calculation used to calculate the yield on bonds with maturities of less than one year and which normally sell at a discount and do not pay coupons. These costs can include financial costs. These can put pressure on the company's liquidity or its. The coupon is typically paid semiannually. This is also referred to as the "coupon rate" or "coupon percent rate"... such as... A situation in which venture capitalists refuse to invest in a new project unless the preceding investors of the company lower the value of their original investment. Credit Analysis A type of analysis an investor or bond portfolio manager performs on companies or other debt issuing entities encompassing the entity's ability to meet its debt obligations.. This is one part of the company's.. A bankruptcy procedure that allows a bankruptcy court to initiate a. depending on the quality of..

which is collateralized with AAA-rated securities. such as IOUs. Credit Risk The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit Market 1. Credit Spread Option A financial derivative contract that transfers credit risk from one party to another. The credit market encompasses both investment-grade bonds and junk bonds. Watch: What Is A Credit Score? .to mitigate the risk of loss from default by a borrower or bond issuer. or credit linked note .. Credit default contracts include credit default swaps (CDSs). or trust. Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness..Also known as a "bond rating. Credit Quality One of the principal criteria for judging the investment quality of a bond or bond mutual fund. as well as short-term commercial paper... 2. The buyer of a credit spread. 2... The market for debt offerings as seen by investors. It is based upon the history of borrowing and repayment. There are many forms of credit money. insurance. credit default options and credit... Those people who loan money to friends. Credit Spread 1. Different MBSs and different sections within an MBS have.. .. the lender is provided with reassurance that the borrower will honor the obligation through additional collateral. Creditors can be classified as either "personal" or "real".. total return swap. Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current.. Through credit enhancement. or the ratio of total credit-related losses to the original par value of an MBS. bonds and money market accounts.. Credit Rating An assessment of the credit worthiness of individuals and corporations. An initial premium is paid by the buyer in exchange for potential cash flows if a given credit spread changes from its current level. Virtually any form of financial instrument that cannot be repaid... As the term implies... Credit Money Any future monetary claim against an individual that can be used to buy goods and services. Credit Loss Ratio The ratio of current credit-related losses to the current par value of a mortgage-backed security (MBS).. The broad market for companies looking to raise funds through debt issuance. Credit Linked Note (CLN) A security with an embedded credit default swap allowing the issuer to transfer a specific credit risk to credit investors.usually a credit derivative such as a credit default swap.. credit default index contracts.y y y y y y y y y y y y security issuers. The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating. Credit Default Insurance The use of a financial agreement .. as well as the availability of assets and extent of liabilities... CLNs are created through a Special Purpose Company (SPC). credit quality informs investors of a bond or bond portfolio's credit worthiness." .... or risk of default. or a third party. An options strategy where a high premium option is sold and a low premium option is bought on the same underlying. Creditor An entity (person or institution) that extends credit by giving another entity permission to borrow money if it is paid back at a later date.

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Cross Calling A method of redeeming bonds using surplus funds provided from an unrelated bond issue. Cross calling occurs when a lender, which repackages its loans into new securities, uses prepayments from low interest rate loans to repay principal on the... Cross Default A provisions in a bond indenture or loan agreement that puts the borrower in default if the borrower defaults on another obligation. Also known as "cross acceleration". Crossover Refunding A local government's issuance of new municipal bonds (called refunding bonds) in which the proceeds of the refunding bonds are placed in escrow and used to make debt service payments on the refunding bonds until the call date of the original bonds.... Crowding Out Effect An economic theory explaining an increase in interest rates due to rising government borrowing in the money market. Cum Coupon A bond status that means the buyer of the bond has the right to receive the current coupon payment on the bond. Cum-coupon bonds require the buyer to pay the seller the accrued interest on the bond, and the buyer is then entitled to the next coupon.... Currency Band A currency system that establishes a trading range that a currency's exchange rate can float between. A currency band represents the price floor and ceiling within which the price of a given currency can trade, and is like a hybrid of a fixed... Current Coupon The to-be-announced (TBA) mortgage security of any issue for the current delivery month that is trading closest to, but not exceeding par value. TBA mortgage securities with the current coupon are used as a benchmark throughout the industry to price... Current Coupon Bond A bond with a coupon rate that is within 0.5% of the current market rate. Current coupon bonds are typically less volatile than other bonds with lower coupons because the coupon rate is closer to that set by the market. Watch: Understanding Bonds ... Current Face The current par value of a mortgage-backed security (MBS). Current face is determined by multiplying the current pool factor by the mortgage-backed security's original face value. A mortgagebacked security's current face represents the outstanding... Current Maturity The interval between the present date and the maturity date of a bond. The current maturity tells how long the bond has left until it matures, and it is an important metric for determining a bond's valuation. The longer the time until maturity, the... Current Yield Annual income (interest or dividends) divided by the current price of the security. This measure looks at the current price of a bond instead of its face value and represents the return an investor would expect if he or she purchased the bond and... Curve Steepener Trade A strategy that uses derivatives to benefit from escalating yield differences that occur as a result of increases in the yield curve between two Treasury bonds of different maturities. This strategy can be effective in certain... Cushion Bond A type of callable bond that sells at a premium because the issued coupon payments are above market interest rates.

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CUSIP Number An identification number assigned to all stocks and registered bonds. The Committee on Uniform Securities Identification Procedures (CUSIP) oversees the entire CUSIP system. Custodial Receipt A receipt representing a security held by a custodian or transfer agent. As such, it represents ownership of the security by the depositor. A security in custodial receipt form is usually nontransferable.

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Daily Factor A decimal representing the portion of an annual yield earned in one day. Daily factors are often reported alongside current annualized yield figures, and can be translated back to the current yield by multiplying the number by 365. ... Daily Trading Limit The maximum gain or loss on a derivative contract, such as options and futures contracts, that is allowed in any one trading session. The limits are imposed by the exchanges in order to protect against extreme volatility or manipulation within the... Dash To Trash When investors flock to a class of securities or other assets, bidding up prices to beyond what can be justified by valuation or other fundamental measures. While the dash-to-trash effect can occur within any type of security, the phrase is... Dated Date The date at which interest begins to accrue on a fixed-income security. Investors who purchase a fixed-income security between interest payment dates must also pay the seller or issuer any interest that has accrued from the dated date to the... Day-Count Convention A system used to determine the number of days between two coupon dates, which is important in calculating accrued interest and present value when the next coupon payment is less than a full coupon period away. Each bond market has its own day-count... De Minimis Tax Rule A rule that states that capital gains tax must be paid on a bond if the bond was purchased at a discount to the face value in excess of a quarter point per year between the time of acquisition and maturity. The reason for the capital gains tax is... Dealer Bank A commercial bank authorized to buy and sell government debt securities including federal and municipal bonds. This debt is usually issued to fund large government projects such as road and bridge construction. Dealer banks are registered with the... Dealer-Median Prepayment Speed The median value of all Wall Street securities dealers¶ prepayment speed estimates for the underlying mortgages used to form mortgage-backed securities. The prepayment speed estimates used by banks and other regulated financial enterprises to value... Death Bond A security backed by life insurance which is derived by pooling together a number of transferable life insurance policies. Similar to mortgage-backed securities, the life insurance policies are pooled together and then repackaged into bonds to... Death Spiral A type of loan investors give to a company in exchange for convertible debt, which, like convertible bonds, typically has provisions that allow investors to convert the bonds into stock at below-market prices. This can cause the original... Debenture A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed

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only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to... Debenture Redemption Reserve A provision that was added to the Indian Companies Act of 1956 during an amendment in the year 2000. The provision states that any Indian company that issues debentures must create a debenture redemption service to protect investors against the... Debt An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to... Debt Ceiling The maximum amount of monies the United States can borrow. The debt ceiling was created under the Second Liberty Bond Act of 1917, putting a "ceiling" on the amount of bonds the United States can issue. As of the end of July, 2011 the debt ceiling... Debt Exchangeable for Common Stock (DECS) A debt instrument that provides the holder with coupon payments in addition to an embedded short put option and a long call on the issuing company's stock. Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a... Debt For Bond Swap A debt swap involving the exchange of a new bond issue for similar outstanding debt or vice versa. Debt for bond swap transactions are usually executed to take advantage of an interest rate change and/or for tax write-off purposes. Debt Fund An investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate... Debt Instrument A paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender in accordance with terms of a contract. Types of debt instruments include notes, bonds, certificates, mortgages, leases or other agreements... Debt Limitation A bond covenant that limits or restricts any additional debt that may be incurred by the issuer. Debt limitations look to protect the current lenders by maintaining the firm's degree of leverage. Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Debt Security Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate and maturity/renewal date. Debt securities include government bonds, corporate bonds, CDs... Debt Tender Offer When a firm retires all or a portion of its debt securities by making an offer to its debtholders to repurchase a predetermined number of bonds at a specified price and during a set period of time. Firms may use a debt tender offer as a mechanism... Debt/Equity Swap A refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt.

These statistical models often use regression analysis (analyzing changes to certain market variables. that can be exchanged in the future at a predetermined price for another type of instrument. will have sufficient cash set aside for retirement of the debt. such as preferred shares or convertible bonds..y y y y y y y y y y y y y y y Debtor A company or individual who owes money. The failure to promptly pay interest or principal when due. The process of dedicating a portfolio may be used as an alternative to multiperiod immunization. such as cash or a cash equivalent. Defeasance A provision that voids a bond or loan when the borrower sets aside cash or bonds sufficient enough to service the borrower's debt. such as shares of common stock. Deep-Discount Bond 1. by the debtissuing firm. which are typically bonds.. Lenders and investors are exposed to default risk in virtually all forms of credit extensions. Deferred Interest Bond A debt instrument that pays no interest until a date specified in the future. If the debt is in the form of securities.. such as bonds. Default Model A type of model used by financial institutions to determine the likelihood of a default on credit obligations by a corporation or sovereign entity. . Deferred Equity A type of security. Default Premium The additional amount a borrower must pay to compensate the lender for assuming default risk. These securities are known as deferred equity because of." Defeased Securities Securities that have been secured by another asset... Dedicated Portfolio A passive form of portfolio management that involves the matching of future cash inflows with future liabilities.. the debtor is referred to as a borrower. the debtor is referred to as an issuer. they are then said to be in default of the debt. at which point the lenders of the debt. Default Probability The degree of likelihood that the borrower of a loan or debt will not be able to make the necessary scheduled repayments. Borrowers may default when they are unable to make the required payment or are unwilling to honor. ... A bond that is selling at a discount from par value and has a coupon rate significantly less than the prevailing rates of fixed-income securities with a similar risk profile. A bond that sells at a significant discount from par value.... Firms that have created defeased securities. which reduces the level of interest.. and stocks that are less volatile than average. Should the borrower be unable to pay. If the debt is in the form of a loan from a financial institution. Default Risk The event in which companies or individuals will be unable to make the required payments on their debt obligations..Also referred to as "defease. To mitigate the impact of default.2. Decoupling The occurrence of returns on asset classes diverging from their normal pattern of correlation. Defensive Investment Strategy A method of portfolio allocation and management aimed at minimizing the risk of losing principal. cash equivalents. Default 1.. Default occurs when a debtor is unable to meet the legal obligation of debt repayment... Deferment Period The period after the issue of callable security during which it cannot be called by the issuer. Defensive investors place a high percentage of their investable assets in bonds.

The dilution protection feature kicks in if the actions of the company will decrease the stakeholders' percentage claim on. which earn low-risk returns... . . Dirty Price A bond pricing quote referring to the price of a coupon bond that includes the present value of all future cash flows.... If it is unable to do this. Dim Sum Bond A bond denominated in Chinese yuan and issued in Hong Kong. Deposit brokers offer investors an assortment of fixed-term investment products.. The dirty price is how the bond is quoted in most European markets. Discount The condition of the price of a bond that is lower than par. including interest accruing on the next coupon payment. Denomination may also refer to the base currency in a transaction. Definitive Securities Securities that are issued in the form of a paper certificate as opposed to book-entry securities which are electronic entries into a computer... Dilution Protection A provision that seeks to protect existing shareholders or investors in a company from a decrease in their ownership position. these trusts are closed-ended and are not actively managed.. Digested Security A digested security is a financial instrument which an investor has bought and intends to hold for a long period of time.y y y y y y y y y y y y y Defined Portfolio An investment trust that invests in a predefined portfolio of bonds and/or stocks that have been professionally selected by the company. Its value is determined by fluctuations in the underlying asset.. The. The discount equals the difference between the price paid for a security and the security's par value. Derivative A security whose price is dependent upon or derived from one or more underlying assets. Detachable Warrant A derivative that is attached to a security and gives the holder the right to purchase an underlying security at a specific price within a certain time frame.... Examples of definitive securities include bearer and registered bonds.. Denomination A classification for the stated or face value of financial instruments. Deleverage A company's attempt to decrease its financial leverage. Similar to some classes of mutual funds. If a large number of investors choose to digest a particular security. Dim sum bonds are attractive to foreign investors who desire exposure to yuan-denominated assets. The security is thus effectively taken out of trading.. the company will be in significant risk of defaulting. The derivative itself is merely a contract between two or more parties. The. and is. The most common. A detachable warrant is often combined with various forms of debt offerings and can be. Deposit Broker An individual or firm that facilitates the placement of investors' deposits with insured depository institutions. as well as bonds and other fixed-income investments. or the currency in... Deleveraged Floater A fixed-income investment with a floating rate tied to a specific index with less than a one for one payback ratio.. but are restricted by China's capital controls from investing in domestic Chinese debt. including currency notes and coins. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet.

... The "discount" in a discount bond doesn't necessarily mean that investors get a better yield than the... denominated bond that trades outside of the United States. This is generally performed on a large scale with transactions that also include government bonds and treasury. Discount Note A short-term debt obligation issued at a discount to par. specifically in the context of a collateralized debt obligation (CDO). that a bond is quoted at.y y y y y y y y y y y y y y Discount Bond A bond that is issued for less than its par (or face) value. The other way bonds are often quoted is in terms of their yield. Dollar Drain When a country imports more goods and services from another country than it exports back to the same country. Along with the principal. The net effect of spending more money importing than is received from exporting causes a net reduction in the importing country's reserves... The interest rate for dollar BILS is determined at maturity. any coupon payments from the bond are paid in U.. rather than based on its yield to maturity. sells. Dollar Price Percentage of par. Discount yield is most frequently used to calculate the yield on short-term bonds and treasury bills sold at a discount. Discount House Primarily operating in the United Kingdom.. Discounting The process of determining the present value of a payment or a stream of payments that is to be received in the future.. Discount notes are similar to zero-coupon bonds and Treasury bills and are typically issued by government-sponsored agencies or highly rated corporate borrowers... Dollar Bond 1.. The calculation methodology for a diversification score takes into account the. or a bond currently trading for less than its par value in the secondary market.. Dollar Bond Index-Linked Securities (Dollar BILS) A zero-coupon floating rate debt instrument with an interest rate that is determined by the return performance of a specified index over a given time period. a firm that buys...S.2. Discount Margin (DM) The return earned in addition to the index underlying the floating rate security. Dollar Roll A type of repurchase transaction in the mortgage pass-through securities market in which the buy .. these financial instruments have suffered a substantial. Dollar. .. Given the time value of money. funds. Distressed Securities A financial instrument in a company that is near or is currently going through bankruptcy.. The dollar duration is generally used by professional bond fund managers as a way of approximating the portfolio's interest rate risk.S. Dollar Duration Dollar duration measures the dollar change in a bond's value to a change in the market interest rate. or face value. to estimate the diversification in a portfolio. As a result. A bond with a price that is quoted in dollars. Discount notes do not make. once the change in the value. This usually results from a company's inability to meet its financial obligations.. A U. discounts and/or negotiates bills of exchange or promissory notes. Diversity Score A measure. a dollar is worth more today than it would be worth tomorrow given its capacity to earn interest.. Discount Yield Discount yield is a measure of a bond's percentage return. This yield calculation uses a 30-day month and 360-day year to.. created by Moody's Investors Service..

. most states do not tax residents on interest income arising from taxexempt bonds issued by that state. The principal.. Drop The difference in price between the front month and back month in a mortgage-backed security (MBS) dollar roll trade. Dual Currency Issue A bond that pays interest in one currency but pays the principal in a different currency. its. The conversion from a floating-rate to a fixed-rate security can be. but that converts to a fixed-rate security if its reference rate reaches or falls below a predetermined level. The purpose of the combined indexes is to track the performance of the various segments of credit derivatives so that the overall return can be benchmarked. By guaranteeing the loan for its subsidiary company... Dual Currency Bond A debt instrument in which the coupon and principal payments are made in two different currencies.. The currency in which the bond is issued. and the other. usually U. Droplock Security A security that is issued with a variable or floating interest rate. the.. which is called the base currency. Doomsday Call A call provision added to fixed income securities that allows for early redemption by the issuer if certain conditions are favorable. Double Barreled A municipal general obligation bond in which the cash flows are pledged by two distinct and different entities.. Double Exempt The status accorded to municipal bonds for which interest is not subject to taxation at either the federal or state level... A doubling option allows the issuer to retire additional bonds at the sinking fund's call price... A. used mainly for bonds. Duration A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a .S. Downstream Guarantee A guarantee placed on a loan on behalf of the borrowing party by the borrowing party's parent company or stockholder.. which is denominated in a foreign currency... The amount of the principal repayment is set at initiation and paid at maturity.. the principal payments.. The purpose of a dragon bond is to attract funds from a larger market of foreign investors. Doubling Option A sinking fund provision that gives a bond issuer the right to redeem twice the amount of debt when repurchasing callable bonds. Dumbbell An investment strategy. where holdings are heavily concentrated in both very short and long term maturities... This principal amount usually allows for some appreciation in the exchange. other than Japan. One entity will make interest payments. will be the currency in which interest payments are made. Dow Jones CDX Indexes A series of indices that track North American and emerging market credit derivative indexes. These are municipal general obligation (GO) bonds as. In general..y y y y y y y y y y y y y side trade counterparty of a "to be announced" (TBA) trade agrees to a sell off the same TBA trade in the current month and to a buy back the same trade. According to forward securities pricing theory. dollars. the parent company provides assurance to the subsidiary company's lenders that. Dragon Bond A fixed income security issued by a firm in an Asian nation. A dollar roll is a popular type of trade in the MBS pass-through TBA market..

or "marked". Earning Assets An income-producing investment that is owned by a business. Effective Duration A duration calculation for bonds with embedded options. Earnings Yield The earnings per share for the most recent 12-month period divided by the current market price per share.. income from rental property. from high-grade issues to high-yield debt. Egan-Jones Rating Company (EJR) A well-known rating agency that evaluates bonds of all kinds. especially when used in certain congressional settings. Earmarking Funds (or capital) that are set aside to pay for a specific project or event. In some cases. Early amortization is an accelerated payment of bond principal in an asset-backed security. Effective Yield The yield of a bond. Emerging Markets Bond Index (EMBI) A benchmark index for measuring the total return performance of international government bonds issued by emerging market countries that are considered sovereign (issued in something other than local currency) and that meet specific liquidity and. the term is also synonymous with the word "flagged". E Back to top y y y y y y y y y y y y Early Amortization A type of credit enhancement used in certain asset backed securities (ABS).. Egan-Jones Rating Company (EJR) rates corporate debt of all kinds.. assuming that you reinvest the coupon (interest payments) once you have received payment. additional interest expense is calculated using the prevailing market interest rate at the time.. which prevents possible.y change in interest rates... Earning assets include stocks. while declining interest rates... Using this method. Rising interest rates mean falling bond prices.. . bonds... Election Period The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether or not he or she will exercise his or her option. usually triggered when there is a sudden increase in delinquencies in the. Embedded Option An option that is an inseparable part of another instrument.. Empirical duration is estimated statistically using historical market-based bond prices and historical market-based Treasury yields. Dwarf A slang term used to describe a pool of mortgage backed securities (MBSs) that have been issued by Fannie Mae and have a maturity of 15 years.. EJR is funded entirely by investors and not issuers... Duration is expressed as a number of years. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the. Effective Interest Method The practice of accounting for the discount at which a bond is sold as an interest expense to be amortized over the life of the bond.. certificates of deposit (CDs) and other interest or dividend earning accounts or instruments. the historical. institution or individual. Effective duration takes into account that expected cash flows will fluctuate as interest rates change. When the historical yields change. Compare this to a normal (or bare) option. Empirical Duration The calculation of a bond's duration based on historical data.. which trades separately from the underlying security.

