The ex-dividend date is a pivotal date in the dividend distribution process on which a stock goes ex-dividend, typically about three weeks before the dividend is paid to shareholders of record. An investor who buys on or after that date is not entitled to the dividend.
An exchange rate is the rate at which one currency can be converted into another. It indicates the relative value of two currencies and is a critical factor in international trade and finance. The UK uniquely expresses exchange rates as the number of units of a foreign currency that £1 sterling will buy.
Expected return is a key concept in finance that estimates the likely return on an investment, based on historical data or anticipated performance. This measure helps investors evaluate the potential profitability of various investment options and make informed decisions.
Exposure refers to the level of risk assumed by an individual or entity, measured by the amount that one can potentially lose in finance. In marketing, it describes the extent and frequency of advertisements reaching the target audience across various media channels.
External funds are financial resources that a company secures from outside its organization to support its operations, typically through means like bank loans, bond offerings, or venture capital infusions.
An extra dividend is an additional payment made to shareholders on top of the regular dividend, typically awarded after a particularly profitable year to reward shareholders and foster loyalty.
The term FACE can refer to various financial and business concepts, including FACE INTEREST RATE and FACE VALUE.
The Face Amount of a Bond represents the nominal or principal amount that the issuer agrees to pay the bondholder at maturity.
Face value, also known as par value, denotes the nominal or stated value a particular asset maintains, such as stocks, bonds, or other types of securities. It is predominantly utilized in the fields of finance and investment to determine the fixed worth sovereignly ascribed to an instrument.
A facility is an agreement between a bank and a company that grants the company a line of credit with the bank. This can either be a committed facility or an uncommitted facility.
A facility fee is a charge that a borrower must pay to a lender for the opportunity to borrow additional funds. Typically applied in syndicated loan agreements, the facility fee compensates the lenders for making credit available.
Factoring is a financial transaction where a business sells its accounts receivable to a third party (factor) at a discount, providing the business with immediate working capital.
One of 12 banks that provide funds to agricultural lenders and institutions for crop farmers and cattle raisers, owned by farmers and ranchers.
A feeder fund is an investment vehicle similar to a fund of funds but typically invests all its assets into a master fund, which is responsible for managing the investments. This structure is common in hedge funds.
Finance involves the practice of managing and manipulating money, the capital involved in a project, and obtaining loans for specific purposes.
Financial risk refers to the potential for volatility in investment performance due to the use of borrowed money. It indicates the possibility of losing money when investing in financial instruments.
A firm quote is a specific type of bid or offer price for a security, typically stated by a market maker, that is binding and not identified as nominal or subject to further negotiation or review.
A first mortgage debenture is a type of debenture that holds the first charge over property owned by a company, often utilized by property companies to secure financing.
A fixed cost is a type of business expense that is constant and does not fluctuate with changes in the level of goods or services produced. These costs are incurred regularly, regardless of the business's activity level.
Fixed-income refers to a type of investment or income stream where payments are received on a regular schedule and are typically not adjusted for inflation. Common examples include most bonds, certain annuities, and some pension funds.
In accounting and finance, 'float' refers to various concepts including delayed money processing, publicly held stock proportions, contingency fund allocation, and processes related to financial transactions and securities.
A floating-rate loan has an interest rate that is not fixed and can fluctuate over the loan's tenure. These loans are often tied to short-term market indicators like the London Inter Bank Offered Rate (LIBOR).
The term 'For Your Information' (FYI) serves as a common prefix in memos and finance, often indicating that no action is required on the contents or that a quote is not a firm offer to trade at that price.
A forward contract involves the actual purchase or sale of a specified quantity of a commodity, government security, foreign currency, or other financial instrument at a price agreed upon now, with delivery and settlement at a future specified date.
The fourth market involves the direct trading of large blocks of securities between institutional investors, bypassing brokers to save on commissions.
A Fully Paid Share is a share on which the full nominal or par value has been paid by the shareholder, including any premium. Such shares denote that the shareholder has no further financial obligation towards the company concerning the initial capital amount.
