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. |||The income bond is a somewhat rare financial instrument which generally serves a corporate purpose similar to that of preferred shares. It may be structured so that unpaid interest payments accumulate and become due upon maturity of the bond issue, but this is usually not the case; as such, it can be a useful tool to help a corporation avoid bankruptcy during times of poor financial health or ongoing reorganization.
The term residual dividend refers to a method of calculating dividends. A dividend is a payment made by a company to its shareholders. It is essentially a portion of the company's profits that is divided amongst the people who own stock in the company. A residual dividend policy is one where a company uses residual or leftover equity to fund dividend payments. Typically, this method of dividend payment creates volatility in the dividend payments that may be undesirable for some investors. Taobiz explains Residual Dividend Companies that use the residual dividend policy first use the cash flow to fullfill necessary capital expenditures and the remaining amount available (the residual) is paid out to shareholders. Also, if the company is maintaining a certain target debt to equity capital structure, then the full amount of the capital expenditure will not be paid entirely by equity but also with part debt.
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 fluctuate over time.An income annuity is typically purchased with a lump sum payment, often by people who are at or near retirement. Also known as an "immediate annuity". |||Investors seeking income annuities should have clear picture of how much income will be received and for how long. Most annuities pay out until the death of the annuitant and some pay out until the death of spouse. Although the insurance product may be annuitized immediately, variable investments can allow for some principal protection by participating in equity markets. Even if all income units are in fixed investments, there may be a provision allowing for a higher return if a specific benchmark index performs extremely well.
A statement from a brokerage firm or other investment advisory service discussing a specific security, industry, market or news item. Research notes are usually meant to contain time-sensitive information that applies to the current day's trading session or some event in the near future. Taobiz explains Research Note Research notes are often short in length (only a few paragraphs is common) and may make reference to an existing and more thorough investment call to buy or sell a security; research notes are also often used to advise clients to change their tactics and take a different course of action, along with the firm's reasons for this advice. Depending on the issuing firm, research notes may only be released to existing or prospective clients, and not to the general public. Many of them make their way into the public domain quickly, even later in the same trading day.
Any expenses associated with the research and development of a company's goods or services. R&D expenses are a type of operating expense that can be deducted as such on the business tax return. This type of expense is incurred in the process of finding and creating new products or services. Taobiz explains Research And Development (R&D) Expenses R&D expenses can be relatively minor, or they can easily run into the billions of dollars for large corporations. R&D expenses are usually the highest for industrial, technological, healthcare and pharmaceutical firms. Some companies reinvest a significant portion of their profits back into R&D, as they see this as an investment in their continued growth.
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. |||Within the loan arrangement, the lender can make specific provisions regarding an incipient default. Such provisions may place covenants on the borrower or impair a contractual right. Incipient defaults may be determined based on current business problems, such as an illiquid balance sheet or a low quick ratio.
A situation involving the exchange of stock options that are no longer in the money for options that are currently at the money. This allows the investor to exchange worthless options for options that have value, and is common for executives, pending approval from the board of directors. Taobiz explains Reprice This scenario is most likely to arise for corporate executives and high-level employees. Due to the changes in financial reporting laws, repricing will increase the option expenses a firm is required to deduct from net income.
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. The bond is held until it is delivered into the futures or forward contract and the loan is repaid. |||The implied repo rate comes from the reverse repo market, which has similar gain/loss variables as the implied repo rate. All types of futures and forward contracts have an implied repo rate, not just bond contracts.For example, the price at which wheat can be simultaneous purchased in the cash market and sold in the futures market (minus storage, delivery and borrowing costs) is an implied repo rate. In the mortgage-backed securities TBA market, the implied repo rate is known as the dollar roll arbitrage.
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