. Eurobond A bond issued in a currency other than the currency of the country or market in which it is issued. has been about 6% on average for the past century. Equity Derivative A derivative instrument with underlying assets based on equity securities. the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). 2. as the title for the equipment is held in trust for the holders of the issue.. either directly or through the holding of euro-denominated short-term debt instruments.. Escrowed To Maturity The condition of a bond that has been repaid in advance by means of an escrow account. Indexed universal life insurance policies typically contain a minimum guaranteed fixed interest rate component along with the indexed.y y y y y y y y y y y y y y Ending Market Value . Equipment Trust Certificate A debt instrument that allows a company to take possession of an asset and pay for it over time. On a company's balance sheet. which is usually measured by share price. A stock or any other security representing an ownership interest. The return is calculated as the annual percentage return based on the yields of all... Estimated Long-Term Return A unit investment trust's estimated return over the life of the portfolio. Ending market value (EMV) is calculated by taking the beginning market value and adding the interest earned over the course of the investment. Equity Commitment Note (ECN) A type of mandatory convertible bond issued by a bank or other lending institution that qualifies as regulated capital.... The equity premium. calculated according to formulas proposed by the Securities and Exchange Commission (SEC)..EMV The value of an investment at the end of the investment period. Euro ETF An exchange-traded fund that invests in the euro currency. Equity-Indexed Universal Life Insurance A permanent life insurance policy that allows policyholders to tie accumulation values to a stock market index. meaning that stakeholders have a.. A equity commitment note is redeemed when the sale or issue of securities is made at a future date by the issuing bank or lending. When the. This excess return compensates investors for taking on the relatively higher risk of the equity market.. Equity Risk Premium The excess return that an individual stock or the overall stock market provides over a risk-free rate. which holds the funds needed to pay the periodic coupon payments and the principal. Euroclear One of two principal clearing houses for securities traded in the Euromarket. Euroclear specializes . The size of the premium will vary as the. An equity derivative's value will fluctuate with changes in its underlying asset's equity. Equity Premium Puzzle (EPP) An phenomenon that describes the anomalously higher historical real returns of stocks over government bonds. Erasure Guarantee A guarantee made by accredited institutions assuring the legitimacy and accuracy of changes made to bonds and securities.... Also referred to as "shareholders'.. The debt issue is secured by the equipment or physical assets. which is defined as equity returns less bond returns.. Equity 1... It is supposed. Ending Market Value = Beginning Market. Euro ETFs are often set up as currency trusts or grantor trusts.

Ex-Legal Municipal bonds that are delivered without a legal opinion from a bond law firm. the euro. Eurodollar bonds are an important source of capital for multinational companies and foreign. Exchange Traded Products are derivatively-priced. where the value is derived from another investment instruments such as a commodity. Excess Spread Remaining net interest payments from the underlying assets of an asset-backed security. A bond that is ex coupon is sold or bought with the knowledge that the investor will not receive the next coupon payment from the bond. The gradual infusion of capital into a new or recapitalized enterprise... and import duties from all non-member countries have been fixed. not just in European markets.many of which use the same currency. Euroclear is market owned and. In many agreements. and the issuer's home nation. Event-Linked Bond A type of bond whose interest and principal payments are determined based on the non-occurrence of certain events. after all payables and expenses are covered.-dollar denominated bond issued by an overseas company and held in a foreign institution outside both the U.y y y y y y y y y y y y y y in verifying information supplied by two brokers in a securities transaction and the settlement of securities. Exchange Traded Notes (ETN) A type of unsecured. Exchange Traded Products (ETP) A type of security that is derivatively-priced and which trades intra-day on a national securities exchange. Euromarket The market that includes all of the European Union member countries ..S. Event Of Default An action or circumstance that causes a lender to demand full repayment of an outstanding balance sooner than it was originally due.. unsubordinated debt security that was first issued by Barclays Bank PLC.. A British term that describes a revolving credit arrangement in which the borrower periodically renews the debt financing rather than having the debt reach maturity. such as earthquakes and hurricanes.. These. with a comparable coupon and time to maturity. Eurocredit A type of loan whose denominated currency is not the lending bank's national currency. This type of debt security differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus.S.. European callable bonds behave similarly to a vanilla bond after the call date. Ex Coupon A bond or preferred stock that does not include the interest payment or dividend when purchased or sold. Event-linked bonds helps insurance and. which are outlined in the prospectus of the bond issue.. All tariffs between Euromarket member countries have been abolished..... This.. such as the last coupon date. Euroyen bonds can be found in bond markets around the world.2. Euroyen Bond A Eurobond that is denominated in Japanese yen and issued by a non-Japanese company outside of Japan....... Evergreen Funding 1. Eurodollar Bond A U.. The lack. European Callable Bond A bond that can be redeemed by the issuer at a predetermined date prior to maturity. Expansionary Policy A macroeconomic policy that seeks to expand the money supply to encourage economic growth or . the lender will include a contract provision covering events of default to protect itself in. Despite what the name suggests.

Fallen Angel 1.. This is similar in nature to... Face-Amount Certificate Company A type of investment firm that issues debt securities to its investors. Farmer Mac's mission is to establish a secondary market for agricultural real estate and rural housing mortgage loans.(FAMC) A publicly traded. Also known as "par value". Also known. Extendable Bond A bond issue with a maturity that can be extended to a longer period at the option of the issuer. as well as to..... A bond that was once investment grade but has since been reduced to junk bond status. This type of debt is considered risk-free because it is guaranteed by the full faith and credit of the United States government. it is the original cost of the stock shown on the certificate. Fill The action of completing or satisfying an order for a security or commodity. The circumstances could range from natural disasters and cancelled projects to almost anything else. Federal Agencies Special government organizations set up for a specific purpose such as the management of resources. These organizations are typically created by legislative action. For bonds. One form of expansionary policy is fiscal policy.. Fairway Bond A type of bond that accrues interest if the embedded index or interest-rate option underlying the bond remains within a specified range. . Federally Guaranteed Obligations A federally guaranteed obligation is debt that is backed by the full power of the United States government. The fairway in golf is like the index or interest rate range. Financial Asset An asset that derives value because of a contractual claim. For stocks. it is the amount paid to the holder at maturity (generally $1. but may initially be.. bonds or any other type of security. Expectations Theory A theory proposing that long-term interest rates can act as a predictor of future short-term interest rates. Farmer Mac . Stocks.. These securities are called faceamount certificates and are backed by security interest on assets such as real property or other securities.. FDIC Insured Account An account that meets the requirements to be covered or insured by the Federal Deposit Insurance Corporation (FDIC). Extraordinary Redemption A provision which gives a bond issuer the right to call the bonds due to a one-time occurrence. and the like are all examples of financial assets. 2.000). bank deposits.. The outlook is positive if the ball lands on the. which comes in the form of tax cuts. financial oversight of industries or national security issues. A stock that has fallen substantially from its all time highs.. bonds. An FDIC Insured Account has to be in a bank that is a participant of the FDIC program. as specified in the offering statement. shareholder-owned corporation that was federally chartered by an act of Congress in 1988. F Back to top y y y y y y y y y y Face Value The nominal value or dollar value of a security stated by the issuer. rebates and increased government.y y y combat inflation (price increases)...Federal Agricultural Mortgage Corporation . It is the basic act in transacting stocks. The different accounts that can be FDIC..

along with the actual transfer of economic risk. The company's ratings are used as a guide to investors as to which investments are most likely going to yield a return. usually until the annuitant dies. Fitch Ratings An international credit rating agency based out of New York City and London. Corporations can issue fixed debentures to finance. Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract.. that takes responsibility for the fiscal duties of an unrelated party. Fine Paper High-quality securities that are assumed to be risk free. It is based on factors such as how small an economic.S. The insurance company guarantees both earnings and principal.y y y y y y y y y y y y y y Financial Guarantee An non-cancellable indemnity bond that is backed by an insurer in order to guarantee investors that principal and interest payments will be made. Risk is reduced through accounting or financial methods. Many insurance companies specialize in financial guarantees and similar products that are used by debt.. Fiscal Agent An organization.. Finite Reinsurance A type of reinsurance that transfers over only a finite or limited amount of risk. Fixed-income budgeters and investors are often one and the same .typically retired individuals.. such as a bank or trust company.. settlement and delivery of fixed-income assets in the U.... or commercial paper that is issued by solid blue-chip companies that have minimal risk of default. basic regulations on. currencies and derivatives. The charge will remain on the company¶s records until the debenture is repaid.FICC An agency that deals with the confirmation. Fine paper will trade at a small spread over government issued fixed-income securities to. Five Against Bond Spread (FAB) A spread in the futures markets created by taking offsetting positions in futures contracts for fiveyear treasury bonds and long-term (15-30 year) treasury bonds. . Fixed Interest Rate A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan. Fixed Debenture A note that carries a fixed (as opposed to floating) charge against the issuer¶s property or assets for repayment. Fixed Income A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals at reasonably predictable levels... that has a fixed time period . Financial markets are typically defined by having transparent pricing. Five Against Note Spread (FAN) A spread in the futures markets created by taking offsetting positions in futures contracts for fiveyear treasury notes and ten-year treasury bonds..S. the insurer. Financial Market Broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities. usually some kind of debt instrument. By transferring less risk to the reinsurer. Also known as a "fixed-rate mortgage".. Fixed Term Describes an investment vehicle.. Fixed Income Clearing Corporation ... Government securities and mortgage-backed security transactions in the market.. The agency ensures the systematic and efficient settlement of U. bonds.

2. Fixed-Rate Capital Securities A security issued by a corporation that has a $25 par value (although some are issued with a $1.. debenture or gilt-edged bond that investors use to loan money to a company in exchange for interest payments. This contrasts with a fixed interest rate.... This is a valuable tool for investors to use to determine the risk-return structures of their bonds/.. Flip-flop notes provide investors with two options of return.. such as in the case of the outstanding balances in a company's accounts receivable. When using a fixed-income arbitrage strategy. These securities provide the benefits of. Fixed-Income Arbitrage An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. a fixed-income style box is designed to visually represent the investment characteristics of bonds and bond mutual funds. .. A price that is neither rising nor declining.000 par value) and offers investors a combination of the features of corporate bonds and preferred stock.. .. Fixed-Interest Security A debt instrument such as a bond.. A fixed-interest security pays a specified rate of interest that does not change over the life of the. A floating lien is used when the smaller components of the general asset can change over time. A bond that is trading without accrued interest. where payments change based on some underlying measure such as short-term interest....y y y y y y y y y y y y of investment. Fixed-Income Style Box Created by Morningstar..3.. Flat Yield Curve A yield curve in which there is little difference between short-term and long-term rates for bonds of the same credit quality.. Flat 1... in which the interest rate of a debt obligation stays constant for the duration of the agreement. This type of yield curve is often seen during transitions between normal and inverted curves. In forex. Fixed-Income Security An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity.. Flat Bond A debt instrument that is sold or traded without accrued interest.. Floating Interest Rate An interest rate that is allowed to move up and down with the rest of the market or along with an index. Also known as "floating-rate debt".. the condition of being neither long nor short in a particular currency. Floater A bond or other type of debt whose coupon rate changes with market conditions (short-term interest rates). the investor parts with his or her money for a specified period of time and is repaid his or her. Flip-Flop Note A type of fixed-income security that allows its holder to choose a payment stream from two different sources of debt. the investor assumes opposing positions in the market to take advantage of small. Floating Lien A legal claim placed on a set of assets rather than on a single asset. With a fixed-term investment. Unlike a variable-income security..A. There are three possible reasons that a bond would not have any accrued interest: No. Also referred to as 'being square'. allowing them to choose the underlying debt with the higher yield for. the fraction of the bond's coupon payment that the holder earns between periods of bond payments..

. for a temporary period of time.. such as convertible bonds and stock options. the purchaser of the receivables. when the effect of reduced taxes are taken into account. becomes the entity to whom the importer is obliged to pay its debt.. Fully Convertible Debenture (FCD) A type of debt security where the whole value of the debenture is convertible into equity shares at the issuer's notice.y y y y y y y y y y y y y y Floating-Rate Note (FRN) A note with a variable interest rate. granted by a lender or creditor. Force Majeure A French term literally translated as "greater force"... forcing investors to convert their securities into the predetermined number of shares. this clause is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling.. Foreign Currency Fixed Deposit (FCFD) A fixed investment instrument in which a specific sum of money with an agreed upon time and interest rate is deposited into a bank. Freedom Shares Original issue discount bonds issued by the U.. Forbearance A postponement of loan payments. Full Faith And Credit A phrase used to describe the unconditional guarantee or commitment by one entity to back the interest and principal of another entity's debt. The fully taxable equivalent yield shows what yield a fully taxable bond would have to give. The forfaiter. The ratio of conversion is decided by the issuer when the debenture is issued. Companies often release specific financial figures in terms of fully diluted shares outstanding. Forced Conversion The occurrence of an issuer of a convertible security exercising the right to call the issue.. The yield is. Freedom shares had a final maturity of 30 years from their issue date and were originally offered in combination with Series E bonds to promote public. Upon conversion.... Treasury from May of 1967 to October of 1970. Foreign Currency Convertible Bond (FCCB) A type of convertible bond issued in a currency different than the issuer's domestic currency. This full faith and credit commitment is typically employed by a government to help lower the borrowing. in the domestic market's currency....S.Also known as a "floater".. Fully Taxable Equivalent Yield The yield on a municipal bond. A convertible bond is a mix between a debt and equity. Foreign Bond A bond that is issued in a domestic market by a foreign entity. This is done to give the borrower time to make up for overdue payments. the investors enjoy the same. Flower Bond Fixed income products that were originally purchased by investors at a discount for the purpose of paying federal estate taxes upon their maturity. were exercised. the money being raised by the issuing company is in the form of a foreign currency. Forfaiting The purchasing of an exporter's receivables (the amount importers owe the exporter) at a discount by paying cash. . in order to be equivalent to a tax free municipal bond. Fully Diluted Shares The total number of shares that would be outstanding if all possible sources of conversion. In other words. Although fixed deposits have virtually no risk. The adjustments to the interest rate are usually made every six months and are tied to a certain money-market index.. foreign currency fixed deposits introduce an element of risk because.

. Future Capital Maintenance A term used to account for future expenses that a company expects to incur in order to maintain its fixed assets. .. This type of debt is classified as funded debt because it is funded by interest payments made by the borrowing firm. they are goods that consist of many identical parts which can be easily replaced by other. General Obligation Bond (GO) A municipal bond backed by the credit and "taxing power" of the issuing jurisdiction rather than the revenue from a given project. France.. therefore. identical goods. Italy. with little risk of interest payment interruption or default. long-term notes payables or debentures that will mature in more than one year or one business cycle. only share redemptions (outflows) and. Funded Debt A company's debt.. In other words. a gilt-edged security is a stock or bond issued by a company that has a strong record of. The G7 nations are Canada. Because floating stock does not guarantee payout or a fixed rate of interest... which can be high-grade stock or bond issued by a financially stable company such as the Blue Chip companies or. Germany. the United. Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. also known as a repo market for its similarity to repurchase agreements.. Gen-Saki is available to both. A G7 bond is considered relatively less risky than bonds issued by nations outside the G7. G Back to top y y y y y y y G7 Bond A term used to refer to government bonds issued by a nation in the Group of Seven (G7). If the goods are sold by weight or. The performance of an asset or fund is not taken into account... . Gilt-Edged Switching The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security. Fund flow is usually measured on a monthly or quarterly basis. Gilt-Edged Securities High-grade bonds that are issued by a government or firm. in the Japanese market only. Gilts originated in Britain.. swapping it for funded debt (long-term bonds that carry a fixed rate of. This type of security originally boasted gilded edges... such as bonds. interchangeable.... to be reissued and resold at the new rate.. Fungibles Goods. Funding Operations The process a government uses to swap out floating stock or short-term bonds for long-term bonds. These bonds are considered to be high grade.. It is a medium for government bonds. Japan. thus the name. repair or replace an asset in order for it to continue to function as needed. In the case of a firm.. securities or instruments that are equivalent and. This includes the funds necessary to renew.y y y y y y Fund Flow The net of all cash inflows and outflows in and out of various financial assets. Gilt Fund A mutual fund that invests in several different types of medium and long-term government securities in addition to top quality corporate debt. Gen-Saki A secondary market in Japan. Gilt-Edged Bond A bond that is issued by a blue chip company.

Treasury securities. Glide Path Refers to a formula that defines the asset allocation mix of a target date fund. They. government securities.. Government Bond A debt security issued by a government to support government spending. cash program. Gross interest is the interest bondholders receive from their investment..y y y y y y y y y y y y y Gilts Risk-free bonds issued by the British government. They are the equivalent of U.S. . The GSCC was first established in 1986 to provide clearing and settlement of U. Government Security A government debt obligation (local or national) backed by the credit and taxing power of a country with very little risk of default.... Federal. most often issued in the country's domestic currency. includes more fixed-income assets and.. 2001. This. Government paper of a nation is usually perceived as the least risky debt securities in that country. The securities offered under this program have a maturity of 15 years. For a bond to fall into this classification it has to have been issued before March 1. Gnomes 15-year. or had its prospectus certified before.. security or deposit account before taxes or other charges are deducted. have abandoned buildings. The Federal Reserve solicits bids/offers from the primary dealers to receive the best deal whether it be for buying.. Brownfield sites are areas of land that are under utilized.S. and will offer investors the lowest yields compared with debt of a similar. or Freddie Mac's... . Gross Interest The annual rate of interest to be paid on an investment.. selling. pass-through securities offered by the Federal Home Loan Mortgage Corporation. Government Securities Clearing Corporation (GSCC) A division of the U. The GSCC handles both new issues and reselling of government securities.. fixed-rate. assuming the fund holds the. or are under developed. which will be subject to further taxes. The price of shares within a gold fund should correlate very closely to the spot price of gold itself. delegating operating costs as second.. .e... Government Paper Debt securities that are issued or guaranteed by a sovereign government. Gross Revenue Pledge A stipulation in a municipal bond indenture that requires the issuer (the municipality selling the bonds to fund a given development project) first to use revenues to pay down the issue's debtservicing costs.. reversals or repurchase agreements. based on the number of years to the target date. Green Bond A tax-exempt bond which is issued by federally qualified organizations and/or municipalities for the development of brownfield sites.. Fixed Income Clearing Corporation (FICC).. A pass-through security pools debt obligations. The glide path creates an asset allocation that becomes more conservative (i.. Go-Around A strategy used by the Federal Reserve to receive the highest return on securities... Gold Fund A mutual fund or exchange-traded fund (ETF) that invests primarily in gold-producing companies or gold bullion.S. Grandfathered Bond A classification for bonds in the European Union that excludes the payments made on these bonds from retention taxes.. Government debt is money owed by any level of government and is backed by the full faith of the government..

A held to maturity security. Harmless Warrant A warrant that requires the holder to surrender a similar bond when purchasing a new fixed-income instrument.. Heteroskedasticity In statistics. held for trading or available for sale.y y y y y Growth And Income Fund A mutual fund or ETF that has a dual strategy of capital appreciation (growth) and current income generation through dividends or interest payments..H This now-defunct exchange was located in Hamburg. or to a bond issue that has been canceled.. Hard Loan A foreign loan that must be paid in the currency of a nation that has stability and a reputation abroad for economic strength (a hard currency). bonds.GIB A guaranteed income bond (GIB) is an investment tool that provides income in the form of interest over a specified time period. These bonds pay out both interest and principal on a semiannual basis. Held-to-Maturity Securities Debt securities that a firm has the ability and intent to hold until maturity. A halted issue can relate to an initial public offering (IPO) that will no longer occur.. servicing. usually between 6 months and 10 years. The main component of the guarantee fee is charged to protect against. along with any other form of security offering that. H Back to top y y y y y y y y y Halted Issue A planned security offering that does not go forward as planned. Held To Maturity Security Accounting standards necessitate that companies classify any investments in debt or equity securities when they are purchased. Hard Call Protection The period in the life of a callable bond in which the issuing company is not permitted to redeem the bond.. selling and reporting MBS to investors. Germany. yield and principal.. the two bonds must have similar terms. bonds and other securities and was a financial pillar of the city. For the warrant to be exercisable.Also known as a "wedding. A growth and income fund may invest only in equities or in a combination of stocks. Guaranteed Income Bond .. such as maturity.. monitored over a specific amount of time. It traded stocks. Held-For-Trading Security Debt and equity investments that are purchased with the intent of selling them within a short period of time (usually less than one year).. . Accounting standards necessitate that companies classify any investments in debt or equity securities when. Hamburg Stock Exchange (HAM) . such as Freddie Mac and Fannie Mae. These bonds are issued by the Federal Home Loan Mortgage Corporation (Freddie Mac). when the standard deviations of a variable... It offered investment plans such as FONDS-X that impacted both open and closed-end funds. Guaranteed Bond A type of bond in which the interest and principal on the bond are guaranteed to be paid by a firm other than the issuer of the bond. These bonds are issued by life insurance companies in the United Kingdom and are. to lenders for bundling. The investments can be classified as held to maturity... Guaranteed Mortgage Certificate (GMC) A bond backed by a pool of mortgages. REITS and. Guarantee Fees Fees charged by mortgage-backed securities (MBS) providers..

