A type of bond that accrues interest if the embedded index or interest-rate option underlying the bond remains within a specified range. The fairway in golf is like the index or interest rate range. The outlook is positive if the ball lands on the fairway; if a ball lands in the rough, the outlook is negative. Also known as "corridor bond", "index range note", "range accrual note", or "index floater". |||Conservative investors tend to choose this type of bond in the hope of maximizing their yield when they believe that the option will remain within a certain range during the time the bond is held. Investors may profit the most during a sideways market. Should the option remain out of range, the least the investor can expect is a return of principal.
A measure of a company's investment in capital, found by subtracting non-cash depreciation from capital expenditures. This measure helps to give a sense of how much money a company is spending on capital items (such as property, plants and equipment), which are used for operations. Calculated as: Taobiz explains Net Investment Continued investment in the capital of a company is vital because the useful life of existing capital diminishes over time. The amount of net investment compared to such things as revenue will differ between industries and between businesses depending on how capital intensive the business is.
A type of investment firm that issues debt securities to its investors. These securities are called face-amount certificates and are backed by security interest on assets such as real property or other securities. This is similar in nature to mortgage bond debt financing. |||This technique allows a company to obtain financing at relatively low interest rates, since its debt is backed by specific tangible assets under the company's control. Investors who hold face-amount certificates are usually paid a fixed amount of annual interest and are refunded the principal (or face amount) of their securities at a specified termination date.
A type of security that allows holders to access excess cash flows resulting from securitized mortgage loan pools. Taobiz explains Net Interest Margin Securities - NIMS Excess cash flows from the securitized mortgage loan pools are transferred to a trust account through a NIMS transaction. From this trust account, investors of the NIMS receive interest payments.
The difference between the closing price of a security on the day's trading and the previous day's closing price. Net change can be positive or negative and is quoted in terms of dollars. This is what the newspaper stock tables quote. Taobiz explains Net Change Net change is used in technical analysis to analyze stock prices. For example, if ABC stock closed at $10 yesterday and it closed at $10.25 today, then the net change is $.25. In the case where a stock price is automatically adjusted to reflect a dividend distribution or stock split, the net change will not be affected. Thus, a stock that trades at $60 one day and splits 2-for-1 the next day and closes at $30 will have a net change of zero.
A provision which gives a bond issuer the right to call the bonds due to a one-time occurrence, as specified in the offering statement. The circumstances could range from natural disasters and cancelled projects to almost anything else. Also known as an "extraordinary call" or "extraordinary redemption provision". |||Some municipal bonds are issued with an extraordinary redemption provision.
A company's total cash minus total liabilities when discussing financial statements. Net cash is commonly used in evaluating a company's cash flow. More generally, net cash can refer to the amount of cash remaining after a transaction has been completed and all charges and deductions related to the transaction have been subtracted. "Net cash" may also be used as short form for "net cash per share", a stock investing term. More commonly, "net cash" will appear with another word, as in "net cash flow", "net cash income" or "net cash stock". Taobiz explains Net Cash Investors can use net cash to help determine whether a company's stock offers an attractive investment opportunity, and in some cases it can be used in conjunction with other measures to gauge the company's liquidity. Also, net cash might be used to assess whether a company has enough cash to make investments in future projects.
A spread in the futures markets created by taking offsetting positions in futures contracts for five-year treasury bonds and long-term (15-30 year) treasury bonds. |||A FAB spread is created by either buying a futures contract on five-year treasury bonds and selling one long-term treasury bonds or vice versa. Investors speculating on interest rate fluctuations will enter into this type of spread in hopes of under or overpriced treasuries.
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