When a regulated public utility business financially separates itself from a parent company that engages in non-regulated business. This is done mainly to protect consumers of essential services such as power, water and basic telecommunications from financial instability or bankruptcy in the parent company resulting from losses in their open market activites. Ringfencing also keeps customer information within the public utility business private from the for-profit efforts of the parent company's other business. Taobiz explains Ringfencing The parent company can also benefit from ringfencing; bond investors prefer to see public utilities ringfenced because it implies greater safety in the bonds. Also, the parent company is usually freer to grow its non-regulated business segments once a ringfence is in place. Individual states are chiefly involved with ringfencing utilities within their borders, as no federal mandate is currently in place requiring that all public services be ringfenced. A high-profile success story on ringfencing occurred during the Enron meltdown of 2001-2002; Enron acquired Oregon-based Portland General Electric in 1997, but the local power generator was ringfenced by the state of Oregon prior to the acquisition being completed. This protected Portland General Electric's assets, and its consumers, when Enron declared bankruptcy amidst massive accounting scandals.
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 yield calculations. In a standard (or positive) yield curve environment, intermediate-term bonds pay a higher yield for a given credit quality than short-term bonds, but a lower yield compared to long-term (10+ years) bonds. |||In recent years, there has been a steady decline in the issuance of long-term bonds (those maturing in over 10 years). In fact, the 30-year U.S. Treasury bond was discontinued in 2002 as the spread between intermediate-term and long-term bonds reached all-time lows. While the 30-year Treasury was revived in 2006, for many fixed income investors, the 10-year bond became the "new 30 year", and was considered the benchmark rate in many calculations.
A security giving stockholders entitlement to purchase new shares issued by the corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned. Rights are issued only for a short period of time, after which they expire. Taobiz explains Rights This also known as "subscription rights" or "share purchase rights".
A swap transaction meant to capitalize on a yield discrepancy between bond market sectors. |||Opportunities for intermarket spread swaps exist when there are credit quality or feature differences between bonds. For example, if there is a wide credit spread between high credit quality corporate and treasury bonds, and the spread is expected to narrow, investors would swap government securities for corporate securities.
An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small cap stocks in the United States. Taobiz explains Russell 2000 Index The weighted average market capitalization for companies in the Russell 2000 is about US$1 billion and the index itself is considered to be the benchmark for all small cap mutual funds.
An index of approximately 1,000 of the largest companies in the U.S. equity markets, the Russell 1000 is a subset of the Russell 3000 Index. The Russell 1000 (maintained by the Russell Investment Group) comprises over 90% of the total market capitalization of all listed U.S. stocks, and is considered a bellwether index for large cap investing. The Russell 1000 is a market capitalization-weighted index, meaning that the largest companies constitute the largest percentages in the index and will affect performance more than the smallest index members. Taobiz explains Russell 1000 Index The Russell 1000 is a much broader index than the often quoted Dow Jones Industrial Average (DJIA) and Standard & Poor’s 500 Index (S&P 500), although all three are considered large cap stock benchmarks. Many institutional managers prefer the Russell 1000 as a barometer for large cap investments as a whole; the average market cap of a Russell 1000 company is over $80 billion, and all of the index members are considered highly liquid stocks. An ETF representing the Russell 1000 can be purchased for a minimal expense ratio; the ETF is called the iShares Russell 1000 Index and trades on the New York Stock Exchange (NYSE) under the ticker IWB.
The yield spread between two fixed-income securities in different sectors with the same maturity. |||In the bond market, an intermarket-sector spread could occur between corporate bonds and government bonds with the same maturity.
The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Taobiz explains Runoff If the "tape is late" then it can take a long time to print off all the closing prices.
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