Under certain programs. these bonds pay a higher yield than investment grade bonds. Heteroskedasticity often arises in two forms. This theory... fraud and other dishonest acts by employees. conditional and unconditional. Home Mortgage A loan given by a bank.. Hospital Revenue Bond A type of municipal bond to support the construction of new hospitals or new equipment and upgrades for existing hospitals. The terms of the deposits vary from overnight to one year.y y y y y y y y y y y y are non-constant. Also known as a. Housing Bonds Debt securities issued by state or local governments to raise money for affordable housing development. Office.......HLT guidelines are set out by the U. Housing bonds sometimes require voter approval and are repaid out of the government's general tax fund or from an increase in the sales tax rate. Because of the higher risk of default.. High-Yield Bond A high paying bond with a lower credit rating than investment-grade corporate bonds. Spreads are often expressed as a difference in. the proceeds from Housing Authority bonds may also be used to help. Treasury bonds and municipal bonds.. The U. bondholders are paid only after the... High-Yield Bond Spread The percentage difference in current yields of various classes of high-yield bonds (often junk bonds) compared against investment-grade corporate bonds.. Hotelling's Theory This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets .. Highly Leveraged Transaction (HLT) A bank loan to a highly leveraged company. Honesty Bond A bond posted by an organization or professional insuring the honesty and integrity of the bond issuer and/or its employees.. the owner of the property (the borrower) transfers the title to the lender on the condition that the..Based on the two main credit.K. In a home mortgage... is. Hong Kong Interbank Offer Rate (HIBOR) An interest rate stated in Hong Kong dollars on the lending and borrowing between banks in the Hong Kong interbank market. HLTs can be thought of as similar to junk bonds as they both face default risk. The Housing and Economic Recovery Act (HERA) allowed the Federal Housing Administration (FHA) to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime. An honesty bond insures the policy holder against theft.. The revenue created by the hospitals is then used to pay back bondholders.. version.specifically bonds and other interest-bearing securities... Generally. mortgage company or other financial institution for the purchase of a primary or investment residence. Hong Kong Exchanges and Clearing Limited (HKEx) A publicly-traded holding company created in 2000 through the merger of The Hong Kong Stock Exchange.. the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company.S. the London Interbank Offer Rate (LIBOR). .. but HLTs are more secure and have stronger debt covenants due to their structure. Housing And Economic Recovery Act (HERA) This act was created to address the subprime mortgage crisis of 2008.. The merger was designed to increase China's competitiveness in the. Conditional heteroskedasticity identifies. Housing Authority Bonds A short-term or long-term bond issued by state or local governments to help finance the construction or rehabilitation of affordable rental housing. Treasury bonds or another benchmark bond measure.

even through no interest payment has been made. Humped yield curves are also known as bell-shaped curves. I Back to top y y y y y y y y If-Converted Method A method used to calculate the share impact of convertible securities if they were converted into new shares. in recognition of the fact that many roundtable members are directly involved in providing mortgage credit to American consumers. it refers to the right that a banker has to liquidate goods if you fail to service a loan. Imputed Interest A term used to describe interest that is considered to be paid. Also known as "multiperiod immunization". Implementation Lag The time lag between when a macroeconomic shock or other adverse condition is recognized by central banks and the government.y y y y y Housing Policy Council (HPC) A subsidiary of the Financial Services Roundtable. but is heavily... The response lag may be short or long. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the. that are infrequently traded. Hybrid Fund A category of mutual fund that is characterized by portfolio that is made up of a mix of stocks and bonds. and when a corrective action is put into place... Morningstar separates hybrid funds into domestic hybrid and international hybrid. Hypothecation When a person pledges a mortgage as collateral for a loan.. which can vary proportionally over time or remain fixed. Humped Yield Curve A relatively rare type of yield curve that results when the interest rates on medium-term fixed income securities are higher than the rates of both long and short-term instruments.. Inactive Bond Crowd A group of exchange members who buys and sells bonds..The opposite of inactive bond crowd... Immediate Payment Annuity An annuity contract that is purchased with one payment and has a specified payment plan which starts immediately... The bond is held until it is delivered into the futures or. The Housing Policy Council (HPC) is a strong. The most common example is a convertible bond that has features of an ordinary bond. The term also applies to securities in a margin account used as collateral for money loaned from a. Hybrid Security A security that combines two or more different financial instruments... due to the absence of frequent trading. Immunization A strategy that matches the durations of assets and liabilities thereby minimizing the impact of interest rates on the net worth... Hybrid securities generally combine both debt and equity characteristics. Implied Repo Rate The rate of return that can be earned by simultaneously selling a bond futures or forward contract and then buying an actual bond of equal amount in the cash market using borrowed money.... Illiquid The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. may take a longer period of time to fill. . formed in 2003. Only in-the-money convertible securities (securities where the stock price is above the exercise price) are considered in the. Limit orders placed by the inactive bond crowd. depending on whether policy makers.

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Inbound Cash Flow Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow can include sales revenue generated through business operations, refunds received from suppliers, financing transactions... Incipient Default When a borrower appears to be heading toward defaulting on its debt. An incipient default is the foreshadowing of a person or company's inability to service a debt obligation. Income Annuity Annuities designed to start paying income as soon as the policy is initiated. The income annuity is annuitized immediately, although the underlying income units may be in either fixed or variable investments. As such, the income payments may... Income Bond A type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment. Income Fund A type of mutual fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market... Income Participating Security (IPS) A security that comprises a common share and a high-yield bond packaged together to distribute an issuer's cash flow to investors in a tax-efficient manner. An income participating security generally trades on an exchange, and its two components can... Income Risk The risk that the income stream paid by a fund will decrease in response to a drop in interest rates. This risk is most prevalent in money market and other short-term income fund strategies, rather than longer term strategies that lock in interest... Indenture A contract between an issuer of bonds and the bondholder stating the time period before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable and the amount of money that is... Index Amortizing Note (IAN) A type of structured note whose payment schedule is determined by the behavior of interest rates. Indexed Certificate Of Deposit (Indexed CD) A savings certificate entitling the bearer to receive an interest rate that is indexed to inflation. The indexed certificate of deposit (indexed CD) yields a rate of return that is linked to a stock market index, such as the S&P 500 or the NASDAQ... Index-Linked Bond A bond in which payment of income on the principal is related to a specific price index - often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are... Industrial Development Revenue Bonds (IDRBs) Municipal debt securities issued by a government agency on behalf of a private sector company and intended to build or acquire factories or other heavy equipment and tools. Inflation Derivatives A subclass of derivative that is used by individuals to mitigate the effects of potentially large levels of inflation. The most common type of inflation derivatives are swaps, in which a counterparty's cash flows are linked to a price index and the... Inflation-Indexed Security A security that guarantees a return higher than the rate of inflation if it is held to maturity.

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Inflation-Linked Certificates of Deposit Federally insured debt securities that are similar to regular certificates of deposit (CDs), but provide investors with inflationary protection via annually variable interest rates that increase or decrease with changes in the consumer price index... Inflation-Linked Savings Bonds (I Bonds) U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, as their yields are tied to the inflation rate. Inflation-Protected Security (IPS) A type of fixed-income investment that guarantees a real rate of return. The real rate of return is the nominal return, less the inflation rate, thus protecting investors from inflation. Installment Debt Debt issued with the condition of regularly occurring intervals for payment by the debtor, until the principal and interest are paid in full. Instrument 1) A tradeable asset or negotiable item such as a security, commodity, derivative or index, or any item that underlies a derivative. An instrument is a means by which something of value is transferred, held or accomplished. 2) An economic... Insurance Bond An investment instrument that is offered by life insurance companies. The investment is provided in the form of a single premium life insurance policy. These bonds are often used as investments in the U.K. and other countries. Also known as an... Insured Bond A bond with interest and principle payments insured by a third party. Insured bonds are usually found as a feature of municipal bonds; they are purchased, underwritten and repackaged by a financial guarantee company who then sells the issue to... Inter-American Development Bank (IDB) A cooperative development bank founded in 1959 to accelerate the economic and social development of its Latin American and Caribbean member countries. The Inter-American Development Bank is owned by a total of 47 member countries including the... Intercorporate Investment Securities that are purchased by corporations rather than individual investors. Intercorporate investments allow a company to achieve higher growth rates compared to keeping all of its funds in cash. These investments can also be used for strategic... Interest 1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. 2. The amount of ownership a stockholder has in a company, usually expressed as a percentage. Interest is commonly calculated using one of two... Interest Only (IO) Strips The interest portion of mortgage, Treasury or bond payments, which is separated and sold individually from the principal portion of those same payments. The periodic payments of several bonds can be "stripped" to form synthetic zero-coupon... Interest Rate The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). The assets borrowed could include, cash... Interest Rate Call Option An interest rate derivative in which the holder has the right to receive an interest payment based on a variable interest rate, and then subsequently pays an interest payment based on a fixed interest rate. If the option is exercised, the investor... Interest Rate Collar An investment strategy that uses derivatives to hedge an investor's exposure to interest rate

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fluctuations. The investor purchases an interest rate ceiling for a premium, which is offset by selling an interest rate floor. This strategy protects the... Interest Rate Future A futures contract with an underlying instrument that pays interest. An interest rate future is a contract between the buyer and seller agreeing to the future delivery of any interest-bearing asset. The interest rate future allows the buyer and... Interest Rate Risk The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship. Such changes usually affect... Interest Rate Sensitivity A measure of how much the price of a fixed-income asset will fluctuate as a result of changes in the interest rate environment. Securities that are more sensitive will have greater price fluctuations than those with less sensitivity. This type of... Interest-On-Interest The interest that is earned upon the re-investment of interest payments. Interest-on-interest is primarily used in the context of coupon paying bonds, where all coupon payments are assumed to be re-invested at some interest rate and held until the... Intermarket Analysis The analysis of more than one related asset class or financial market to determine the strength or weakness of the financial markets or asset classes being considered. Instead of looking at financial markets or asset classes on an individual... Intermarket Sector Spread The yield spread between two fixed-income securities in different sectors with the same maturity. Intermarket Spread Swap A swap transaction meant to capitalize on a yield discrepancy between bond market sectors. Intermediate/Medium-Term Debt A type of fixed income security with a maturity, or date of principle repayment, that is set to occur in the next 3-10 years. Bonds and other fixed income products tend to be classified by maturity date, as it is the most important variable in the... International Bank Of Reconstruction And Development (IBRD) A component of the United Nation's World Bank Group that was established in 1945 with the original mandate of providing funding towards the post-World War II rebuilding efforts. In the modern era, the IBRD's main objective is to provide loans and... International Bond Debt investments that are issued in a country by a non-domestic entity. International bonds are issued in countries outside of the United States, in their native country's currency. They pay interest at specific intervals, and pay the principal... Internote Corporate debt securities that are designed to allow ease of purchase by individual investors. Internotes reflect the issued debt of the underlying entity which allows retail investors to gain access to bank, corporate or government bonds.... Interpolated Yield Curve (I Curve) A yield curve derived by using on-the-run treasuries. Because on-the-run treasuries are limited to specific maturities, the yield of maturities that lies between the on-the-run treasuries must be interpolated. This can be accomplished by a number of... Interpolation A method of estimating an unknown price or yield of a security. This is achieved by using other related known values that are located in sequence with the unknown value. Interpretive Letter A letter issued by banking regulators that interprets the banking law for a specific issue or party.

Inverted Yield Curve An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality.. such as Standard & Poor's. This is calculated by subtracting the longer term by the shorter term. Bond rating firms. 2. Issuer A legal entity that develops. options and futures... following the Irish Parliament's passing of the Stock Exchange (Dublin) Act. When the interest rate goes up the coupon payment rate will go down because. . registers and sells securities for the purpose of financing its . The investment style of a fund helps set expectations for long-term. In effect. Issue 1. Investment Ideas Specific views. Other. the shorter term instrument is yielding.. Investment Grade A rating that indicates that a municipal or corporate bond has a relatively low risk of default....y y y y y y y y y y y y y Interpretive letters become effective immediately upon issuance. such as certificates of deposit (CDs) or bonds. The bottom of the pyramid is comprised of low-risk investments. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor..and lowercase letters 'A' and 'B' to identify a.. .... or can carry a greater degree of risk such as with stocks. Inverse Floater A bond or other type of debt whose coupon rate has an inverse relationship to a benchmark rate. A bond or stock issue. An inverse floater adjusts its coupon payment as the interest rate changes. It is similar to a warrant except that it is subject to the conversion ratio. Inverted Spread A situation in which the yield difference between a longer term financial instrument and a shorter term instrument is negative.. The Irish Stock Exchange (ISE) has existed since 1793 and was first recognized by legislation in 1799.. plans or ideas on ways to invest money effectively.. the mid-portion is composed of growth investments and the top is speculative. The process of offering securities as an attempt to raise funds. In essence.. These letters are similar to IRS letter rulings that interpret the application of. A series of stocks or bonds that have been offered to the public.. Companies may issue bonds or shares to investors as a method of financing the business... an ICULS provides the benefits of a bond until it is converted to an equity. Investment Pyramid A portfolio strategy that allocates assets according to the relative safety and soundness of investments. Irish Stock Exchange (ISE) A stock exchange located in Ireland. Irredeemable Convertible Unsecured Loan Stock (ICULS) A type of security that can be used to purchase underlying common shares.. Investment vehicles can be low-risk.. Investment Vehicle A product used by investors with the intention of having positive returns.. Investment Style The overarching strategy or theory used by either a retail investor or an institutional money manager to set asset allocation and choose individual securities for investment. Investment ideas typically involve the expertise and advice of an investment advisor who recommends different investment tools based on individual circumstances. Intramarket Sector Spread The yield spread between two fixed-income securities with the same maturity within the same sector. The Irish Stock Exchange merged... use different designations consisting of upper.

interest. Kicker 1.. and is often purchased by married couples who want to guarantee that a surviving spouse. The bond is subject to Australian laws and regulations. The government pays interest on the bond until the maturity date. Also known as a "high-yield bond" or "speculative bond". At the maturity date. K Back to top y y y y y Kangaroo Bond A type of foreign bond that is issued in the Australian market by non-Australian firms and is denominated in Australian currency.operations. Keogh Plan A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.= Security's price after a 1% decrease in yield P+ =. Issuers may be domestic or foreign governments.." Keepwell Agreement A contract between a parent company and its subsidiary to maintain solvency and financial backing throughout the term set in the agreement.000. etc. Junk Bond A bond rated 'BB' or lower because of its high default risk.. Joint And Survivor Annuity An insurance product that continues regular payments as long as one of the annuitants is alive. corporations or investment trusts. . A joint and survivor annuity must have two or more annuitants. Key Rate Duration Holding all other maturities constant. These pools combine loans with similar characteristics and are generally larger than singleissuer pools. although most plans are defined... Also called a "joint-and-several bond. The kicker may or may not actually. Issuers are legally responsible for the obligations of the...... the full price of the bond is returned to the bondholder. or other feature that is added to a debt instrument to make it more desirable to potential investors by giving the debt holder the potential option to purchase shares in the issuer. Japanese government bonds play a key role in the financial.. Jumbo Pool A pass-through Ginnie Mae II mortgage-backed security that is collateralized by multiple-issuer pools. Junior Issue Generally speaking. The mortgages contained in jumbo pools... and allow investors to deposit a certain amount of money and receive interest." Jumbo CD A certificate of deposit (CD) with a minimum denomination of $100. principal. These investments are. J Back to top y y y y y y y Japanese Government Bond (JGB) A bond issued by the government of Japan. any issue that ranks lower in claim to another issue in terms of dividends.. this measures the sensitivity of a security or the value of a portfolio to a 1% change in yield for a given maturity.. Jumbo CDs have higher denominations than regular certificate of deposits. A right.Also known as a "matilda bond. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan. exercisable warrant..The calculation is as follows:Where:P. Joint Bond A bond that is guaranteed by a party other than the issuer.

. was established in 1956.. The index includes pass-through. the Kuala Lumpur Stock Exchange was established in 1976..S.KS The Stock Market Division of Korea Exchange. Lehman Brothers Government/Corporate Bond Index An unmanaged market-weighted index... Level 1 assets include listed stocks.. Lehman Investment Opportunity Notes (LIONs).. such as mortgage pools created by the Government National Mortgage Association (GNMA). NZX. funds. The Lehman Brothers MBS Index consists of fixed-rate securities. bonds. In the event that the buyer is unable to make payment on the purchase. comprised of government and investment grade corporate debt instruments with maturities of one year or greater. and therefore a reliable fair market value.. Level 2 asset values can be closely approximated using simple models. The Lehman Brothers Asset-Backed Securities Index serves as the performance benchmark for many ABS funds. The index includes government securities. but whose fair value can be readily determined based on other data values or market prices. Sometimes called ³mark to model´ assets. which was established in 1930 and went through several name changes. Publicly traded companies must..... mortgage-backed securities. asset-backed securities and corporate securities to simulate the universe of bonds in the market. as well as some registered banks.. Any extra income earned above of the threshold is taxed at the guardian's rate. Lehman Brothers Mortgage-Backed Securities Index An index made up of mortgage-backed securities that is used for benchmarking purposes. or any assets that have a regular ³mark to market´ mechanism for pricing. Kiwi Bond Retail stock offered directly to the public and available only to New Zealand residents.. Its precursors were the Singapore Stockbrokers' Association. Letter Of Credit A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ... L Back to top y y y y y y y y Lehman Aggregate Bond Index An index used by bond funds as a benchmark to measure their relative performance... were created as a new breed of security that separated principal and interest and were issued at a discount. . Level 2 Assets Assets that do not have regular market pricing. Federal.y y y y Kiddie Tax A special tax law created in 1986 imposed on individuals under 17 years old whose earned income is more than an annually determined threshold.. Lehman Investment Opportunity Note (LION) A type of zero-coupon Treasury bond issued by the U. government through Lehman Brothers... controlled-amortization and bullet-structured.KL The former name for what became the Bursa Malaysia in 2004. the bank will be required to cover the full or remaining. formerly an independent South Korean exchange.. Some of its milestones include the launching of the Stock Index Futures Market in 1996 and the Stock Index Options Market in 1997. The Lehman Brothers Government/Corporate Bond Index is a total return benchmark index for many bond. Lehman Brothers Asset-Backed Securities Index A fixed-income index that focuses on asset-backed securities.. Application forms and investment statements are available from the new Zealand Debt Management Office (NZDMO) Registry. Level 1 Assets Assets that have readily observable prices. Kuala Lumpur Stock Exchange (KLS) . Korea Stock Exchange (KSC) ....

its assets are sold and the proceeds pay creditors. Bonds that were sold under the same name were reissued after the September 11.. in collecting interest and principal payments. Liquidity Preference Theory The idea that investors demand a premium for securities with longer maturities. putable (by investor). 2....... Often. Liquid Asset An asset that can be converted into cash quickly and with minimal impact to the price received. Lewis Ranieri Former bond trader and former vice chairman of Salomon Brothers who is credited with introducing securitization to the financial world.y y y y y y y y y y y y y Leveraged Buyout (LBO) The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.. .. Limited recourse debt sits in between secured bonds and unsecured bonds in terms of the backing behind the loan. LIBOR Curve A graphical representation of various maturities of the London Interbank Offered Rate (LIBOR)... In a liquidity trap. . which entail greater risk. Liberty bonds were introduced as a means of financing the war effort in Europe.. LPN holders participate. Any transaction that offsets or closes out a long or short position. Limited Recourse Debt A debt in which the creditor has limited claims on the loan in the event of default. 2001. making monetary policy ineffective. Liquid Yield Option Note (LYON) A zero coupon bond that is callable (by issuer).. consumers choose to avoid bonds and keep their funds in savings because of the prevailing belief that.. which will cause prices to fall. Loan Participation Note (LPN) A fixed-income security that permits investors to buy portions of an outstanding loan or package of loans. Liberty Bond A type of bond issued by the U.. Liquidation Preference A term used in venture capital contracts to specify which investors get paid first and how much they get paid in the event of a liquidation event such as the sale of the company.. LYONs are synthetic products that are financially engineered by Merrill Lynch. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market. on a pro rata basis. Liquidation 1. the easier it is to sell quickly for its full. then the asset is said to be illiquid. The LIBOR curve is usually depicted for short-term. Liquidity Premium A premium that investors will demand when any given security can not be easily converted into cash. Banks or other financial institutions often enter. terrorist attacks. and converted at the fair market value... Any leftovers are distributed to shareholders.S. which is the short-term floating rate at which large banks with high credit ratings lend to each other.. because they would prefer to hold cash. Liquidity Trap A situation in which prevailing interest rates are low and savings rates are high. When a business or firm is terminated or bankrupt. the assets of the company being acquired are used as collateral for the loans in addition to the assets of.. government during World War I. mortgage-backed securities (MBS) were only acknowledged by a handful of states as legitimate. Initially. When the liquidity premium is high.. The more liquid an investment. and convertible. which entails less risk. Liquidation preference helps protect venture capitalists from losing.. Often a limited recourse debt contract is.

the company passes a provision preventing anyone with more than 10% ownership from converting convertible securities into voting stock. They may include stocks.. The company issues a large number of bonds with the condition they must be redeemed at a high price if the company is taken over. Long-Term Capital Management (LTCM) A large hedge fund led by Nobel Prize-winning economists and renowned Wall Street traders that nearly collapsed the global financial system in 1998 as a result of high-risk arbitrage trading strategies.. Loss Given Default (LGD) The amount of funds that is lost by a bank or other financial institution when a borrower defaults on a loan. In a lobster trap. long-term debts are known as "long-term loans. with a rate of return dependent upon a lottery style payout." this typically is the 30-year U. and U. This includes sending monthly payment statements and collecting monthly payments. real estate and cash. treasury.K. The receipts pay a yield equal to a fixed base interest rate minus the floating rate of a benchmark (such as. maintaining records of payments and balances. such as pension plan managers and insurers. Long Inverse Floating Exempt Receipts (LIFER) A floating rate debt security traded among qualified institutional buyers (QIBs) and originated by German financial firm Deutsche Bank. and is a measure of bond price volatility with respect to interest.. Macaulay Duration The weighted average term to maturity of the cash flows from a bond.K. Long-Dated Asset A class of income-generating assets where the revenue stream is generated over a long period of time.y y y y y y y y y y y y Loan Servicing The administration aspect of a loan from the time the proceeds are dispersed until the loan is paid off. The fund formed in 1993 and was founded. but the most frequently used method compares. Academics suggest that there are several methods for calculating the loss given default. Residential mortgages and 20-year bonds are examples of long-dated assets.S. Lottery Bond A bond issued in the U. Longevity Derivatives A class of securities that provides a hedge against parties that are exposed to longevity risks through their businesses.. M Back to top y y Macaroni Defense An approach taken by a company that does not want to be taken over.. Lobster Trap A strategy used by a target firm to prevent a hostile takeover." Long-Term Investments An account on the asset side of a company's balance sheet that represents the investments that a company intends to hold for more than a year... In the U. These types of derivatives are designed to have increasingly high payouts as a. collecting and... When people refer to "the long bond..S. Long Bond A bond that matures in more than 10 years.. bonds. . Long-Term Debt Loans and financial obligations lasting over one year.. The weight of each cash flow is determined by dividing the present value of the cash flow by the price. Loan Syndication The process of involving several different lenders in providing various portions of a loan..