A function in accounting refers to a specific section or department of an organization that carries out discrete activities managed by a director or manager. Functional budgets are often created for these sections. Examples include production, sales, finance, and personnel.
Future Worth, also known as the Future Value (FV), refers to the amount of money that an investment made today will grow to at a specific point in the future when interest is compounded over time.
A gain refers to an increase in value, measured by the difference between the adjusted tax basis and the selling price. It is a key concept in accounting and finance, encapsulating various types, such as capital gain, realized gain, and recognized gain.
A general expense refers to costs incurred during business operations that do not fall under categories such as selling, administrative, or cost of goods sold (COGS). These are typically miscellaneous expenses essential for running a business but not directly tied to core operational sectors.
Ginnie Mae, commonly referred to as the Government National Mortgage Association (GNMA), is a government corporation within the U.S. Department of Housing and Urban Development (HUD). It guarantees the timely payment of principal and interest on mortgage-backed securities (MBS) issued by approved lenders.
A comprehensive guide exploring the definition, examples, FAQs, related terms, references, and recommended books for understanding global bonds.
Gross amount refers to the total amount of something before any deductions are made for costs, taxes, or losses. For instance, gross revenues do not take into consideration factors such as taxes, depreciation, and other costs.
In the context of installment sales, the Gross Profit Ratio is the proportion of gross profit (gain) to the contract price, used to determine the taxable gain from periodic receipts from the buyer.
The gross redemption yield, also known as the effective yield or yield to maturity (YTM), represents the internal rate of return of a bond bought at a specified price and held until its maturity, excluding any taxes payable on the interest and the capital repayments.
Half-life in finance refers to the point in time at which half the principal has been repaid in a mortgage-backed security, including amortization and retirements.
The Hang Seng Index (HSI) is an arithmetically weighted index reflecting the performance of the largest companies listed on the Hong Kong Stock Exchange (HKEX).
High credit refers to the maximum amount of credit that has been extended to a customer or a company within a specific time frame. This can apply both to banking loans and trade credit from suppliers in different financial contexts.
A housing bond is a short- or long-term bond issued by a local housing authority to finance short-term construction of low- or middle-income housing or long-term commitments for housing, plants, pollution control facilities, or similar projects.
The overall cost of raising additional finance, reflecting the increased risks and required returns for equity and debt funders due to increased financing.
Inflation-Indexed Securities are bonds or notes that guarantee a return exceeding inflation if held to maturity. These instruments include Treasury Inflation-Protected Securities (TIPS) and mutual funds owning such securities.
In finance and various fields, an installment refers to anything given or received as part of a series of steps, commonly used in the context of debt repayment over successive periods.
The Inter Bank Offered Rate (IBOR) is the average interest rate at which a selection of banks on the interbank market is prepared to lend to one another.
Interest is the charge applied for borrowing a sum of money, typically expressed as a percentage of the principal loan amount. Interest calculations can vary based on whether simple or compound interest is used, influencing financial decisions significantly.
Interest income refers to the earnings obtained from various types of investments where the payment reflects the time value of money or from transactions where payments are made for the use or forbearance of money.
Interest-Rate Risk, also known as interest-rate exposure, refers to the risk arising from changes in interest rates. These changes can impact the value of fixed-interest assets and liabilities, cause mismatches in asset-liability repricing, and influence prepayment and reinvestment activities.
An intermediary acts as a go-between in various capacity including executive recruiters, brokers and financial institutions that facilitate investment decisions on behalf of others.
To allocate capital to an enterprise with the objective of securing income or profit for the investor.
Investment banks play a pivotal role in the financial markets by advising on mergers and acquisitions, underwriting new securities, and often trading securities for their own accounts. They differ from commercial banks, focusing on capital creation for corporations and other entities.
An investor is a party who allocates capital to purchase an asset with the expectation of financial returns. Generally, investors are more diligent and conservative compared to speculators.
