An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income arbitrage strategy, the investor assumes opposing positions in the market to take advantage of small price discrepancies while limiting interest rate risk. |||Fixed-income arbitrage is primarily used by hedge funds and leading investment banks. The most common fixed-income arbitrage strategy is swap-spread arbitrage. This consists of taking opposing long and short positions in a swap and a Treasury bond. Such strategies provide relatively small returns and, in some cases, huge losses. That's why these strategies are often referred to as "picking up nickels in front of a steamroller"!
Describes an agreement to purchase or sell shares made directly with the company. Non-open market transactions, as the name suggests, don't take place on a market exchange like most purchase and sale transactions, but instead are private transactions. While these transactions occur outside of the traditional market, they still need to be filed with the SEC. These transactions can be referred to as non-open market acquisition or disposition. Taobiz explains Non-Open Market The most typical non-open market transactions occur when insiders exercise their options. If an insider has an option to buy a certain amount of shares at a set price, they are buying the shares from the company and not through an exchange. However, once the shares have been purchased, the insider can sell the purchased shares into the open market. Another type of non-open market transaction is a tender offer where a corporation offers to repurchase shares from outside shareholders.
A beneficial owner who gives permission to a financial intermediary to release the owner's name and address to the company(ies) or issuer(s) in which they have bought securities. Companies and issuers request this personal information so they can contact the shareholder regarding important shareholder communications (such as proxies, circulars for rights offerings and annual/quarterly reports). Taobiz explains Non-Objecting Beneficial Owner - NOBO A beneficial owner of a security is someone who has a security or securities held by a financial intermediary. This tends to be the individual’s broker, or, in some cases, it may be another financial intermediary the person is associated with. An objecting beneficial owner (OBO)instructs the financial intermediary who holds the securities to not provide the owner's name and personal information to the company that issued the securities. When you set up your account with a broker, you will often have the choice as to whether or not you would like your information released to the companies in which you purchase shares.
Describes an investment vehicle, usually some kind of debt instrument, that has a fixed time period of investment. With a fixed-term investment, the investor parts with his or her money for a specified period of time and is repaid his or her principal investment only at the end of the investment period. |||A common example of a fixed-term investment is a term deposit, in which the investor deposits his or her funds with a financial institution for a specified period of time and cannot withdraw the funds until the end of the time period, or at least not without facing an early withdrawal penalty. This is the opposite of a demand deposit, in which the investor is free to withdraw his or her funds at any time. As a price for the convenience of withdrawal at any time, demand deposits generally pay lower interest rates than term deposits.
Securities that cannot be purchased on margin at a particular brokerage or financial institution. Some classes of securities, such as recent initial public offerings (IPOs), over-the-counter bulletin board stocks, and penny stocks, are non-marginable by decree of the Federal Reserve Board. Other securities, such as stocks with share prices under $5 or with extremely high betas, may be excluded at the discretion of the broker itself. Non-marginable securities must be 100% funded by the investor's own cash, and holdings in non-marginable securities do not add to the investor's margin buying power. Taobiz explains Non-Marginable Securities Most brokerage firms have their own internal lists of non-marginable securities, which investors can find online or by contacting their institutions. These lists will be adjusted over time to reflect changes in share prices and volatility. The main goal of keeping some securities away from margin investors is to mitigate risk and control the administrative costs of excessive margin calls on what are usually volatile stocks with uncertain cash flows.
A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan. Also known as a "fixed-rate mortgage". |||An estimated 70-80% of all home mortgages are fixed-rate.
A class of stock in which the issuing company is not allowed to impose levies on its shareholders for additional funds for further investment. Non-assessable stocks typically have the words "fully paid and non-assessable" printed on the stock certificate. These are the opposite of assessable stocks. Taobiz explains Non-Assessable Stock Assessable stocks proved unpopular, and most companies switched over to issuing non-assessable stock in the early 1900s . Although equity was no longer sold at a discount compared to its share price, investors were more confident about buying non-assessable stocks because they no longer had to worry about the possibility that the issuer would force them to make more investments after the initial transaction.
Stock that is issued without the specification of a par value indicated in the company's articles of incorporation or on the stock certificate itself. Taobiz explains No-Par Value Stock Most shares issued today are classified as no-par or low-par value stock. No-par value stock prices are determined by what investors are willing to pay for them in the market. Companies find it beneficial to issue no-par value stock as they have flexibility in setting higher prices for future public offerings and have less liability to shareholders in the case that their stock falls dramatically.
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