the maple bond gives domestic investors (in this. Maple Bond A bond denominated in Canadian dollars that is sold in Canada by foreign financial institutions and companies.Forex . Mandatory Convertible A type of convertible bond that has a required conversion or redemption feature. These securities provide. short-term commercial paper and certificates of deposit are all considered marketable securities because there is a public.. plus any original issue discount. samurai bond and matilda bond.. The borrower has to make a lump sum payment derived from a formula based on the net present value (NPV) of future coupon payments that will not be paid because. Managed Forex Accounts .. The system includes three ranks:... such as the bulldog bond. bonds. Market Exposure The amount of funds invested in a particular type of security and/or market sector or industry and usually expressed as a percentage of total portfolio holdings..y y y y y y y y y y y y y Maintenance Bond A type of surety bond purchased by a contractor that protects the owner of a completed construction project for a specified time period against defects and faults in materials. the holder must convert the mandatory convertible into the underlying common stock. The requirement to make delivery of the mortgage or pair-out of the.. Market Discount The difference between the face value of a bond issued at par and the current below-par market price.... Marketweight A credit rating system for fixed-income instruments. The marketweight ranking system gives a subjective estimate of the accuracy of the current credit spread and determines whether an investment is attractive. workmanship and design that could arise later if the project was done.Investopedia A type of forex account in which a money manager trades the account on a client's behalf for a fee.. Master Notes High-quality debt instruments offered by the Federal Farm Credit Bank (FFCB) with a minimum face value of $25 million.. Either on or before a contractual conversion date.. Market Basket A subset of products or securities that is designed to mimic the performance of an overall market. Returns and. prices or performance levels. which are used to track such things as inflation.... Managed forex accounts are similar to hiring an investment advisor to manage a traditional investment account of equities and bonds. . Stocks. Market discounts occur when interest rates rise. Thus. or exchanged with ease. The issuer might be required to redeem all or a portion of the bonds according to the call or prepayment provisions.. Mandatory Redemption Schedule Specified dates when a bond issuer is required to redeem all or a portion of the outstanding issues of a bond prior to its maturity. Marketable Security Any equity or debt instrument that it readily salable and can be converted into cash. Mandatory Mortgage Lock The sale of a mortgage in the secondary mortgage market with terms that require the seller of the mortgage to make delivery to the buyer by a certain date or pair-out of the trade. Make Whole Call (Provision) A type of call provision on a bond allowing the borrower to pay off remaining debt early.. it is the amount an investor has at risk or the amount he/she can lose.. Also. Market baskets contain a fixed selection of items. thus causing bond prices in the secondary market to fall. Similar to other foreign bonds..

Matching Strategy A strategy of creating investment portfolios that meet the individual needs of investors through tiered investment durations.. Used to back municipal bonds and structured finance products." Matrix Trading A fixed-income trading strategy that looks for discrepancies in the yield curve. counties and special districts (such as school districts) to finance major improvements and services within the particular district.. 2. Also known as a "kangaroo bond. Merger Securities A non-cash asset paid to the shareholders of a corporation that is being acquired or is the target of a . Mello-Roos In the U. The exact period of time that is considered medium term depends on the investor's personal preferences. Pool numbers are typically six digits in length.. The end of the life of a security. An example of this would be if a bank accepted a $100. The income from these notes is used to make loans to club members... Different issuers such as Freddie Mac. A note that usually matures in five to 10 years. Matilda Bond An bond denominated in the Australian dollar and issued on the Australian market by a foreign entity. ranging from nine months to 30 years. Investors can choose from differing maturities. Special taxes and bonds used for Mello-Roos financing. Member Payment Dependent Note A note that is issued by Lending Club..y y y y y y y y y y y y y y Matador Bond A term used to identify a foreign bond issued in Spain by a company that is not domiciled in Spain.. draft. Inc. The length of time until the principal amount of a bond must be repaid. then. Medium Term Note (MTN) 1. A corporate note continuously offered by a company to investors through a dealer. as well as on the asset class under consideration.. Match-Rate Funds When the interest rate on a loan matches (or is extremely close to) the interest rate on the source of the funds loaned out. In the. municipal....... and were usually corporate bonds.S. Member Payment Dependent Notes. Fannie Mae and Ginnie Mae use. and a primary worldwide issuer of financial guarantee insurance. It is also the termination or due date on which an installment loan must be paid. MBIA Insurance Corporation A division of publicly-traded MBIA. issued in 2008.. which an investor can capitalize upon by instituting a bond swap. The market for matador bonds grew rapidly between 1987 and 1999. Medium Term An asset holding period or investment horizon that is intermediate in nature.. MBS Pool Number A number or alphanumeric character assigned to a mortgage-backed security (MBS) by the issuer as an identifier of that security. Maturity 1. Discrepancies come about when current yields on a particular class of bond (corporate. Maturity Date The date on which the principal amount of a note. a form of financing that can be used by cities.. as MBIA's insurance. Matador bonds were bonds denominated in pesetas.. MBIA insurance is used as an avenue to credit enhancement.000 deposit and agreed to pay 5% interest on it for five years.. had an initial maturity of just three years and four business days and accrued interest from. 2. acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop.

.. Midgets A slang term referring to a Government National Mortgage Association (GNMA) bond.. A bond's yield-to-call and yield-to-maturity will change according. Minimum Yield The lesser of a bond's yield-to-call and yield-to-maturity. Money On The Sidelines The cash that is held either in savings or in low-risk. which increase the value of the subordinated debt and allow for greater flexibility when. Michael Milken As an executive at investment bank Drexel Burnham Lambert Inc. The minimum yield is used by investors who want to determine a conservative estimate for the value of a particular bond. Monetary Base The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. Merton. Investors might use money at call to cover a margin.. or BMV) has its headquarters in Mexico City.y y y y y y y y y y y y merger.. GNMA is also known as "Ginnie Mae".. Modified pass-through certificates are backed by federal loans of identical maturity and coupon date. options... Money At Call A short-term loan that does not have a set repayment schedule. Brokerage firm analysts and some investors employ the model in order to determine a... Modified Duration A formula that expresses the measurable change in the value of a security in response to a change in interest rates. such as certificates of deposits (CDs). Merton Model A model. low-yield investment vehicles. the Mexican Stock Exchange (in Spanish. but in 1989 he was indicted by.. Money Market A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. which has a 15 year maturity. la Bolsa Mexicana de Valores. Money on the. Michael Milken amassed an enormous personal fortune. instead of being placed in investments that have the potential for greater rewards... Calculated as:Where:n = number of coupon periods per yearYTM = the bond's yield to maturity Modified Pass-Through Certificate A fixed-income security that passes through an undivided interest in a pool of mortgages. The money market is used by participants as a means for borrowing and lending in the short term.. named after the financial scholar Robert C... that was developed in the 1970s and is used today to evaluate the credit risk of a corporation's debt.. Mezzanine Debt When a hybrid debt issue is subordinated to another debt issue from the same issuer. it adopted its current name in 1975 and is. such as the stock market... Principal and interest payments are made to investors. preferred stock and warrants. from several days to just...MX Mexico's only securities market. Mezzanine debt has embedded equity instruments (usually warrants) attached. Mexican Stock Exchange (MEX) . during the 1980s who used highyield junk bonds for corporate financing and mergers and acquisitions. but is payable immediately and in full upon demand. among others. The midget is secured by mortgages backed by federal agencies. Money-at-call loans give banks a way to earn interest while retaining liquidity. This measure of the money supply typically only includes the most liquid. Theses securities generally consist of bonds. Established in 1886 as the Mexican Mercantile Exchange.

Mortgage cash flow obligations (MCFOs) use cash flow from a pool of mortgages that generate revenue to repay investors their principal plus interest... Mortgage Company A company engaged in the business of originating and/or funding mortgages for residential or commercial property.. unaffiliated research company that rates fixed income securities. This servicing fee typically goes to the servicer of the loan. but now provide credit.. they market themselves to potential borrowers and seek funding from one. These bonds are typically backed by real estate holdings and/or real property such as equipment. Quebec. and is. Located in Montreal.. These insurance companies first began providing wraps for municipal bond issues. In a default situation. Montreal Exchange A Canadian derivatives exchange that facilitates the trading of stock options. Moral Obligation Bond A type of revenue bond issued by a municipality or similar government body.... Moody's assigns ratings on the basis of risk and the borrower's ability to make interest payments.. Mortgage Cash Flow Obligation (MCFO) A type of pay-through unsecured general obligation bond that has several classes. Moody's backs its ratings with exhaustive financial research and. Monthly Income Preferred Securities (MIPS) Shares that are an interest in a limited partnership existing solely for the purpose of issuing preferred securities and lending the proceeds of the sales to its parent company... it is the country's main financial derivative market... Payments are. lists new debt registrations and provides market commentary. Mortgage Bond A bond secured by a mortgage on one or more assets. interest rate futures and options... Moody's An independent. Mortgage originators adjust the fallout assumptions used in their hedge ratios as interest rates change relative to the loans they have in their..y y y y y y y y y y y y y Monoline Insurance Company An insurance company that provides guarantees to issuers.. Also known as "Moody's Credit Survey". while the.... but also provides an additional moral pledge of commitment against. that enhance the credit of the issuer. as well as index options and futures.. This process requires that the sell side of a TBA trade inform the its buy-side counterpart of the exact securities that will be delivered into the trade. A mortgage company is often just the originator of a mortgage. Moody's Bond Survey A weekly publication that reports changes in corporate bond quality ratings for publicly traded companies. mortgage brokers .. Mortgage Fallout A term used to describe the percentage of loans that do not close in a mortgage originator's pipeline. MIPS usually have a $25 par value. Mortgage Allocations A process used in the settlement of mortgage-backed security to-be-announced (TBA) trades. NYSE listing and cumulative monthly. Mortgage Excess Servicing The percentage of the monthly cash flow that remains after the cash flow has been divided into a coupon and principal payment for the mortgage backed securities (MBS) holder. mortgage bondholders have a claim to the underlying property and could sell. Mortgage Pipeline Mortgage loans that have been locked in with a mortgage originator by borrowers. A moral obligation bond not only gives investors the tax exemption benefits inherent in a municipal bond. often in the form of credit wraps.

These are the simplest form of. Multi-Asset Class A combination of asset classes (such as cash. Freddie Mac and Ginnie Mae are known as "pools" themselves. equity or bonds) used as an investment. municipality or county to finance its capital expenditures. is sold into the secondary mortgage... The weights and types of classes will vary. Municipal Investment Trust A type of unit investment trust (UIT) that invests solely in municipal securities. Mortgage Revenue Bond (MRB) A funding source for home mortgages. MAC was authorized to sell bonds.." Municipal bonds are debt securities issued by a state.. Mortgage subsidy bonds were issued by cities and other municipalities. thus creating a group or portfolio of assets. Some mortgage-backed securities issued by Fannie Mae.. Mortgage revenue bonds help low.y y y y y y y y y y y y y or other lenders. etc. and may be either taxable or. airports. Municipal Bond Arbitrage A strategy that consists of building a portfolio of tax-exempt municipal bonds and simultaneously hedging the duration risk of the portfolio through the short sale of equivalent taxable corporate bonds of the same maturity.MAC A corporation created by the state of New York to aid New York City in an extreme financial crisis.... The bondholder does not have to worry about. Mortgage Pool A group of mortgages held in trust as collateral for the issuance of a mortgage-backed security.. The municipal convertible is a zero-coupon bond. Municipal Bond Fund A mutual fund that invests in municipal bonds.. They are exempt.and middle-income firsttime home buyers by offering long-term mortgages at below-market rates... The. A loan will stay in an originator's pipeline from the time it is locked until it falls out. Municipal bonds are exempt from federal taxes and from most state and local taxes. Multi-Callable Bond A bond that allows the issuer to call or redeem it on particular future dates that are specified at the time of issuance.) to finance capital expenditures. Also.. The city had exhausted all lending organizations and was no longer able to have any debt issuances underwritten... Municipal Bond A debt security issued by a state. Municipal Convertible A zero-coupon municipal bond that can be converted into an interest-bearing bond under certain circumstances. Each class will have different characteristics in order to meet the needs of a wider range of investors than would be possible by issuing just one class of stock. or special purpose district (public schools. or "munis..... A multi-asset class investment would contain more than one asset class. Multiple Capital Structure The classification of a company's stock and bond offerings into different classes. Mortgage Subsidy Bond One of the few types of municipal bonds ever issued that may be subject to taxation. generally interest rate.. provided that the funds raised were used for home mortgages. A state can issue mortgage revenue bonds (a form of tax-free municipal bond) to.. municipality. Municipal investment . county. especially if you live in the state in which the bond is issued. Municipal Inflation-Linked Securities Investment vehicles issued by various levels of governments containing variable coupon payments that increase and decrease with changes in the consumer price index (CPI). Since the issuer benefits by gaining flexibility with regard to the bond's maturity.. the coupon on the bond may be higher than.. Municipal Assistance Corporation . and is sold at a discount from its face value..

bonds. which passes through taxfree income.. on its website.. Mutual Fund An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks... The lost. .. offer fixed income and are often exempt from income tax at.S. such as a bond or shares. or to repay investors. Municipal Securities Rulemaking Board (MSRB) A regulating body that creates rules and policies for investment firms and banks in the issuing and sale of municipal bonds.... Mutual funds are operated by money managers. Conversely. The interest paid on any security issued by the federal government is not taxable at the state or local level. A national bank functions as a member bank of the Federal Reserve in the capacity of investing member of its district Federal Reserve Bank.... Municipal investment trusts.. Naked warrants are. The MOB is sometimes used for determining tax strategies. who.. N Back to top y y y y y Naked Warrant A warrant that is issued without a host bond. Mutual Exclusion Doctrine An agreement between federal and state and local taxing authorities mandating mutual exclusion in taxation of interest. cities and counties.. Negative Arbitrage The opportunity lost when municipal bond issuers assume proceeds from debt offerings and then invest that money for a period of time (ideally in a safe investment vehicle) until the money is used to fund a project.. Municipal Note Debt issued by state and local governments to finance capital expenditures such as construction projects. Activities regulated by the MSRB.y y y y y y y trusts allow individuals to invest in a diversified pool of municipal bonds. Municipals-Over-Bonds Spread (MOB) The difference in yields between a municipal bond and a Treasury bond with the same time to maturity. National Quotation Bureau (NQB) A privately-owned company that was established in 1913 to provide investors with information on stocks and bonds traded over the counter (OTC). Municipal notes are appealing to investors because they mature in one year or less... but unlike a normal warrant.. National Bank In the United States. including data access. Mutual investment... a commercial bank chartered by the comptroller of the currency of the U.. Ratings provided by Nationally Recognized Statistical Ratings Organizations (NRSRO) are used frequently. any.S. The company now mainly offers electronic services. money market instruments and similar assets. NQB changed its.. This type of obligation is financed by an tax assessment made upon the residents that will benefit from the facility. government in several regulatory areas. it is not sold with an accompanying bond.. notes and other municipal securities by states. Mutual Investment Certificate A certificate issued by a local or municipal authority for the purpose of funding a public works project. Munifacts A newswire service for municipal bonds that provides information on new municipal bond issues in the primary market and secondary market. Treasury. A naked warrant allows the holder to buy or sell a particular financial instrument. Nationally Recognized Statistical Ratings Organization (NRSRO) The formal term to describe credit rating agencies that provide credit ratings that are used by the U.

It is commonly computed using the following formula: Net Debt To Assessed Valuation In a municipal bond issue..Calculated as: Net Revenue Pledge A provision in a municipal bond issue that requires the issuing municipality to use net revenues . Net Debt To Estimated Valuation A ratio comparing the net value of a municipal bond issue to the estimated market value of the property secured by the debt. Net Liquid Assets A measure that examines a company's net liquid financial assets. Net Debt Per Capita A measurement of the value of a government's debt expressed in terms of the amount attributable to each citizen under the government's jurisdiction. The formula for net interest cost (NIC) is based on the average coupon rate weighted to. Negative Covenant A bond covenant preventing certain activities.Most mortgage bonds are negatively convex.NIC A mathematical formula that an issuer of bonds uses to compute the overall interest expense that is associated with their bonds. Negative covenants are written directly into the agreement creating the bond issue.. This yield curve shift effectively humps the curve. Negative Pledge Clause A negative covenant in an indenture stating that the corporation will not pledge any of its assets if doing so gives the lenders less security.. A bond¶s convexity is the rate of change of its duration. group or individual. country. Once a company has been placed on negative watch. government... Net Interest Cost . dividend.. . adding to the curvature of the yield curve. as opposed to having multiple underwriting groups competitively bidding on the issue to. Negotiated Sale A method of offering municipal bonds or similar financial instruments in which the issuing entity and a selected underwriter negotiate the terms of the issue. it has a 50% chance of its. This ratio can differ significantly from a municipal bond's net debt to assessed valuation if real-estate prices for the. a ratio measuring the value of the municipality's net debt compared to the specified value of the real property being purchased as assessed for tax purposes. Negative Convexity When the shape of a bond's yield curve is concave.. A net borrower could be a company.... and exist to protect the best interests of the. which they will have to pay. stocks. are legally binding on the issuer. unless agreed to by the bondholders....and short-term yields decrease by a greater degree than intermediate rates.. loans and other investments (less related expenses). mutual funds. Negative Watch A status that the credit-rating agencies (Standard and Poor's. Net Borrower An entity that borrows more than it saves or lends out. The individual tax rate on net investment income depends on whether it is interest income. Also be referred to as a "covenant of equal coverage".. Moody's and Fitch) give a company while they are deciding whether to lower that company's credit rating. Borrowing can take the form of debt by acquiring goods and/or services under the stipulation of future. The net liquid assets show how much of a company's liquid assets would be left if all current liabilities were paid off..y y y y y y y y y y y y y y Negative Butterfly A non-parallel yield curve shift in which long. Net Investment Income Income received from investment assets (before taxes) such as bonds. and is measured as the second derivative of price with respect to yield.

patents and trademarks.. These types of securities trade over the counter (OTC) or in a private transaction.. Net Tangible Assets Calculated as the total assets of a company. Non-Marketable Security Any type of security that is difficult to buy or a sell because it does not trade on a normal market or exchange. . detailed data on a mutual might show a fund's nominal rate of return as 10%. in which time a market is sought. but also show its return after.... it locks in the interest rate it will pay until the security matures.. Depending on its application. Also known as "net asset value" or "book value". Nominal Interest Rate Nominal interest rates refer to referes to the rate of interest prior to taking inflation into account. Nonfinancial Asset An asset with a physical value such as real estate. while competitive tender is for large institutional investors. Nominal Yield The interest rate stated on the face of a bond. For example.. .. minus any intangible assets such as goodwill. The issuer of a noncallable bond subjects itself to interest rate risk because. which represents the percentage of interest to be paid by the issuer on the face value of the bond. When deposit-rate restrictions that had existed for decades were lifted. .... Net Worth The amount by which assets exceed liabilities. Noncallable A financial security that cannot be redeemed early by the issuer. less all liabilities and the par value of preferred stock. Non-Competitive Tender One of the two bid processes for buying debt issuances.. at issuance. equipment. dentistry. Non-Equity Option A term for option contracts whose underlying securities are instruments other than equities. electronics. Finding a party with which to transact business is. banks and thrifts found themselves having to pay. Also known as "Rule 396". Net-Worth Certificate An instrument used by the FDIC starting in 1982 as part of an effort to save failing banks and thrifts by providing capital.. Nine-Bond Rule The NYSE requirement that all orders for nine bonds or less be sent to the floor for one hour. that when added to the yield at one point on the Treasury yield curve equals the discount factor that will make a security's cash flows equal to its current market price. The rule doesn't apply if the customer directs the broker to go to the OTC market.y y y y y y y y y y y y y (revenues left after expenses) from the project being financed to pay first the debt service costs of the issue. The price that a noncompetitive bidder receives is the average bid price of all. ornamentation and. This term can be applied to companies and individuals. If interest rates. gold or oil. Nominal Yield Spread The spread. For example.. investment fees and inflation are factored in. Nominal Rate Of Return The amount of money generated by an investment before expenses such as taxes.. Non-competitive tender is for small investors. an inflation and risk premium must be added to the real interest rate in order to obtain the nominal rate. machinery. expressed in percent or basis points. gold is considered a nonfinancial asset because it has inherent value based on its use in jewelry..