A junior issue refers to a type of debt or equity that is subordinate in claim to another issue, particularly in terms of dividends, interest, principal, or security in the event of liquidation.
Kangaroo Bonds are bonds denominated in Australian dollars and issued in Australia by foreign firms, used to attract Australian investors while diversifying funding sources.
A kicker is an added feature of a debt obligation, usually designed to enhance marketability by offering the prospect of equity participation. Common examples include convertible bonds, rights, and warrants. Kicker features may also be found in mortgage loans where ownership participation or a percentage of gross rental receipts is included. Kickers are also known as sweeteners.
In the Indian subcontinent, the term 'Lakh' (10^5 or 100,000) is commonly used in finance and other contexts to indicate sums of money or quantities. Often used alongside 'Crore' (10^7 or 10,000,000).
The last sale refers to the most recent trade in a particular security, and it is not to be confused with the final transaction in a trading session, which is known as the closing sale.
Expenses that are deemed not reasonable based on the facts and circumstances, which are subsequently not tax-deductible by law.
A leaseback transaction involves a property owner selling the property and then leasing it back from the buyer. This allows the original owner to continue using the property while receiving an influx of capital from the sale.
Level debt service is a provision in a municipal charter stipulating that payments on municipal debt be approximately equal every year, making it easier to project the amount of tax revenue needed to meet obligations.
Leverage refers to the use of various financial instruments or borrowed capital—such as margin—to increase the potential return of an investment.
An in-depth exploration of leveraged buyouts, including definitions, examples, related terms, frequently asked questions, and resources for further study.
The term 'load' can refer to different concepts in computing and finance. In computing, it involves moving a program from a disk to a computer's memory. In finance, it typically refers to a sales charge paid by an investor when buying shares in a mutual fund.
Loan capital refers to the funds borrowed by an organization to finance its operations, subject to the payment of interest over the life of the loan, which is repaid at the end of the loan term.
Loan Closing refers to the final step in the process of securing a loan, particularly in real estate transactions. It encompasses all activities that transpire when the borrower and lender settle the terms and conditions of the loan agreement.
The Loan-to-Value (LTV) ratio is a financial metric used by lenders to evaluate the risk involved in lending a borrower against the value of the asset being purchased.
A term used in finance to denote secured rates of return, commodities positions in static markets, and investor withholding due to tax implications.
A locked-in interest rate is a rate promised by a lender at the time of loan application. The promise is a legal commitment of the lender, though there may be qualifications or contingencies that allow the lender to charge a higher rate. On home loans, the lock-in is customarily provided for 1% of the amount borrowed, though often it is free of charge. However, many prospective lenders find ways to renege on commitments when interest rates rise.
In finance, a long coupon refers to the first interest payment of a bond issue, which covers a longer period than the subsequent payments or an interest-bearing bond maturing in more than 10 years.
In financial markets, a long position refers to the purchase of a security, commodity, or currency with the expectation that its value will increase over time. This term is often used in the context of stock trading, futures contracts, and foreign exchange markets.
The loss ratio measures the ratio of losses incurred (or loans losses for banks) to either total premiums earned by an insurer or the overall receivables or debts for a corporation within a specific period, often one year.
A management fee is a charge against assets for the administration and management of portfolios, funds, or real estate properties. It encompasses services such as investment management, shareholder relations, administration, rent collection, maintenance, and bookkeeping.
Manipulation refers to creating a false appearance of active trading or controlling by shrewdness or influence. In finance, it's illegal and subject to penalties. In psychology, it involves behavior to control others.
Marginal Cost of Capital represents the cost of financing for the next dollar of capital raised. Different sources of capital, such as subordinated debt, can have varying costs. This metric is crucial for determining the hurdle rate in discounted cash flow and present value analysis.
A Materials Returns Note (MRN), also known as a Stores Returns Note (SRN), is a document used to record the return of materials to the store. Similar to a materials requisition, it is considered a prime document used to debit stock and credit expenditure.