Obligation Bond A municipal bond used to secure a mortgage on property or other physical assets that can be liquidated. The LCDX is traded over the counter and is managed by a consortium of large investment. This gives the yield curve an upward slope.. currencies). In the financial context. Investments of this sort are made with after-tax money. and may not always fall neatly into this categorization. Nonperforming Asset A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time.. Customers making accountsreceivable payments are not notified that their account/payment is being used as collateral for a loan.. The nonperforming asset is therefore not yielding any income to the lender in the. Returns from these investments are. Obligor A person or entity who is legally. Non-Qualifying Investment An investment that does not qualify for any level of tax-deferred or tax-exempt status.. Note Auction A formal bidding process that is scheduled on a regular basis by the U.. Treasury.e. A traditional mortgage would require a relatively high initial down payment of about 25% and 25-year payment schedule with an interest rate that is compounded on a monthly. Currently there are 17 authorized securities dealers (primary dealers) that are obligated to bid on each issue...Sometimes referred to as..... who is contractually bound to make all principal repayments and interest. Notes are similar to bonds in that. . North American Loan Credit Default Swap Index .. the term obligor refers to a bond issuer. plans or trusts.. or contractually. However. Note A financial security that generally has a longer term than a bill. Numismatics The study of the physical embodiment of various payment media (i. They continue making payments to the company that. Numismatics has many.. The face value of the bond is greater than the value of the property itself. Note Against Bond Spread (NOB) A spread within futures contracts created by offsetting positions in 30-year treasury bond futures with positions in 10-year treasury note contracts.y y y y y y y y y y Non-Notification Loan A full-recourse loan that is securitized by accounts receivable (AR). is often in the research of the production and use of the coins to determine their rarity... Nontraditional Mortgages A broad term describing mortgages that do not take the traditional form. O Back to top y y y Obligation The legal responsibility to meet the terms of a contract. This is the most often seen yield curve shape. the duration of a note can vary significantly. Normal Yield Curve A yield curve in which short-term debt instruments have a lower yield than long-term debt instruments of the same credit quality.S. All Treasury notes are originally issued in this. They are purchased and held in tax-deferred accounts. obliged to provide some benefit or payment to another. but a shorter term than a bond... The study of numismatics as it applies to coins.LCDX A specialized index of loan-only credit default swaps (CDS) covering 100 individual companies that have unsecured debt trading in the broad secondary markets.. If the obligation is not met there is often recourse for the other party to the contract..

and the lowest that the seller will accept. Ordinary income is composed mainly of wages. These are the opposite of "off-the-run treasuries".. Ordinary Annuity A series of equal payments made at the end of each period over a fixed amount of time. government bonds of a given maturity that are not the most recently issued. On-The-Run Treasuries The most recently issued U.2. or ordinary income rates.. Open mouth operations can be thought of as the central bank announcements. These are the opposite of "on-the-run treasuries"... commissions and interest income (as from bonds)..y y y y y y y y y y y y y y Offer 1. ordinary annuity payments are made monthly. It was established as an independent entity within the Department of Housing and Urban Development by the Federal Housing Enterprises. then the other part is automatically canceled. Office Of Federal Housing Enterprise Oversight (OFHEO) The federal regulatory body that oversees the government-sponsored entities (GSEs). in practice... Off-The-Run Treasury Yield Curve The U. Ordinary Income Income received that is taxed at the highest rates. When one party expresses interest to buy or sell an asset from another party. Ordinary Income can only be offset with standard tax deductions. The offering price is often the highest the buyer will pay to purchase an asset. semi-annually or. provided that the revenue of the previous year was sufficient enough to cover the costs of the new issue.. salaries. Open-End Indenture A clause in a revenue-bond agreement that permits the issuance of additional revenue bonds in the future. Offering The issue or sale of a security by a company. Option Adjusted Spread (OAS) Mainly used for fixed-income products..S. Freddie Mac and Fannie Mae. . While the payments in an annuity can be made as frequently as every week.to late-'90s with the introduction. Treasury yield curve derived using off-the-run treasuries. One-Cancels-the-Other Order (OCO) An order stipulating that if one part of the order is executed.S. quarterly.. The use of online trading increased dramatically in the mid. Open Mouth Operations Open mouthed operations are speculative measures taken by the Federal Reserve to influence interest rates and inflation through the sale or purchase of U. On-The-Run Treasury Yield Curve The U... Off-the-run treasuries refer to U. Treasury bond or note of a particular maturity. off-the-run. The on-the-run Treasury curve is the primary benchmark used in pricing-fixed income securities..S. OAS measures the yield spread that is not directly attributable to the security's characteristics. Online Trading The act of placing buy/sell orders for financial securities and/or currencies with the use of a brokerage's internet-based proprietary trading platforms. Off-The-Run Treasuries All Treasury bonds and notes issued before the most recently issued bond or note of a particular maturity. It is often used in reference to an initial public offering (IPO) when a company's stock is made available for purchase by the public but it can also be used in the context of a bond issue.S. Treasury yield curve derived using on-the-run treasuries. While they are not as recent as on-the-run treasuries.S Treasury bonds. The act of making an asset available for..

It is the difference between the stated redemption price at maturity and the issue price... Par Yield Curve A graph of the yields on hypothetical Treasury securities with prices at par. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. On the par yield curve. securities. An example of pari-passu. For example. Parity Bond Two or more bond issues with equal rights to one another. the outstanding.y y y y y y Original Face The par value of a mortgage-backed security at the time it is issued. such as a city within the state. occurs during bankruptcy.. 2. Overlapping Debt The debt of a political entity. a parity bond is an issued bond with equal rights to a claim as other bonds already issued. unsecured bonds have equal rights in that coupons can be claimed.. mortgage-backed securities return both principal and interest to the holder in periodic payments (usually monthly). A dollar amount assigned to a security when first issued. wages given to employees and taxes paid on income. etc. Paper Trade Simulated trading that investors use to practice mimicking trades (buys and sells) without actually entering into any monetary transactions.000 for corporate issues. which is why the Treasury bond will trade at par. Over-The-Counter (OTC) A security traded in some context other than on a formal exchange such as the NYSE. TSX. Original Issue Discount (OID) The discount from par value at the time that a bond or other debt instrument is issued. In other words. such as a state where its tax base overlaps the tax base of another political entity. Par Value 1. The face value of a bond.. Outbound Cash Flow Any money a company or individual must pay out when conducting a transaction with another party. with higher denominations such as $10.000 for many government issues. It also refers. Overcollateralization (OC) The process of posting more collateral than is needed to obtain or secure financing. Over time. 2. A dollar amount that is assigned to a security when representing the value contributed for each share in cash or goods. Overcollateralization is often used as a method of credit enhancement by lowering the creditor's exposure to default risk. Par 1. AMEX. Generally $1.. The face value of a bond. Partial Redemption An investment-transaction classification that refers to the withdrawal of a portion of a security's value . P Back to top y y y y y y y y Paper Dealer A firm that specializes in buying commercial paper from companies and then selling/marketing it to investors.. creditors or obligations are equally managed without any display of preference. Outbound cash flows can include cash paid to suppliers. Pari-passu A Latin phrase meaning ³equal footing´ that describes situations where two or more assets. the coupon rate will equal the yield-to-maturity of the security.. Unlike most other types of bonds.

such as a mortgage-backed security (MBS) . The immediate transfer of assets is triggered by the death of the client. Performance Index Paper (PIP) A short-term paper on which the rate is denominated and paid in a base currency. Performance Bond A bond issued to one party of a contract as a guarantee against the failure of the other party to meet obligations specified in the contract.. Pass-Through Rate The rate on a securitized asset pool .. the rate movement is based on the exchange rate with an alternate currency... "pay to bearer" refers to any negotiable instrument that is simply paid to the bearer without requiring proof of identity.. Perpetual bonds are not redeemable but pay a steady stream of interest forever.. Payable On Death (POD) An arrangement between a bank or credit union and a client that designates beneficiaries to receive all the client's assets.. A servicing intermediary collects the monthly payments from issuers. remits or passes them through to the holders of the pass-through security.. Payment-In-Kind Bonds A type of bond that pays interest in additional bonds rather than in cash. and.. Payee The party in an exchange who receives payment. The pass-through rate (also known as the. As the name implies. However. with assets of $4. an investor may prefer to keep a. The name of the payee is included in the bill of exchange. The ratio of conversion for.. It is funded by a portion of severance taxes on.. 2009. . Using.. which he believed would be a safe and profitable portfolio in any economic climate..that is "passedthrough" to investors once management fees and guarantee fees have been paid to the securitizing corporation. the Permanent Wyoming Mineral Trust Fund (PWMTF) is that state's oldest and largest permanent fund.. Rather than withdrawing the entire amount of his or her security's value from the account....y y y y y y y y y y y y y by the owner. Pay To Bearer Any check or draft that can be transferred to the holder by delivery without having to be endorsed. Partially Convertible Debenture (PCD) A type of convertible debenture. check or other transfer medium by a payer. Browne constructed what he called the permanent portfolio. Also referred to as a "totten trust. with the payer receiving a good or service in return.. Payment-in-kind bonds are considered a type of deferred coupon bond since there are. Watch: What Is A Pip? . Perpetual Bond A bond with no maturity date. A payee is paid in cash.2 billion as of June 30. Pass-Through Security A pool of fixed-income securities backed by a package of assets. Some of the only notable perpetual bonds in existence are those that were issued by the British Treasury to pay off smaller issues used to.. part of which will be redeemed by the issuing company after a specified period of time and part of which is convertible into equity or preference shares at the end of the specified period. Permanent Portfolio A portfolio construction theory devised by free-market investment analyst Harry Browne in the 1980s... Pass-Through Certificate Fixed-income securities that represent an undivided interest in a pool of federally insured mortgages put together by the Government National Mortgage Association (Ginnie Mae). The bond issuer incurs additional debt to create the new bonds for the interest payments.. Permanent Wyoming Mineral Trust Fund (PWMTF) Established in 1974 by the Wyoming Legislature." . after deducting a fee.. Also known.

In futures contracts. futures and swaps.. bonds. rather than being traded out with offsetting contracts.. Plain Vanilla The most basic or standard version of a financial instrument. the life of the PAC tranche will remain relatively. which alters the components of a traditional financial instrument. but does not have ownership unless default occurs.... The lender of the debt maintains possession of the pledged asset. usually options. Physical Delivery Term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date. These types of bonds represent the largest segment of the German private debt market and are considered to be the safest debt instruments in the private.. The formula for determining the present value of a perpetuity is as follows: Pfandbriefe A type of bond issued by German mortgage banks that is collateralized by long-term assets used. Also referred to as "yield pickup.... Plain vanilla is the opposite of an exotic instrument. In real estate mortgages.. The issuers of perpetual preferred stock will always have redemption privileges on such shares." PIMCO PIMCO is a global investment management firm that primarily focuses on portfolio management. Calculated as: . where the earnings are taxed but. Phantom income is not terribly common. As long as the actual prepayment rate is between a designated range of prepayment speeds. A $1 price change in the value of common stock.000. as well as their mutual. but does manifest itself in such investments as limited partnerships. Perpetuity A constant stream of identical cash flows with no end.. Portfolios are held directly by investors and/or managed by financial professionals.2. .000 par value or more are used in the calculation. resulting in a more. or 1% of one cent. Pool Factor The percentage of the original principal that is left to be distributed in a mortgage-backed security. Pickup A gain in yield made by selling one bond and buying another. Planned Amortization Class (PAC) Tranche A class of tranche in a planned amortization class (PAC) bond that receives a primary payment schedule.4... Only issues of $1. A 1% change in the face value of a bond or a debenture. PIMCO specializes in fixed income securities and manages the internationally known Total Return Fund.. Placement Ratio A ratio that calculates the amount of bonds sold during the week as a percentage of the amount of municipal bonds that are issued during the corresponding week. Portfolio A grouping of financial assets such as stocks. as represented by a numerical factor that will be attached on periodic market quotes and other presentations of the MBS¶s price.. Pledged Asset An asset that is transferred to a lender for the purpose of securing debt. bonds and cash equivalents.Also known as. Points 1.3.y y y y y y y y y y y y y y Perpetual Preferred Stock A type of preferred stock that has no maturity date.. Issued perpetual preferred stock will continue paying dividends indefinitely. account management and business management.. exchange-traded and closed-fund counterparts. Phantom Income Income paid to a taxpayer during the tax year that is not constructively received at the taxpayer's end. Watch: What Are. . a price change of one one-hundredth. the initial fee charged by the..

Positive Butterfly A non-parallel yield curve shift in which short. Because bankrupt entities do not have enough money to fulfill all of their financial obligations. The proceeds from the issue of the lower yield and/or longer maturing. Portfolio weights can be simply calculated using different approaches: the most basic type of weight is determined by dividing the dollar value of a security by the total dollar. Pre-funded bonds are issued by municipalities that wish to attain a higher credit rating for their debt. government securities to pledge as collateral for the bond issue.. Preferred Creditor An individual or organization that has priority in being paid the money it is owed if the debtor declares bankruptcy..and long-term rates shift upward by a greater magnitude than medium term rates...... Predators' Ball An annual convention held by Drexel Burnham Lambert for the purpose of matching high-risk companies searching for financing with investors who wanted the high rewards that can come with higher risk.. These are frequently described as hybrid securities because they combine features of debt and equity. where the issuer actually decides to exercise its right to buy its bonds back before the scheduled maturity date.. converting to ordinary. Preferred Equity Redemption Stock (PERC) Preferred stock with special provisions limiting the value of its convertible shares and the mandatory redemption value at maturity.. Preferred Redeemable Increased Dividend Equity Security (PRIDES) First introduced by Merrill Lynch. Preferred Habitat Theory A term structure theory suggesting that different bond investors prefer one maturity length over another and are only willing to buy bonds outside of their maturity preference if a risk premium for the maturity range is available. Prepaid tuition plans allow donors to provide all or part of the amount of tuition for college education. regardless of its rate of.2) A specific type of. some investors that are owed. adding to its curvature.. Prepaid Tuition Program One of the two major types of 529 plans... Premium Put Convertible A convertible bond with an additional put feature that allows it to be redeemed at a premium sometime during its life. This yield curve shift effectively humps the curve. The amount paid is guaranteed to grow at the same rate as college tuition. Interest payments are made at regular intervals. Premium Bond 1) A bond that is trading above its par value. these.. A bond will trade at a premium when it offers a coupon rate that is higher than prevailing interest rates. Pre-Refunding Bond A type of bond issued to fund another callable bond.. Premium Adjustable Convertible Security (PEACS) A debt instrument that combines a coupon paying bond with the option to convert the bond into common stock at a set price. After the first convention in 1979.y y y y y y y y y y y y y Portfolio Weight The percentage composition of a particular holding in a portfolio. This is because investors want a higher yield.. The theory also.S. PRIDES are synthetic securities consisting of a forward contract to purchase the issuer's underlying security and an interest bearing deposit.. Since state-issued.. and conversion into.. .. and will pay more for it. Pre-Funded Bond Bonds issued by a government agency that purchases U.

which consist of investment banks that will. but their repayment is determined by the exchange rate between the dollar and a specific foreign. The owner of a private company.. International Monetary Fund bonds and Federal Reserve notes.... Price-Based Option A derivative financial instrument in which the underlying asset is a debt security. bonds.Also knows as the "value of a basis point" (VBP) or "basis point value" (BPV). The prime interest rate... acting as...4. Examples of primary instruments include stocks. By contrast. Prime underwriting facilities peg the lender's yield to the bank's prime rate. Primary markets are facilitated by underwriting groups. Principal 1. These dealers must meet certain liquidity and quality requirements as well. 2. Prime Rate The interest rate that commercial banks charge their most credit-worthy customers.3.S. Federal Reserve. governments and other groups obtain financing through debt or equity based securities. Primary Dealer A pre-approved bank. Generally a bank's best customers consist of large corporations. Primary Instrument A financial investment whose price is based directly on its market value. Primary Market A market that issues new securities on an exchange. Price Value of a Basis Point (PVBP) A measure used to describe how a basis point change in yield affects the price of a bond. dollars. is largely determined by the federal funds rate.. Price Talk The discussion of the appropriate price for an upcoming security issue. bills and anything else that has its own value.. earning interest at the periodic rate (r)..5.y y y y y y y y y y y y y y Present Value Interest Factor Of Annuity (PVIFA) A factor which can be used to calculate the present value of a series of annuities. Proceeds from a primary distribution are sent directly to the issuing company... All bond offerings are considered primary distributions. The main party to a transaction. the price of derivative. The investment community will determine a reasonable range of prices within which the new security should be sold. Also.. The initial deposit.. Principal Only Strips (PO) A type of fixed-income security where the holder is only entitled to receive regular cash flows that are . certificates of deposit. such as underwriting new government debt.S. Prime Bank Term used to describe the top 50 banks (or thereabouts) in the world. PERLs are denominated in U. Primary Distribution The original sale of a new security issue (bonds or stocks) from a company to investors/shareholders. Companies. Prime Underwriting Facility A kind of revolving underwriting facility. broker/dealer or other financial institution that is able to make business deals with the U... The original amount invested. PVIFA is also a variable used when.. Typically. Principal Exchange Rate Linked Security (PERL) A type of debt security that pays interest semiannually and has a yield that is linked to foreign exchange rates. The face value of a bond. Prime banks trade instruments such as world paper. separate from interest. Most prime underwriting facilities are short-term notes of some sort. The amount borrowed or the amount still owed on a loan. perfectly finances a series of (N) consecutive dollar withdrawals. these options give their holders the right to purchase or sell an underlying debt security (usually a bond) or to receive cash payment based on the. separate from earnings. or prime lending rate.

Project Notes A short-term debt obligation issued to finance a project or endeavor past a specified milestone... PINES trade on a stock exchange but also bear interest. Private Purpose Bond A type of municipal bond that is issued to finance a project for which at least 10% of the benefit will go to a private sector entity. the vast majority of the benefit provided by the project being financed by a public purpose bond must be directed at the public at large. Private Equity Equity capital that is not quoted on a public exchange.. Many private conduits are now backed by mortgages. Capital. credit card. promoters raise money for a company through offering investment vehicles other than traditional stocks and bonds.. for a fee. Promissory Note A written. Also known as "principal-protected products" and "principal-protected securities.or pay-through securities in its own name. which requires the issuing party to sell debt securities (often in the form of revenue bonds) to finance the full completion of a particular project.." Prior Preferred Stock A type of preferred stock with a higher claim on assets and dividends than other issues of preferred stock... Private Conduit A governmental or private entity that pools mortgages and other loans. helps raise money for some type of investment activity. and the government generally does not. Public Purpose Bond This type of bond is used by municipalities to finance public works facilities and improvements. The financing is most often for projects of a private user. .. seen most often in municipal bond indentures.. Municipal bonds are usually associated with tax-free income. Project Completion Restriction A type of clause. or to fund multiple small projects on a short-term basis. However. the Tax Reform Act of 1986 requires...y y y y y y y y y y y y y derived from incoming principal repayments on an underlying loan pool. those holding prior preferred stocks have first. such as limited.. and. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.. Most often. dated and signed two-party instrument containing an unconditional promise by the maker to pay a definite sum of money to a payee on demand or at a specified future date.. However... Principal-Protected Note (PPN) A fixed-income security that guarantees a minimum return equal to the investor's initial investment (the principal amount). unsubordinated debenture issued by a public company. Promoter An individual or company that.. If a firm did not generate enough money to fulfill all of its dividend schedule requirements. Private Activity Bond (PAB) Tax-exempt bonds issued by or on behalf of local or state government for the purpose of providing special financing benefits for qualified projects. The entity will then issue pass. Public Income Notes (PINES) An unsecured. Project notes are often used by municipalities to fund urban renewal programs and are. Provisional Call Feature A feature of a convertible issue that allows the issuer to call the issue during the non-call period if the stock reaches a certain price.. The loan is often a pool of mortgages in the form of a mortgage-backed. as a private conduit to investors.

since it establishes a. The repurchase price is set at the time of issue.. because the money invested in them is taxed. and is usually par value... This is opposed to the payment method.y y y y y Public Securities Association (PSA) The predecessor association to the Bond Market Association. Ratable Accrual Method A method for determining when and how much income was earned over a period of time.. respectively. However.. the.. Put Bond A bond that allows the holder to force the issuer to repurchase the security at specified dates before maturity. Purchase Fund A feature of some bond indentures and preferred stock that requires the issuer to make an effort to purchase a specified amount of securities if they fall below a stipulated price (usually par value). Pure Discount Instrument A type of security that pays no income until maturity. and could be used to find the accrued. Qualifying Investment An investment purchased with pretax income. Quarterly Income Preferred Securities (QUIPS) Shares that are an interest in a limited partnership that exists solely for the purpose of issuing preferred securities and lending the proceeds of the sales to its parent company. Put Provision A condition that allows a bondholder to resell a bond back to the issuer at a price .which is generally par . the bond markets. and underwent a name change to the Bond Market. when it is known as either a bull market rally or a bear market rally.. Q Back to top y y y Qualified Savings Bond Refers to a series EE savings bond which has been issued after December 1989 and purchased by an individual at least 24 years of age. bonds or indexes. annuity or plan is exempt from income taxes until it is withdrawn. The ratable accrual method can be used to compute the interest income for tax purposes. They usually have a $25 par value. which represents the largest securities markets in the world... Rate Anticipation Swap A type of swap in which bonds are swapped according to their current duration and predicted interest rate movements.. These sorts of investments are taxdeferred. The instrument is originally sold for less than its face value (at a discount). The Public Securities Association was incorporated in 1976. Although interest rates are expected to fluctuate over the period of an investment. upon expiration. expressed as a percentage increase over . a. This type of price movement can happen during either a bull or a bear market.. R Back to top y y y y y Rally A period of sustained increases in the prices of stocks. Rate Level Risk A type of interest rate risk which asserts that the characteristics of interest rate fluctuation are variable (as opposed to constant) over a period of time.. NYSE listing and cumulative. The put provision is an added degree of security for the bondholder.on certain stipulated dates prior to maturity.. the holder receives the face value of the instrument. Money invested in a qualifying investment trust. Rate Of Return The gain or loss on an investment over a specified period..

The realized yield also includes the returns that have been. sell. Recourse A legal agreement by which the lender has the rights to pledged collateral in the event that the borrower is unable to satisfy debt obligation. . usually.. When there is low liquidity in the market. that rates various debt and preferred stock issues for safety of payment of principal. The risk that an early unscheduled repayment of principal on mortgage-backed securities(MBS) will occur when the underlying mortgages are refinanced by borrowers. The money from investors is held in escrow and is used to purchase. A subset of the municipal and corporate bond classes.. such as Moody's or Standard & Poor's. Rebalancing The process of realigning the weightings of one's portfolio of assets.. All MBS buyers assume some level of prepayments in their initial yield.. the funds required to pay off refunded bonds are held in escrow until the maturity date. Rediscount The act of discounting a short-term negotiable debt instrument for a second time. Recapitalization Restructuring a company's debt and equity mixture.... This period of time is typically the holding period which may differ from the expected yield at maturity.. Recourse refers to the legal right to collect. An analyst's recommendation on whether to buy. it scrutinizes the issuer's ability to repay principal and make interest payments.. An evaluation of a corporate or municipal bond's relative safety from an investment standpoint. Real Estate Mortgage Investment Conduit (REMIC) A special purpose vehicle (SPV) that is used to pool mortgage loans and issue mortgage-backed securities (MBS). Essentially. . Basically. Rating 1. the process involves the exchange of one form of financing for another. theoretically. Because these bonds are being called before their initial expiration date.y y y y y y y y y y y y y the initial investment cost.. most often with the aim of making a company's capital structure more stable.. Refunding Retiring an outstanding bond issue at maturity by using money from the sale of a new offering. Refunded Bond Bonds that have their principle cash amount already held aside by the original issuer of the debt.. Gains on investments are considered to be any income received from the security plus realized capital gains. Rate Trigger A sizeable decline in interest rates that may trigger or cause companies to call in bonds that otherwise pay high coupon or interest rates. Refunding Escrow Deposits (REDs) A type of forward financial contract that creates an obligation for its investors to purchase a particular bond issue at a specified yield at some date in the future. such as removing preferred shares.. Banks may rediscount these short-term debt securities to assist the movement of a market that has a high demand for loans. interest.. Rebalancing involves periodically buying or selling assets in your portfolio to maintain your original desired level of asset allocation. bondholders can. Ratings Service A company.. Real estate mortgage investment conduits (REMIC) hold commercial and residential mortgages in trust. and issue interests in these. 2. or dividends..... Refinancing Risk 1. Realized Yield The actual amount of return earned on a security investment over a period of time..

Required Yield The return a bond must offer in order to be a worthwhile investment. These reports contain statements on a bank's income. For the party selling the security (and agreeing to.. usually at a different price.. The dealer sells the government securities to investors. Re-Offer Price A price at which the underwriting syndicate of a debt issue resells the bonds to public investors. assets (cash due. Companies can. Also known as an "account... Registered Representative A person who works for a brokerage company that is licensed by the Securities and Exchange Commission (SEC) and acts as an account executive for clients trading investment products such as stocks... . indexes may vary from provider to provider but two. RRSP contributions are tax deductible and taxes are deferred until the money is withdrawn.. The owner's name and contact information is recorded and kept on file with the company. Companies that cannot meet the strict listing requirements of national exchanges may qualify to trade on regional exchanges. If you are the owner of a bond or a share in a company you will be registered as a owner by one of these institutions. They can register stocks. REIT ETF Exchange-traded funds that invest the majority of assets in equity REIT securities and related derivatives.. usually on an overnight basis. Reset Margin The difference between the interest rate of a security and the index on which the security's interest rate is based.. Registrar An institution or organization that is responsible for keeping records of bondholders and shareholders. An RRSP can contain stocks. GICs.. REIT ETFs are passively managed around an index of publicly traded real estate owners. Regulation 9 A regulation that permits national banks to open and operate trust departments in-house and function as fiduciaries. The reinvestment rate is the amount of interest the investor could earn if s/he purchased a new bond.y y y y y y y y y y y y y Regional Stock Exchange A place outside of a country's primary financial center where equity in publicly-held companies is traded... if the same investor is. Repurchase Agreement (Repo) A form of short-term borrowing for dealers in government securities. allowing it to pay the bond's coupon payment to the appropriate person. bonds. and buys them back the following day. bank holding companies and Edge Act corporations must file with the FDIC under Section 1817(a)(1) of the Federal Deposit Insurance Act.. as it is always added to the underlying index.. If the bond is in physical form. This feature is most common with a floating-rate. Required yield is set by the market and sets the precedent for how current bond issues will be priced. Regulation 9 allows national banks to manage and administrate investmentrelated activities. bonds and mutual funds. Reinvestment Rate The amount of interest that can be earned when money is taken out of one fixed-income investment and put into another.. Registered Bond A bond whose owner is registered with the bond's issuer... Registered Retirement Savings Plan (RRSP) A legal trust registered with the Canada Revenue Agency and used to save for retirement. The reset margin will be positive.. mutual funds. The syndicate will purchase the bonds for a specified amount from the issuing firm and re-offer the bonds to the public. .... contracts and. bonds and.. Report of Condition and Income A quarterly financial statement that banks.

000 increments with no accrued interest or added markups. or local stadium. home-equity loans and subprime mortgages. The bond contains an embedded derivative that allows the issuer to put the bond to bondholders at a set date prior to the bond's maturity for. Reverse Repurchase Agreement The purchase of securities with the agreement to sell them at a higher price at a specific future date.RMBS A type of security whose cash flows come from residential debt such as mortgages. Reverse Convertible Note (RCN) A synthetic instrument that shares characteristics with both bonds and stocks. They will usually pay. This index is comprised of a broad range of 25 revenue bond issues with investment grade ratings..... This is a type of mortgage-backed securities that focuses on residential instead of commercial debt. 2. Reverse Floater A floating-rate note in which the coupon rises when the underlying reference rate falls. The removal of an asset from securities markets because its maturity date has been reached.. The. unsecured debt obligation usually issued by a multinational corporation. Reverse Swap An exchange of cash flow streams that undoes the effects of an existing swap.. highway. Resolution Funding Corporation (REFCORP) A mixed-ownership government corporation established by Congress in 1989 in conjunction with the Resolution Trust Corporation (RTC). Revenue Bond A municipal bond supported by the revenue from a specific project. Retirement of Securities 1.... The cancellation of stocks or bonds because the issuer has bought them back..y y y y y y y y y y y y y y Residential Mortgage-Backed Security . A reverse convertible note (RCN) typically provides high coupon payments and final payoffs that depend on the performance of an underlying stock. Retractable Bond A bond that features an option for the holder to force the issuer to redeem the bond before maturity at par value.. Reverse swaps are . Revdex A bond index that estimates the approximate yield that an investor will receive if he or she invests in revenue bonds maturing in 30 years. Reverse Convertible Bond (RCB) A bond that can be converted to cash.. debt or equity at the discretion of the issuer at a set date. . For the party selling the security (and agreeing to repurchase it in the future) it is a repo. An investor may choose to shorten the maturity on a bond because of market conditions or if he or she requires the principal sooner.. Residual Interest Bonds (RIBS) A type of inverse floating-rate bond created by dividing the income from a municipal bond into two portions... such as a toll bridge. Retail Note A medium-term. for the party on the other end of the transaction. subordinated. The floating rate resets with each coupon payment and may have a cap and/or floor. The underlying reference rate is often the London Interbank Offered Rate. The index.. The two corporations were established to rescue savings and loan (S&L) institutions that failed during the savings. Revenue Anticipation Note (RAN) A short-term debt security issued on the premise that future revenues will be sufficient to meet repayment obligations. Retail notes can be purchased directly from the issuer at par in $1. The municipal bondholder will create two new securities: a primary direct floating-rate bond and a residual inverse floating-rate bond...

Revertible Refers to a special kind of convertible corporate bond that automatically converts itself into shares of the company's stock in the event that the underlying stock drops below a certain price. S Back to top y y Safe Asset Assets which...y y y y y y y y y y used. mutual funds. because they allow investors to avoid negative tax or accounting implications. a. Reverse swaps.. The size of the roll-down return varies greatly between long and short-dated bonds. founded in 1910. in and of themselves. Risk Averse A description of an investor who. This is done mainly to protect consumers of essential services such as power. bonds. instead of simply canceling the original swap..S... Roll-Down Return A form of return that arises when the value of a bond converges to par as maturity is approached. do not carry a high likelihood of lawsuit risk.. the bank merged with Smith Barney. government. was once one of the largest Wall Street bulge bracket financial service companies. These loans are generally provided through the purchase of short-term Euronotes. Risk-Free Asset An asset which has a certain future return.... water and basic telecommunications from. . Risk Premium The return in excess of the risk-free rate of return that an investment is expected to yield. Risk-Free Return The theoretical rate of return attributed to an investment with zero risk. Risk-Free Rate Puzzle (RFRP) An anomaly in the difference between the lower historic real returns of government bonds compared to equities. Mere ownership of this type of asset does not expose the asset owner to a significant risk of litigation. Investors hope to achieve capital gains by employing this strategy. Revolving Underwriting Facility (RUF) A form of revolving credit in which a group of underwriters agrees to provide loans in the event that a borrower is unable to sell in the Eurocurrency market. Roll-down is smaller for long-dated bonds that are trading away. when faced with two investments with a similar expected return (but different risks). In 1997. bank accounts. it was acquired by Phibro Corporation and became known as PhibroSalomon. Treasuries (especially T-bills) are considered to be riskfree because they are backed by the U. Ringfencing When a regulated public utility business financially separates itself from a parent company that engages in non-regulated business. The risk-free rate represents the interest on an investor's money that he or she would expect from an absolutely risk-free investment over a specified period of time.compared to that of a risk-free asset ..Assets such as stocks. An asset's risk premium is a form of compensation for investors who tolerate the extra risk . and looks at the disparity from the perspective from the lower returning... Riding the Yield Curve A trading strategy that is based upon the yield curve and used for interest rate futures.. will prefer the one with the lower risk. This puzzle is the inverse of the equity premium puzzle..in a given. .. Salomon Brothers Salomon Brothers. In 1981. This stands in contrast to traditional convertible...

large numbers of. Savings And Loan Crisis (S&L) One of the largest financial scandals in U. It is used by certain asset-backed security issuers to notify regulators and investors of interest. SEC Form 10-D A filing with the Securities and Exchange Commission (SEC). SEC Form 25 A notification given to the SEC by a national securities exchange telling of the removal from listing on that exchange and registration of matured. SEC Form 8A12BEF is to become effective automatically upon filing. investment funds... Seasoning determines if a premium should be made for the security in the secondary market. SEC Fee A nominal fee that was created by the Securities Exchange Act of 1934 to be an additional transaction cost attached to the selling of exchange-listed equities.. dollars. SEC Form 8A12BT A form concerned with the registration of listed debt securities (bonds) pursuant to Section 12(b) of the Securities Exchange Act of 1934. dividend. the Savings and Loan Crisis emerged in the late 1970s and came to a head in the 1980s. also known as the Registration for Listing of a Security on a National Exchange Form.. SEC Form 25 is required by Rule 12d2-2 of the Securities. Scripophily The hobby of collecting antique bonds. Samurai Bond A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations. Other types of yen-denominated bonds are Euroyens issued in countries other than Japan.. through payroll deductions.. redeemed or retired corporate securities. SEC Form 8A12BT is to become effective simultaneously with the effective of a concurrent Securities Act... including warrants and convertible. Savings Bond Plan A program that allows employees to purchase U. which trades U. or "seasoned" if..SN Located in Santiago. derivatives and gold and silver Chilean coins. It trades stocks. In the volatile interest rate climate of the '70s..y y y y y y y y y y y y y Salomon Brothers World Equity Index (SBWEI) An index that measures the performance of fixed-income and equity securities from domestic and international markets that consist of companies with a float of at least $100 million. the SGO is the premier stock exchange of Chile.. Santiago Stock Exchange (SSE) . and when enough money has accumulated. independent of any associated brokerage.. stocks and other financial instruments based on their esthetics and prominence in the financial world.S. SEC Form 8-A12G A filing with the Securities and Exchange Commission (SEC). such as the Series EE and Series I bonds.S. also known as the Asset-Backed Issuer Distribution Report.S. finally ending in the early 1990s... required when a company issues certain stock or bond securities. SEC Form 8A12BEF This form concerns the registration of listed debt securities (bonds) pursuant to Section 12(b) of the Securities Exchange Act of 1934.. This fee is usually listed as a separate fee. bonds. history. Seasoning The length of time a debt security has been publicly traded. savings bonds.. and capital.. It also has an electronic trading platform called Telepregon.. .. The debt security can be "unseasoned" if has been traded for less than a year. Money is set aside from each paycheck. the company purchases a savings bond.

. mortgage aggregators (securitizers) and investors. Securities Industry And Financial Markets Association (SIFMA) An association that represents firms of all sizes in all financial markets in the U.. second lien debts stand behind higher lien debts in terms of rights to collect. usually at least 10 years.. if they want to succeed.. This section applies to transfers during marriage as well as in the. If you default on repayment. The secondary mortgage market is extremely large and liquid.. or a portion of the same collateral. sells it and uses the.. No deductible loss or taxable gain can be declared. the Board of Governors of the Federal. SEC Yield A standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds.... the bond issuer passes title of the asset or the money that has been set aside onto the bondholders. Secured Debt Debt backed or secured by collateral to reduce the risk associated with lending. A Section 988 transaction relates to IRS Section 988. If a borrower defaults. SEC form TA-1 is submitted to one of four regulatory agencies: Comptroller of the Currency. Section 1041 A section of the Internal Revenue Code that mandates that any transfer of property from one spouse to another is income tax-free. delivering an efficient. It is important for investors to identify secular trends in markets. Per IRS rules. An example would be a mortgage. SEC Form TA-1 A form used to apply for or amend registration as a transfer agent. Secured Bond A type of bond that is secured by the issuer's pledge of a specific asset. Secular An adjective used to describe a long-term time frame.. SEC POS AM Filing A filing that is made by companies which have filed for registration with the SEC.. and worldwide. This SEC Form T-6 requires the name and address of the proposed trustee. not just short-term trends. The yield figure.. enhanced member network of access and. It is based on the most recent 30-day period covered by the fund's filings with the SEC.. Second Lien Debt Debts that are subordinate to the rights of other.y y y y y y y y y y y y y SEC Form T-6 This form must be filed with the SEC to determine whether a foreign person is eligible to act as an institutional trustee. . SIFMA is committed to enhancing the public's trust and confidence in the markets. 1986. the note represents a contractual obligation to lend and borrow money at a specified interest rate.... the bank seizes your house.. your house is considered collateral towards the debt. Depending on the type of organization applying... more senior debts issued against the same collateral. the company's jurisdiction and address and the name..S. which was applied to all tax years after December 31. Secured Note A bilateral lending agreement. Examples of secular trends include an aging. Section 988 A financial transaction involving a capital loss or gain on an investment held in a foreign currency. which is a form of collateral on the loan. In the event of a default. SEC Filing POS AM is a filing which has post-effective amendments to provide updated prospectus information.. Secondary Mortgage Market The market where mortgage loans and servicing rights are bought and sold between mortgage originators. most gains from.

Selloff The rapid selling of securities. The increase in supply leads to a decline in the value of the security. Since bonds come with all types of coupon rates and payment frequencies. These firms are in the business of underwriting commercial paper and other securities that will then be sold to investors... such as stocks.. Semiannual is an adjective that can describe something that occurs. a debt agreement (bonds) or the rights to ownership (derivatives).. Security An instrument representing ownership (stocks). Sensitivity The magnitude of a financial instrument's reaction to changes in underlying factors. as in a semiannual periodical. Semi-Annual Bond Basis (SABB) A conversion metric to compare rates on bonds with varying characteristics. Sequential Pay CMO A type of collateralized mortgage obligation (CMO) in which there are several tranches. reported or published twice each year. bonds and commodities. Senior Issue An issue of bonds... Financial instruments. these bonds are used to finance a project providing regular. preferred stock or other securities that represents the first priority lien on the issuer's assets or earnings. are constantly impacted by many factors. such as stocks...Since the bondholder. bonds and commodities.. Sell-Off The rapid selling of securities. . or in case of a bankruptcy. the.. security subsidiaries can.... Senior Debt A bond or other form of debt that takes priority over other debt securities sold by the issuer. In certain regions. in the event the issuer goes bankrupt.. A senior convertible note has priority over all other debt securities issued by the same organization. Each tranche's holder receives interest payments as long as the tranche's principal amount has not been completely paid off. As they mature gradually over a period of years. The increase in supply leads to a decline in the value of the security. The senior tranche receives all. Senior Bank Loan A debt financing obligation issued by a bank or similar financial institution to a company or individual that holds legal claim to the borrower's assets above all other debt obligations. most bonds pay. For example.y y y y y y y y y y y y y y Securities Subsidiary A company that is controlled by a large bank or financial holding company. such as stocks and bonds.. Sensitivity accounts for all factors that impact a given instrument in a. level. Serial Bond A bond issue in which a portion of the outstanding bonds matures at regular intervals until eventually all of the bonds have matured. Senior Security A security (usually debt) that. typically every six months. Senior Convertible Note A debt security that contains an option where the note will be converted into a predefined amount of the issuer's shares. Semiannual A semiannual event happens twice a year. Senior issues have a higher priority claim on a firm's dividends. must be repaid before other creditors receive any payment. or is payable... interest payments. The loan is considered senior to all other claims against the.. it's important to be able to find some common measure to compare different types of bonds.

. Treasury for the rest of the bond's. A person who passes the Series 82 can only offer private placement offering on original. typically 20 years. Settlement Date 1. That is. Series 52 An exam offered by the Financial Industry Regulatory Authority (FINRA) and overseen by the Municipal Securities Rulemaking Board (MSRB). passing principal and interest payments along to the note holder..S..S.. Most Series EE bonds have a total interest-paying life that extends beyond the. Essentially. Series 72 license holders can sell government bonds and. interest-bearing U.. The date by which an executed security trade must be settled....y y y y y y y y y y y y y Serial Bond With Balloon A combination of a serial bond issue and a term bond issue. Service certificates were granted to WWI veterans under the Adjusted Service Certificate Law in 1924.S. etc. after which it is reset by the U..... and then a large percentage of the bonds (the term bonds) mature in the. . Servicing strips trade in a secondary market much like mortgage-backed securities do. Interest is paid at redemption as part of the redemption value. the serial bond with balloon has bonds that mature at different intervals throughout the issue's life.. Series E Bond interest is reportable for Federal income tax purposes for the year in which the Series E Bonds are redeemed. The payment date of benefits from a life insurance policy. collecting and making escrow payments. Servicing... Series E Bond Accrual bonds that were issued at 75% of the face amount. government savings bond that pays semi-annual interest based on a coupon rate.. government savings bond that is a combination of two separate rates: 1) Fixed Interest Rate 2) Variable Inflation Rate (adjusted semiannually) Service Certificates Bond-like certificates that promised payments at maturity date to World War I (WWI) veterans. Servicing Strip A security created by the stream of cash flows that result from the servicing fee on a mortgage.. This coupon is locked in at a fixed rate for the first 10 years. government savings bond that is guaranteed to at least double in value over the initial term of the bond. Series I Bond A non-marketable.. Servicing Fee A percentage of each mortgage payment made by a borrower to a mortgage servicer as compensation for keeping a record of payments. interest-bearing U. Series 72 An exam administered by the Financial Industry Regulatory Authority (FINRA) for individuals seeking to become government securities limited representatives for registered broker/dealers. the date by which a buyer must pay for the securities delivered by the seller. Series EE Bond A non-marketable. Series 62 An exam administered by the Financial Industry Regulatory Authority (FINRA) for financial professionals seeking to become limited registered representatives for corporate equities and corporate debt securities.. which promised "bonus" payments to eligible soldiers..... the seller of the servicing strip has the ability to service the.. . The Series 52 qualifies a financial professional to become a licensed municipal securities representative. Series HH Bond A 20-year non-marketable U..S. 2. It tests an individual's knowledge of. Series 82 An exam administered by the Financial Industry Regulatory Authority (FINRA) for individuals seeking to become private securities offering representatives.