A Medium-Term Note (MTN) is a type of debt security that generally matures in five to ten years, offering issuers flexible financing and investors a range of maturities and interest rate structures.
Miscellaneous Income refers to revenue that is unrelated to and much smaller than that from the main business operation. It usually originates from incidental or auxiliary activities.
An abbreviation that can refer to different terms such as Money Order or Modus Operandi, depending on the context.
Pertaining to, or having to do with, money, money creation, money supply, and government management of money.
Income measured only in monetary terms, without adjusting for changes in purchasing power due to inflation or deflation.
A Mortgage Correspondent is an entity or individual who services loans for a fee and plays an intermediary role between borrowers and lenders. This entity may also include underwriting and originating loans.
A statistical calculation used to analyze data points by creating a series of averages of different subsets of the full data set. It is particularly used in finance and business to assess trends over a certain period.
M-CATS, or Municipal Certificate of Accrual on Treasury Securities, is a type of zero-coupon bond issued by a municipality. These bonds do not pay periodic interest but are sold at a significant discount to their face value.
National debt refers to the total amount of money that the federal government owes to creditors due to borrowing. It consists of various debt instruments such as Treasury bills, Treasury notes, and Treasury bonds. The interest on the national debt is a significant part of the federal government's annual expenses.
Net denotes an amount remaining after specific deductions have been made. Net profit before taxation, for instance, is the profit made by an organization after the deduction of all business expenditure but before the deduction of the taxation charge.
Net proceeds refer to the amount received from the sale or disposition of property, from a loan, or the sale or issuance of securities after the deduction of all costs incurred in the transaction.
The effective interest rate on a loan resulting from dividing the interest by the actual proceeds received. For instance, on a $1,000 discounted loan with a 10% interest rate, the net interest would be $100/$900 = 11.1%.
The nominal interest rate is the rate of return on an investment that is unadjusted for the effect of inflation. It is distinguished from the real rate, which is the nominal rate less the rate of inflation.
A non-ratio covenant is a form of covenant in a loan agreement that includes conditions relating to the payment of dividends, the granting of guarantees, disposal of assets, change of ownership, and a negative pledge.
The normal operating cycle is the period required to convert cash into raw materials, raw materials into inventory finished goods, finished goods inventory into sales and accounts receivable, and finally, accounts receivable back into cash.
A Note Receivable is a financial instrument representing a written promise from a debtor to pay a specified sum of money to the creditor at a future date or on demand.
Objective Value is a term used to describe the value of an asset as determined by market forces, rather than subjective measures like personal opinions or intrinsic valuations.
Off-balance-sheet (OBS) refers to assets or liabilities that do not appear on a company's balance sheet but potentially have a significant impact on the company's financial health.
The official exchange rate of a country's currency as determined by that country's government.
This term refers to a partial payment of an obligation or an arrangement of credit terms between a seller and a buyer, where payment is expected at a later date and is not documented by a promissory note.
The term 'Open' varies in meaning across different fields such as Banking, Finance, Securities, and Computers. It generally signifies the initiation of an action or status that is currently active and not yet completed.
A term frequently used on Wall Street to describe the use of borrowed funds by individuals or companies to increase the return on invested capital, as well as an acronym for the options pricing model.
An optionor is a party who grants or sells an option, allowing another party, known as the optionee, the right but not the obligation to execute a transaction, typically involving the purchase or sale of an asset, under specified terms within a defined timeframe.
Ordinary interest is a type of simple interest calculated based on a 360-day year, as opposed to the 365-day year used in exact interest calculations.
Other Real Estate (ORE) and Other Real Estate Owned (OREO) refer to foreclosed properties held by lending institutions, not including properties used for bank operations.
Original equity refers to the amount of cash initially invested by the underlying owner in a venture or business. It is distinct from sweat equity and capital calls.
Overshoot refers to the phenomenon where a specified target or goal, such as an economic target, earnings projection, budget, or any predefined metric, is surpassed, often leading to unanticipated consequences.