Typically. June 30 and. Short-Term Investments An account in the current assets section of a company's balance sheet. Shanghai Stock Exchange The largest stock exchange in mainland China.Also known as a "geisha bond". By repurchasing some bonds before. which has listing requirements. Sinker A bond with payments that are provided by the issuer's sinking fund. Loans made by multinational development banks and the World Bank to developing countries... They.y y y y y y y y y y y y y y Shadow Rating 1. A sinker's bond payments are paid from a pool of money that the issuer has set aside to repurchase a portion of the bonds it has issued each year. For the most part.. a short coupon is a bond's first coupon. .. for example. The pledge can be a physical asset. these accounts contain stocks and bonds that can be liquidated. using money (a sinking fund) from the issuer's earnings saved specifically for security buybacks. personal guarantees depend solely on the. The provision dictates that a premium will be paid by the issuer if early redemption occurs. Sight Letter of Credit A letter of credit that is payable once it is presented along with the necessary documents.. This account contains any investments that a company has made that will expire within one year. While physical or financial assets can be assigned an underlying price or value. The issuer makes periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market. Most often. Short Coupon A payment made on a bond within a shorter time interval than is normal for the bond. A short coupon is used if the issuer wishes to make payments on certain dates... Organizations such as the World Bank have issued such debt instruments in the past . A rating given by S&P to Israel Bonds. Soft Loan 1. the Shanghai Stock Exchange is a nonprofit organization run by the China Securities Regulatory Commission (CSRC).. Shogun Bond A type of foreign-currency denominated bond that is issued in Japan by foreign entities. 2. soft loans have extended grace periods in which only interest or service charges are due. funds and bonds are all traded on the exchange. Stocks. 2. A loan with a below-market rate of interest... Because it adds doubt for investors over. The name given to a bond rating performed on an issuing party by a credited institution.. Sinking Fund A means of repaying funds that were borrowed through a bond issue.. Side Collateral A pledge that partially collateralizes a loan.. that sets aside money on a regular basis to ensure investors that principal and interest payments will be made as promised.... Sinking Fund Call A provision allowing a bond issuer the opportunity to buy outstanding bonds from bondholders for a set rate. Soft Call Provision A feature added to convertible fixed-income and debt securities. Sinkable bonds reduce the risk for investors and therefore. called a sinking fund.. Sinkable Bond A bond issue that is backed by a fund. financial asset or personal guarantee.. but without any public announcement of the results. Sovereign Bond A debt security issued by a national government within a given country and denominated in a foreign . which are not permitted to be traded on the secondary market.

. Spread To Worst The difference in overall returns between two different classes of securities.. Speculators take large risks. All speculative risks are made as conscious choices and are not just a result of uncontrollable circumstances. Sovereign credit ratings give investors insight into the level of risk associated with investing in a particular country and also include political risks. Sovereign debt is generally a riskier investment when it comes from a developing country. equities or currencies with a higher-thanaverage risk in return for a higher-than-average profit potential. Standard & Poor's (S&P) A financial services company that rates stocks and corporate and municipal bonds according to risk profiles.. At the request of the country. Speculative Risk A category of risk that. quite recently. ... The foreign currency used will most likely be a hard currency. Spread options can be written on all types of financial products including equities. . especially with respect to anticipating future price. in order to finance the issuing country's growth. IRA accounts. or returns from the same class. Standard Poor's Underlying Rating (SPURs) A measurement tool prepared by Standard and Poor's for a more in depth rating of Municipal Bonds.. a credit. Spice traders prefer to invest in riskier endeavors and seek higher risk premiums for the risk that they take on. Spread Option A type of option that derives its value from the difference between the prices of two or more assets.. off-the-run treasuries or a.. and may represent significantly more risk to the bondholder. bonds.. Spice Trader A slang term used to describe an investor who tends to trade in high-risk investment vehicles or markets. Stable Value Fund An investment vehicle found in both company retirement plans and.. Sovereign Debt Bonds issued by a national government in a foreign currency. commodities. bonds and currencies. results in an uncertain degree of gain or loss. This type of rate curve can be built from on-the-run treasuries. This type of position can be purchased.. and. These bonds are repaid with either excise taxes.. and a safer investment when it comes from a. special assessment taxes or ad valorem taxes. Spot Rate Treasury Curve A yield curve constructed using Treasury spot rates rather than yields. These bonds can be short.y y y y y y y y y y y y y currency.. .. but different representative securities.. Sovereign Credit Rating The credit rating of a country or sovereign entity. The spot rate Treasury curve can be used as a benchmark for pricing bonds. Speculative risk is the opposite of pure risk. The spread to worst measures the difference from the worst performing security to the best. Speculator A person who trades derivatives... when undertaken. Interest owed to lenders is paid by taxes levied on the community benefiting from the particular bond-funded project. Stable value funds are comprised of mostly 'synthetic GICs' (known also as wrapped bonds) because of their inherent stability. Special Tax Bond A type of bond that is repaid by revenues derived from taxation of a particular activity or asset. Special Assessment Bond A special type of municipal bond used to fund a development project..

the Stockholm Stock Exchange was founded in 1863. Straight bonds are debt instruments because they are essentially loaning money (creating debt) to an entity. sets up a trust and then issues securities to investors. In other words.. and are. Funding for SIVs comes from the issuance of commercial paper that is. Copenhagen and Iceland. STRYPES were created and trademarked by Merrill Lynch. SNIFs will guarantee payment to the lender if the borrower defaults. Strip 1. Structured Yield Product Exchangeable For Stock (STRYPES) A type of convertible bond issued by companies that pays a quarterly cash coupon and can also be exchanged for a certain number of shares or receive the cash equivalent at maturity. Stock Participation Accreting Redemption Quarterly-Pay Securities (SPARQS) A callable note that pays interest to the holder. The return performance of a structured note will track that of the underlying debt obligation and the. and then a higher coupon rate for the following periods. often a bank.y y y y y y y y y y y y y y Standby Note Issuance Facility (SNIF) A type of credit facility. SNIFs ultimately act as a form of insurance for. The entity.. it joined the NOREX alliance. For bonds. Structured Note A debt obligation that also contains an embedded derivative component with characteristics that adjust the security's risk/return profile.. Structured Investment Vehicle (SIV) A pool of investment assets that attempts to profit from credit spreads between short-term debt and long-term structured finance products such as asset-backed securities (ABS)..ST The main securities market in Sweden. as part of an effort for the Nordic.. Static Spread The constant yield spread which when added to the point on the spot rate Treasury curve where a cash flow from a bond is received will make the price of the bond equal to the present value of its cash flows. These investment products are issued and underwritten by Morgan Stanley and provide investors with both interest payments and. and upon maturity is exchanged for shares in the underlying company.. Step-Up Bond A bond that pays an initial coupon rate for the first period... or the theoretical yield of the non-collateralized portion of a bond.. Straight Bond A bond that pays interest at regular intervals.. the process of removing coupons from a bond and then selling the separate parts as a zero coupon bond and interest paying coupons... and at maturity pays back the principal that was originally invested. Stockholm Stock Exchange (STO) .. a strategy created by being long in. Stub The balance part of a check or receipt that is retained for record-keeping purposes or as proof of .. In 1997. In this way... a group that also includes the stock exchanges of Oslo. Structured Repackaged Asset-Backed Trust Security (STRATS) A derivative product similar to an exchange-traded fund (ETF) or American Depository Receipt (ADR)." Stripped Yield The implied sovereign yield of a bond. 2.. that accepts an arrangement that finances projects via secondary obligations. Strip Bond A bond where both the principal and regular coupon payments--which have been removed--are sold separately. In options. With structured repackaged asset backed trust securities.... where the originator buys an asset. Also known as a "zero-coupon bond. Also known as a stripped bond or zero coupon bond. each cash flow is.

e. Subordination is the act of yielding priority. Sub-Sovereign Obligation (SSO) A form of debt obligation issued by hierarchical tiers below the ultimate governing body of a nation.SG Germany's second-largest securities market (after the Frankfurt Stock Exchange). Subordinate Financing Debt financing that is ranked behind that held by secured lenders in terms of the order in which the debt is repaid.. Super Floater A floating-rate collateralized mortgage obligation (CMO) tranche whose coupon rate is determined by a formula based on an interest-rate index such as LIBOR.. Sukuk An Islamic financial certificate. Substitution Swap A swap that is carried out by trading a fixed-income security for a higher yielding bond with similar features. Super Sinker A bond with long-term coupons but a short-term maturity. Super PO A companion tranche structured as a Principal Only (PO) bond. it moves more than one basis point for each basis point. cities or towns in order to fund municipal and.. the issuer of a sukuk sells an investor. Because the traditional Western interest paying bond structure is not permissible.y y y y y y y y y y y y y payment. which receives only principal payments from the underlying mortgages. . A Super PO is designed to lend support to planned amortization class (PAC) and targeted amortization class (TAC). similar to a bond in Western finance. a stub refers to a residual security that is left over after being separated from the parent security.. a style box is designed to visually represent the investment characteristics of fixed-income (bond). "Subordinate" financing implies that the debt ranks behind the first secured lender. Established in 1860.. While there are a variety of styles... the Stuttgart Stock Exchange (in German. In the context of securities.. that complies with Sharia.. Islamic religious law.. Style Box Created by Morningstar. Stuttgart Stock Exchange (STU) ... domestic equity (stock) and international equity (stock) securities and their respective mutual funds.. The coupon rate is leveraged i... Böerse Stuttgart) handles around 40% of all securities trades in the country.. Subprime Loan A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. This form of debt comes from bond issues and is issued by states.. Quite often. Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. there are nine basic investing styles for both equity and fixed-income funds... country... the Exchange trades in. Super sinkers are usually home-financing . or territory. The term. and means that the secured lenders will be paid. provinces.. subprime borrowers are often turned away from traditional lenders because of their low credit ratings or other factors that. Style The investment approach or objective that a fund manager uses to make choices in the selection of securities for the fund's portfolio. Also known as a "junior security" or "subordinated loan". A style box is.. Subordination Clause A clause in an agreement which states that the current claim on any debts will take priority over any other claims formed in other agreements made in the future.

For companies making an initial public offering. or because investment objectives have changed. in other words .. Recently.TWO An alternative securities exchange in Taiwan with listing criteria that are lower than those of the Taiwan Stock Exchange (TSE).the survivors.... the balance of a loan is split between a fixed rate and a. Swap Curve The name given to the swap's equivalent of a yield curve. convertible bonds.TW The securities trading center in Taiwan. mortgage prepayments are used to. or a sovereignty (such as a government). In other words.. STRIPEs combine interest rate swaps and interest rate caps in order to protect the borrower from changes in interest rates.. a. companies analyze financial ratios such as book value. Surety The guarantee of the debts of one party by another. Two popular forms of sweeteners are warrants and rights. government bonds. quality of issues (stocks or bonds).. The borrower could be a corporation. listing on the TWO can be a step toward getting listed on the TSE. The swap curve identifies the relationship between swap rates at varying maturities. Synthetic CDOs are typically divided into credit tranches based on the level. Sushi Bond A Eurobond that is issued by a Japanese issuer and does not count against a Japanese institution's limits on the holdings of foreign securities. Survivor Bond A type of bond whose future coupons are based on the percentage of a stated population group who are still alive .. Swap Transferring Risk With Participating Element (STRIPE) A specific type of hedging technique. Sweetener A special feature or benefit added to a debt instrument (such as bonds) or a preferred stock offering to increase its value in the markets. earnings per share. swaps have grown to include currency swaps and interest rate swaps.... which allow the holder to either convert securities. a large project. A surety is the organization or person that assumes the responsibility of paying the debt in case the debtor policy defaults or is unable to make the payments.. To calculate the swap ratio. Under this arrangement.... . As mortality increases and survivors of the group decrease over. Swap Traditionally. Synthetic CDO A form of collateralized debt obligation (CDO) that invests in credit default swaps (CDSs) or other non-cash assets to gain exposure to a portfolio of fixed income assets... the exchange of one security for another to change the maturity (bonds).. Taiwan Stock Exchange (TAI) . Its listed securities include stocks. T Back to top y y Taiwan OTC Exchange (TWO) . The Taiwan Stock Exchange (TWSE) was established in 1961 and began operations in February 1962. Syndicated Loan A loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower.on the future coupon payment dates. The loan may involve fixed amounts.y y y y y y y y y y bonds that give bondholders their principal back right away if homeowners prepay their mortgages.. . The party that guarantees the debt is... Swap Ratio The ratio in which an acquiring company will offer its own shares in exchange for the target company's shares during a merger or acquisition... entitlement certificates of.

.. The bonds are issued at their original face value. rather than TABS.. that may trigger the alternative minimum tax (AMT) for taxpayers. Tax Free Tax free refers to certain types of goods and/or financial products (such as municipal bonds) that are not taxed and with earnings that are not taxed.. bonds... Tax Anticipation Bill (TAB) Unique bills sold at a discount and maturing within 23 to 273 days that the United States Treasury Department issues to investors. UITs and annuities. Since 1975. maturity and coupon rate. partnerships. taxation by regulators or government entities. Tax Exempt To be free from.. the qualifying exclusion for small business stock and excess intangible. tax-deferred or offers other types of tax benefits. Tax-advantaged plans.. the Treasury has relied on the sale of cash management bills. normally tax-free. Reducing the tax liability of a fund is done in three main ways: 1. Governments are often trying to encourage investment when exempting taxation. Tax Preference Item A type of income. State and local governments use tax anticipation notes to borrow money. Examples of Tax-Advantaged investments are municipal bonds. By purchasing tax-free (or low taxed) investments such as.. TACs protect investors from a rise in the prepayment rate or a fall in. cash equivalents) in its portfolio according to a selected time frame that is appropriate for a particular investor. defined in Section 243 of the Internal Revenue Service (IRS) Code. Target-Date Fund A mutual fund in the hybrid category that automatically resets the asset mix (stocks.. Tax preference items include private-activity municipal-bond interest. the income from which is not exempt from tax. account or plan that is either exempt from taxation. or some combination thereof. A tax exempt entity can be excused from a single or multiple taxation laws. Targeted Amortization Class (TAC) A type of credit derivative that is similar to a planned amortization class (PAC) in that it protects investors from prepayment. Taxable Municipal Bond A fixed-income security issued by a local government such as a city or county or related agencies.. Taxable preferred securities are.. to raise money. Taxable Preferred Securites A type of preferred equity security that does not qualify for the dividends-received deduction for corporations of typical preferred securities. A target-date fund is similar to a.. Tax-Advantaged Any type of investment.. or not subject to.y y y y y y y y y y y y y Tap Issue A procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. but sold at the current market price. Tax-Efficient Fund A mutual fund in which structure and operations are based on reducing the tax liability that its shareholders face. Taxable Bond A debt security whose return to the investor is subject to taxes at the local.. Tax Anticipation Note (TAN) A short-term debt security issued by a state or local government to finance an immediate project that will be repaid with future tax collections.... typically for one year or less. Taxable municipal bonds are generally issued to finance a project or activity that does not provide a. The tax free status of these goods and/or funds may incentivize individuals and business entities. state or federal level. . however. it is structured differently than a PAC.

Technical Default A deficiency in a loan agreement that arises not from a failure to make payments as promised. but from a failure to uphold some other aspect of the loan terms. state and local taxes. Telephone Bond Bonds issued by telephone companies. A means of settlement in a financial transaction.. Once viewed as the quintessential safe investment. which cannot be taxed owing to the fact that U. such as a takeover bid or tender offer. before Israel was a state. and its securities market became formalized in 1953 with the Tel Aviv. Tel Aviv Stock Exchange (TLV) . These are generally short-term . A call feature..... the appeal of telephone bonds has diminished in recent decades with the advent of. Treasuries and three-month contracts for Eurodollars having identical expiration months.y y y y y y y y y y y y y y Tax-Equivalent Yield The pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond... Term bonds that have a call feature can be redeemed at an earlier date than the other issued bonds. This calculation can be used to fairly compare the yield of a tax-free bond to that of a taxable bond in order to see which bond. Temporary Default A bond rating that suggests the issuer might not make all of the required interest payments. and can. 4. Israel became a state in 1948. this income may still be required to determine other tax calculations such as Social Security benefits. Tenor The amount of time left for the repayment of a loan or contract or the initial term length of a loan. Most tax-exempt securities come in the form of municipal bonds. or call provision.S. months or days. or a combination. that provides the debt holders (bondholders) some level of tax preference on the earnings from their debt investment at a local. Tenor can be expressed in years. 3. usually issued to finance short-term liabilities. Tax-Exempt Sector The market niche comprised of investment vehicles exempt from federal taxes. or obligations of issuers who operate in the telecommunications sector. Technical default indicates that the borrower may be in financial trouble. A notice from a futures-contract seller to offer money or goods for settlement of a futures..S. Although it is not directly taxed. savings. but is taking actions to avoid a full default.. Temporary default describes the credit worthiness of a debt issuer that has a high likelihood of defaulting. territory or municipality.... Ted Spread The price difference between three-month futures contracts for U.... law forbids the federal government from taxing debt issues. state or federal level. U.. Tax-Exempt Security A security in which the income produced is free from federal.. Term Deposit A deposit held at a financial institution that has a fixed term. Tax-Exempt Commercial Paper An unsecured short-term loan. For some investors.. Nearly all investments in this area are municipal bonds. A bid to buy treasury bills. Tax-Exempt Interest Interest income that is exempt from federal income tax. Tender 1. is an agreement that bond issuers make with buyers.. To accept a formal offer.TA The securities market in Israel.S. 2. which represent obligations of a state. Securities exchange in Israel began in 1935 through the Exchange Bureau for Securities.. Term Bond Bonds from the same issue that share the same maturity dates..

. at which time the issuer must redeem the bond by paying the principal (or face value).. Timberland Investment An investment instrument used primarily by large institutional investors (such as public and private pension funds). Treasury debt obligation that has a maturity of 30 years. Toggle Note A payment-in-kind bond. Term Securities Lending Facility (TSLF) A lending facility through the Federal Reserve that allows primary dealers to borrow Treasury securities on a 28-day term by pledging eligible collateral.S...... Banks purchase these funds when their borrowing needs will last for several days. Pass-through securities issued by Freddie Mac. where the issuer has the option to defer an interest payment by agreeing to .S. Term Federal Funds Balances purchased in Federal Reserve accounts for more than a single day. bond and one of the world's most closely watched financial instrument. Term To Maturity The remaining life of a financial instrument.. Thirty-Year Treasury A U. Term federal funds usually have a maximum term of 90 days... Fannie Mae and Ginnie Mae trade in the TBA market. ..... It is under the umbrella of Source Media. but generally less than 90 days. Times Interest Earned (TIE) A metric used to measure a company's ability to meet its debt obligations. The fund is passively managed. but still wish to benefit from a low interest rate. When a term deposit is purchased.. As a general rule.. The two main assets that underlie timberland investments are tree farms and managed natural forests. The 30-year Treasury is the benchmark U. The returns on these forestland. In bonds. The Bond Buyer The Bond Buyer is a municipal bond market daily trade publication. was formed in August 2005 to contribute to the management of its petroleum resources for the benefit of its current and future generations. a division of Thompson Financial and is considered a. The term TBA is derived from the fact that the actual mortgage-backed security that. To Be Announced (TBA) A term used to describe a forward mortgage-backed securities trade. Timor-Leste Petroleum Fund (East Timor) The Petroleum Fund of Timor-Leste or East Timor. Term Fed Funds Funds that banks borrow from the Federal Reserve for longer than a day.. Time-Sale Financing A form of indirect dealer lending or financing used by banks or other third parties. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. Under time-sale financing. It is. banks borrow term Fed funds when they need a temporary influx of cash.y y y y y y y y y y y y y with maturities ranging anywhere from a month to a few years. it is the time between when the bond is issued and when it matures (maturity date).. the borrower buys installment sale contracts from the dealer and then makes payments to the dealer. Term Structure Of Interest Rates A yield curve displaying the relationship between spot rates of zero-coupon securities and their term to maturity.. a nation in Southeast Asia. the lender (the customer) understands that the money can. It began production in 1891 as The Daily Bond Buyer and is headquartered in Manhattan. The eligible securities under the term securities lending facility include 'AAA' to 'Aaa'.

Total Bond Fund A mutual fund or exchange-traded fund that seeks to replicate a broad bond index by owning many securities across a range of maturities. which includes both the income it generates and any capital gains. Traditional IRA An individual retirement account (IRA) that allows individuals to direct pretax income. Toxic Debt Debt that has a lower chance of being repaid with interest. such as dividends. Trading Effect A measure of performance that examines the difference in returns between a bond portfolio and a chosen benchmark. The principal and interest repayments are supplied by revenues from tolls paid by users of the public project in question.. as they are often guaranteed to lose money. Total Return Swap A swap agreement in which one party makes payments based on a set rate.. who are NASD members and deal with specific. Toxic Waste A slang term referring to securities that are unattractive due to certain underlying provisions or risks making them generally illiquid with poor pricing schemes and transparency.. tunnel or expressway. Transportation bonds may also refer to bonds issued by companies that operate in the transport sector.. either fixed or variable. "Tranche" is the French word for "slice"... toward investments that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to.. and assumes that any cash distributions.. while the other party makes payments based on the return of an underlying asset. Toxic assets cannot be sold. bridges and public transit. Treasurer's Draft A type of bank draft that is payable through a designated bank. In.... all deferred payments must be settled by the bond's maturity.y y y y y y y y y y y y y pay an increased coupon in the future... Toll Revenue Bond A type of municipal bond used to build a public project such as a bridge. Trade Reporting And Compliance Engine (TRACE) A program developed by the National Association of Securities Dealers (NASD) which allows for the reporting of over-the-counter (OTC) transactions pertaining to eligible fixed-income securities. Looking at an index's total return displays a more accurate.This debt generally adheres to one of the following criteria: default rates for the particular debt are in... from both public and private sectors. The most common index used as a benchmark is the Lehman Aggregate Bond. Total Return Index A type of equity index that tracks both the capital gains of a group of stocks over time. are reinvested back into the index.. Brokers. The trading effect reveals whether trading. Toxic Assets An asset that becomes illiquid when its secondary market disappears. Toxic debt is toxic to the person or institution that will receive the payments. Treasurer's drafts are drawn from the . Tranches A piece. up to specific annual limits. portion or slice of a deal or structured financing. including. This difference occurs as a result of short-term alterations in the portfolio's composition. The term "toxic asset" was coined in the financial crisis of 2008/09.. Transportation Bond Fixed-income obligations of issuers that own and operate transportation systems such as ports. With toggle notes. . highways.. in regards to mortgage-backed.. rewards and/or maturities.. This portion is one of several related securities that are offered at the same time but have different risks.

Treasury Note A marketable U..y y y y y y y y y y y y y issuer's own account.. Treasury Index An index based on the auctions of U. Treasury Direct The market where investors can purchase treasury securities directly from the federal government Treasury. Treasury Lock A customized derivative security used by investors to lock in the yield or price of a treasury security. government and since their par value rises..S. government or through a bank..S.. fixed-interest U.S.. The designated bank does not verify either the signature or the endorsement of the check.. TIPS are considered an extremely low-risk investment since they are backed by the U. Treasury Automated Auction Processing System (TAAPS) A computer network system developed by the Federal Reserve (and facilitated by its banks) to process the tenders received for treasury securities. Treasury Bond (T-Bond) A marketable. The treasury securities are traded through an auction process in the primary market. Tbills are sold in denominations of $1.S. and is conducted through Federal Reserve Banks. three months.. Treasury bonds make interest payments semi-annually and the income that holders receive is only taxed at the federal level. It is commonly used in determining mortgage rates for mortgages with an unfixed component and as a performance benchmark for investors in the capital.S.. Treasury Budget Data released by the U. government debt security with a fixed interest rate and a maturity between one and 10 years. This trading system eliminates brokers and dealers... TIGRs were introduced by Merrill Lynch and were originally issued between 1982 and 1986.. TIGR bonds were discontinued when the U. Treasury international capital is used as an economic indicator that tracks the flow of Treasury and agency securities.. Treasury's daily yield curve. Treasury Receipt A zero-coupon bond issued by a brokerage firm and collateralized by treasury securities held for the investor by a custodian. government debt security with a maturity of more than 10 years.S. Treasury STRIPS are fixed-income securities sold at a significant discount to face value and offer no interest payments because they mature at par. When buying Treasury notes from the government. or on the U... Treasury on a monthly basis that accounts for the surpluses or deficits of the federal government. government with a maturity of less than one year. Treasury Inflation Protected Securities (TIPS) A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. Treasury Bill (T-Bill) A short-term debt obligation backed by the U.. Tenders are.S. Treasury Investment Growth Receipts (TIGRs) Stripped Treasury securities offered at a significant discount to face value and backed by the U. Treasury bills. Treasury International Capital (TIC) Select groups of capital which are monitored with regards to their international movement. ..000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks). Treasury budget data tracks the changes in monthly balances as an indicator of budget trends and the direction of fiscal. Treasury STRIPS An acronym for 'separate trading of registered interest and principal securities'. government.S. as well as corporate bonds and. Tenders can be made either on a... Treasury notes can be bought either directly from the U.S.S.

... It may also indicate where the income stream for the... In an arrangement involving a trust receipt. U. along with factors related to the time value of money.. Trust Indenture Act of 1939 A law passed in 1939 that prohibits bond issues valued at over $5 million from being offered for sale without a formal written agreement (an indenture). savings bond.S. True interest cost includes all ancillary fees and costs.S. expressed as a percentage. It can also refer. Trust Receipt Notice of the release merchandise to a buyer from a bank.. Treasuries are considered to be a low-risk investment because they are backed by the full faith and credit of the U. Ultra-Short Bond Fund A type of bond fund that invests only in fixed-income instruments with very short-term maturities.S.. has early redemption features. notes and bills. the assets may be seized or sold to help specific trust. government.. with the bank retaining the ownership title to the released assets. the bank remains the owner of the merchandise. The U. such as finance charges. and matures at face value.. Triple-Tax-Free An investment (usually a municipal bond) featuring interest payments that are exempt from taxes at the municipal. Treasury umbrella include the. In some cases.S. Also known as "triple tax-exempt". Trust Certificate A bond or debt investment. government savings bond that offers a fixed rate of interest over a fixed period of time.y y y y y y y y y Treasury Yield The return on investment.. that fully discloses the particulars of the.S.S.. but the buyer is allowed to. In other words.S. usually in a public corporation. the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds. Two-Sided Market A market in which market makers (or specialists) are required to give both a firm bid and firm ask for each security in which they make a market. that is backed by other assets which serve a purpose similar to collateral. discount points and prepaid interest.S.. U Back to top y y y y U. on the debt obligations of the U.. Savings Bonds A U. Trust Preferred Securities (TruPS) A security similar to debentures and preferreds that is generally longer term. Treasury Created in 1798. state and federal levels. government. Many people find these bonds attractive because they are not subject to state or local income taxes. makes quarterly fixed interest payments. True Interest Cost (TIC) The real cost of taking out a loan.S. If the company experiences difficulty making payments... those making the market must be willing to both buy and sell at the prices they.. Some of the government branches operating under the U.. An . U. These bonds cannot be easily transferred and are.. Trust Indenture An agreement in the bond contract made between a bond issuer and a trustee that represents the bondholder's interests by highlighting the rules and responsibilities that each party must adhere to. which includes. possible late fees.. Savings Bond Adjustment An adjustment in the current amount of reportable interest on a U. the taxpayer has already reported some of the interest that was earned and must therefore reduce the current amount of taxable interest. signed by both the bond issuer and the bondholder..

there is little or no incentive for.... . the unearned interest portion must be returned. Unit linked insurance plans allow for the coverage of an insurance policy. Because of this feature. If the loan is paid off early. Undated Issue A government bond that has no maturity date. United States Treasury Money Mutual Funds An investment fund that pools money from investors to purchase short-term... to service the debt until it is repaid.... unmanaged portfolio. An unseasoned security has been available to the public for only a short period of time.. the unearned interest portion must be returned. all in a single account. Uncommitted Facility A credit facility with no restrictions placed upon the lending institution regarding the amount of funds to be lent.. bonds and exchange traded funds) in an investor's portfolio.. it is initially recorded as a liability. Underlying Debt In municipal bonds. Undetachable stock warrants are considered low-risk because they can be substituted for another security with a higher return. Instead..S. therefore.g.. mutual funds.. Unearned Discount Interest that has been collected on a loan by a lending institution but has not yet been counted as income (or earnings)... Instead. On their own.. Unit Linked Insurance Plan (ULIP) A type of insurance vehicle in which the policyholder purchases units at their net asset values and also makes contributions toward another investment vehicle.. with no track record or historical data on which to base trading and. Unified Managed Account (UMA) A professionally managed private investment account that is rebalanced regularly and can encompass every investment vehicle (e. underlying debt relates to an implicit understanding that the debt of smaller governmental entities might also be backed by the creditworthiness of larger governmental entities in the jurisdiction. low-risk securities. without limit. and pays interest in perpetuity.... If the loan is paid off early.. Unit investment. as redeemable "units" to investors for a specific period of time. since most existing undated issues have very low coupons. Unlimited Tax Bond A municipal bond that is backed by the pledge of the issuer (generally a city or municipality) to raise taxes. Unit Investment Trust (UIT) An investment company that offers a fixed. A United States Treasury Money Mutual Fund is a type of mutual fund that invests primarily or exclusively in U. Unseasoned Security A financial instrument that has only recently been made available for trading. these smaller. While the government can redeem an undated issue if it so chooses. it is initially recorded as a liability. Undetachable Stock Warrant A right attached to a bond that can be redeemed for stock.. This investing strategy tends to offer higher yields than. stocks. It is designed to provide capital appreciation and/or dividend income. generally of stocks and bonds. but cannot be sold separately from the bond.y y y y y y y y y y y y ultra-short bond fund will ideally invest in instruments with maturities around one year.. Treasury bills and repurchase. Unearned Interest Interest that has been collected on a loan by a lending institution but has not yet been counted as income (or earnings). An undetachable.. and provide. unlimited tax bonds may have higher credit ratings and.

water systems.... The bond is payable to the bondholder upon demand following an interest rate change. Variable Annuity An insurance contract in which. UST The abbreviation for the United States Treasury. Unsecured Note A loan that is not secured by the issuer's assets.. issues. An upgrade is usually triggered by a steady improvement in the fundamentals and financials of the entity that has issued the security. the insurance company guarantees a minimum payment. Variable Rate Demand Note (VRDN) A debt instrument that represents borrowed funds that are payable on demand and accrue interest . A utility revenue bond is repaid from monies earned through the utility improvements. Variable life insurance provides permanent protection to the beneficiary upon the death of the policy holder. Traders will often use the phrases 'UST yields' or 'UST curve' to refer to Treasury yields or the Treasury yield curve.Such notes are also often uninsured and subordinated. The fee is based on the amount of credit actually used by a borrower in a revolving line of credit or term loan. the current money market rate is what is used to set the interest rate. Variable Life Insurance Policy A form of permanent life insurance.y y y y y y y y Unsecured Debt A loan not secured by an underlying asset or collateral.. Unsecured Loan A loan that is issued and supported only by the borrower's creditworthiness..S... V Back to top y y y y y y Value Date A future date used in determining the value of a product that fluctuates in price. Utility Revenue Bond A type of municipal bond that is issued to finance utility projects. Unsecured debt is the opposite of secured debt. Generally.. Unsubordinated Debt A loan or security that ranks above other loans or securities with regard to claims on assets or earnings. rather than by some sort of collateral. Variable Rate Demand Bond A bond with floating coupon payments that are adjusted at specific intervals.. Upgrades to the credit rating of corporate issuers of debt. you will see the use of value dates in determining the payment of products and accounts where there is a possibility for discrepancies due to differences. Typically.. Upgrade A positive change in the rating of a security. Utilization Fee An annual fee assessed by a lender against a borrower. UST is commonly used for references to the Treasury debt that the U. Variable Interest Rate An interest rate that moves up and down based on the changes of an underlying interest rate index. at the end of the accumulation stage.. such as electrical plants. This type of insurance is generally the most expensive type of cash-value insurance because it allows.. Also known as a senior security. Watch: Variable Annuity Basics . Unsecured notes are similar to debentures but offer a higher rate of return with less security than a debenture.. The note is structured for a. The remaining income payments can vary depending on the performance of the managed portfolio. sewer systems or any other type of public utility.

MBSs typically have maturities around 30 years. located in Warsaw Poland. such as high-yield bonds in or near default. War Bond Debt securities issued by a government for the purpose of financing military operations during times of war.. According to... this exchange is located in Vienna.... The Vienna Stock Exchange facilitates about 60% of all stocks traded in Austria. Vulture Fund A fund that buys securities in distressed investments. and the exchange ballooned to a market capitalization of approximately $200 billion (EUR) in six years.. Voting Trust Certificate A certificate issued by the limited-life trust of a corporation established to limit the control of a corporation to a few individuals. is .. Wedding Warrant A warrant that can only be exercised if the host asset. Warehouse Bond A type of financial protection that assures an individual or business keeping goods in a storage facility that any losses will be covered if the facility fails to meet the terms of its contract. Trading started on April 16. and represents all of. Austria.... Vienna Stock Exchange (WBAG) . The WAI takes into account more variables than just the profits or share growth of a company. such as the prime rate. or equities that are in or near bankruptcy. W Back to top y y y y y y y Wallpaper The name given to stocks.. The interest rate applicable to the borrowed funds is specified from the outset of the. bonds and. bonds and other securities that have become worthless.. It is an emotional appeal to patriotic citizens to lend the government their money because these bonds offer a rate of return below the. The premium amount for variable universal life insurance (VUL) is flexible and may be changed by the consumer as needed. and a particular issue's 'vintage' will expose the holder to.VI Also known as the Wiener Borse AG. though these changes can result.. The loan typically lasts from the time it is originated to when the loan is sold into the secondary. Wealth Added Index (WAI) A metric designed by Stern Stewart & Co consulting firm that attempts to measure wealth created (or destroyed) for shareholders by a company.. but also provides financing for the buyer in the form of a vendor note. The loan is secured by the. Warehouse Lending A line of credit extended by a financial institution to a loan originator to fund a mortgage that a borrower initially used to buy a property. Instruments such as shares.. If the warehouse owner or operator fails to meet its.. A voting trust certificate is issued to a stockholder in exchange for their common stock.. It is one of the most established stock exchanges in all of southeastern Europe. Warsaw Stock Exchange (WSE) The largest stock exchange in eastern Europe. typically a bond or preferred stock.y y y y y y based on a prevailing money market rate. Variable Universal Life Insurance (VUL) A form of cash-value life insurance that offers both a death benefit and an investment feature. Vintage A slang term used by mortgage-backed securities (MBS) traders and investors to refer to an MBS that is seasoned over some time period. Vendor Note A type of debt instrument used in a particular type of short-term loan agreement in which the seller of goods or merchandise sells them to the buyer.. 1991..

Weighted Average Maturity (WAM) The weighted average of the time until all maturities on mortgages in a mortgage-backed security (MBS). Weighted Average Credit Rating The weighted average of all the bond credit ratings in a bond fund. bonds and any other long-term debt . Without recourse can also refer to a financing arrangement where the dealer's maximum possible. Once calculated. All else equal. Weighted Average Life (WAL) The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. in high amounts.. Until the call date of the host asset is reached... whole pools refer to mortgage certificates where ownership is represented by an undivided interest in entire pools of mortgages. the warrant can only be exercised if the holder surrenders an equal amount of host asset.... All capital sources .. when the buyer of a promissory note or other negotiable instrument assumes the risk of default.... the riskier the bond fund. Workable Indication A nominal quote in the municipal bond market at which price a dealer is willing to either buy or sell a particular issue. In a general sense. preferred stock.. Whole Pool In the mortgage-backed securities market. Weighted Average Coupon (WAC) The weighted-average gross interest rates of the pool of mortgages that underlie a mortgage-backed security (MBS) at the time the securities were issued. The measure gives investors an idea of how risky a fund's bonds are overall. Weighted Average Cost Of Capital (WACC) A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. .. Whoops Slang for the Washington Public Power Supply System (WPPSS). The term 'whole' refers to the fact that the ownership interest is undivided. Without Recourse This phrase has several meanings. The weighted average credit... through financial institutions... Also known as "average effective.. The higher the weighted average to maturity. The WALA is measured as the time in months since the origination of the loans. His investment. with the. Gross A well known bond investment manager who is one of America's 400 richest people as of 2009..common stock. This differs from a firm quote as revisions to the offer are allowed within a specified time period.WALA A dollar-weighted average measuring the age of the individual loans in a mortgage pass-through or pooled security.are included in a WACC calculation.. These loans will usually be issued by large financial. Wholesale Money Funds borrowed by corporations. WAL tells how many years it will take to pay half of the outstanding principal... Weighted Average Loan Age . A mortgage-backed security's current WAC can differ from its original WAC as the underlying. such as Ginnie Mae or a Freddie Mac security. William H. the longer the mortgages in the security have until maturity. The lower the weighted average credit rating.. Wholesale money is a way for large institutions to obtain capital without having to issue shares or bonds... which made the record books with the largest municipal bond default in history.y y y y y y y y y y y y surrendered. William Gross is the founder of Pacific Investment Management (PIMCO) and manages their total return fund as well as several other funds. usually one hour.

. Yen ETF Exchange-traded funds that invest primarily in yen-backed assets such as short-term debt instruments and bonds. but differing maturity dates. dollars that is publicly issued in the U. Yield Curve Risk The risk of experiencing an adverse shift in market interest rates associated with investing in a fixed .. funds. Yield Basis A method of quoting the price of a fixed-income security as a yield percentage.. Treasury debt. by foreign banks and corporations.000. These securities result in a capital loss for the owner and can be claimed as such when filing taxes... This allows bonds with varying characteristics to be easily compared.. Launched in 1997 and operated by the Deutsche Börse. or hold the currency in simple interest-bearing accounts that pay the current money market yields in Japan. Worthless securities can include stocks or bonds that are either publicly traded or privately held.. X Back to top y Xetra An all-electronic trading system based in Frankfurt. Yankee certificates of deposit are generally used by institutional and other large investors looking to invest funds in. Some Yen ETFs will match.y y Workout Period The period of time in which temporary yield discrepancies between fixed income securities are adjusted. Yield The income return on an investment. five-year and 30-year U.. bulletin that gives updated bid and ask prices as well as other information on OTC bonds.. According to the Securities Act of 1933.. Yankee CD A certificate of deposit (CD) issued in the U.." is done after the bond is placed in escrow for an investor who is awaiting. This practice. the Xetra platform offers increased flexibility for seeing order depth within the markets and offers trading in stocks. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost... market. As they usually have a minimum face value of $100. Germany. at a set point in time.S. Yellow Sheets A U.. .. Worthless Securities Securities that have a market value of zero.. of bonds having equal credit quality. referred to as "burning the yield. Yankee Certificate Of Deposit A certificate of deposit issued by a foreign bank in the United States. Yield Curve A line that plots the interest rates.S. Y Back to top y y y y y y y y y y Yankee Bond A bond denominated in U. these bonds must first be registered with the Securities and Exchange Commission (SEC) before they can. The most frequently reported yield curve compares the three-month. its current market value or its face value.S. by a branch of a foreign bank.S. rather than in dollars. twoyear.. bonds. Yield Burning The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond.. typically in New York.S.

while the bond with the higher yield will typically have a... Yield Spread The difference between yields on differing debt instruments.S. Yield Elbow The point on the yield curve indicating the year in which the economy's highest interest rates occur.. .. coupon interest rate. Yield To Maturity (YTM) The rate of return anticipated on a bond if it is held until the maturity date.. Z Back to top y y Zacks Lifecycle Indexes A series of indexes developed by Zacks Investment Research. The calculation of yield to call is based on the coupon rate. Yield-based options are settled in cash. calculated by deducting the yield of one instrument from another... Yield-Based Option A type of debt-instrument-based option that derives its value from the difference between the exercise price and the value of the yield of the underlying debt instrument. the length of time to the. the greater the difference between the yields offered by each instrument... as average life in this case may be significantly less than the. Yield Equivalence The interest rate on a taxable security that would render a return equivalent to that of a tax-exempt security. Inc. The yield-to-average life calculation is often used in the case of a sinking fund where. Yield Pickup The additional interest rate an investor receives when selling a lower-yielding bond in exchange for a higher-yielding bond. calculated as follows: Yield Maintenance A prepayment premium that allows investors to attain the same yield as if the borrower made all scheduled mortgage payments until maturity. It is particularly useful when a bond has a sinking-fund feature. Yield To Average Life The yield on a fixed-income security when the average maturity is substituted for the maturity date of the issue. This yield replaces the stated final maturity with the average life maturity.. YTM is considered a longterm bond yield expressed as an annual rate. to provide a benchmark for the lifecycle of target-date funds.. A yield-based call buyer expects.. par value. This yield is valid only if the security is called prior to maturity... Yield To Worst (YTW) The lowest potential yield that can be received on a bond without the issuer actually defaulting. The Zacks Lifecycle Index constituents include U. Yield-To-Average Life The yield calculation of a bond that is systematically retired throughout its life.. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if. which is a result of changing yields. with a different index for each target date. and vice versa. The higher the yield spread. The spread can be. Yield To Call The yield of a bond or note if you were to buy and hold the security until the call date. The risk is associated with either a flattening or steepening of the yield curve. equities.... The calculation of YTM takes into account the current market price..y y y y y y y y y y y income instrument. Z-Bond The final tranche in a series of mortgage-backed securities that is the last one to receive payment... The bond with the lower yield generally has a shorter maturity.

. each cash flow is. Zero-Coupon Certificate Of Deposit (CD) A certificate of deposit (CD) that is purchased at a largely discounted rate. In a Z-tranche. The number produced by the model is referred to as the company's.y y y y y y y Used in some collateralized mortgage obligations (CMO). Interest that. In other words. rather than paid over the course of the loan. the bond pays no interest and is issued at a discount to par value. .... Due to the zero-coupon feature. Zero-Coupon Mortgage A form of commercial financing in which regular interest and principal payments are deferred until maturity. This class of bond does not receive any interest or principal payments until all other tranches have been completely paid off. but rather as a lump sum at the date of maturity. Z-bonds pay no coupon payments while principal is being paid on earlier bonds.. rendering profit at maturity when the bond is redeemed for its full face value. Zero-Volatility Spread (Z-spread) The constant spread that will make the price of a security equal to the present value of its cash flows when added to the yield at each point on the spot rate Treasury curve where a cash flow is received . Also known as an "accrual bond". Z-Tranche A special type of bond class in a sequential pay collateralized mortgage obligation. the interest that is. Zeta Model A mathematical formula developed in the 1960s by NYU Professor Edward Altman that attempts to express the chances of a public company going bankrupt within a two-year time period.. Zero-Coupon Convertible A fixed income instrument that is a combination of a zero-coupon bond and a convertible bond. while the convertible feature means that the bond is. While the coupon rate on such a mortgage is technically zero because there are no regular.. Zero-Coupon Bond A debt security that doesn't pay interest (a coupon) but is traded at a deep discount.... It differs from a traditional CD in that interest payments are not received yearly...