1. A written document that acknowledges a debt. 2. A temporary document representing a fraction of a share resulting from a split or spin-off. Scrips may be applied to the purchase of full shares. 3. Currency issued by a private corporation Taobiz explains Scrip 1. Historically, companies short of cash have paid scrip dividends instead of cash dividends. 3. An example would be frequent flier miles.
An index made up of mortgage-backed securities that is used for benchmarking purposes. The Lehman Brothers MBS Index consists of fixed-rate securities, such as mortgage pools created by the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corp (FHLMC) and Federal National Mortgage Association (FNMA). This index serves as a performance benchmark for many mortgage-backed securities funds. |||For a mortgage-backed security to be included in the index, it must have a minimum principal amount of $50 million. The securities within the index have an average life between 15 and 30 years. The MBS Index is a subset of the Lehman Brothers Aggregate Bond Index, which includes a larger variety of benchmark bonds.
A trading strategy that attempts to make many profits on small price changes. Traders who implement this strategy will place anywhere from 10 to a couple hundred trades in a single day in the belief that small moves in stock price are easier to catch than large ones. Taobiz explains Scalping Traders who implement this strategy are known as scalpers. The main goal is to buy (or sell) a number of shares at the bid (or ask) price and then quickly sell them a few cents higher (or lower) for a profit. Many small profits can easily compound into large gains if a strict exit strategy is used to prevent large losses.
A market driven by forces that could be in place for many years, causing the price of a particular investment or asset class to rise or fall over a long period of time. In a secular bull market, strong investor sentiment drives prices higher, as there are more net buyers than sellers. In a secular bear market, weak sentiment causes selling pressure over an extended period of time. Taobiz explains Secular Market Secular markets are typically driven by large-scale national and worldwide events, which occur in combination. For example, wars, demographic/population shifts and governmental/political policies are all events that could drive secular markets. A secular bull market will have bear market periods within it, but it will not reverse the overlying trend of upward asset values. For example, most economists agree that U.S. equities were in a secular bull market from about 1980 to 2000, even though the stock market crash of 1987 occurred within the same time period. The losses from that bear market period were quickly recovered, and the market indexes continued to rise over the next 13 years. The Standard & Poor's 500 Index (S&P 500) rose from 120 to nearly 1,500 during this secular bull market.
An unmanaged market-weighted index, comprised of government and investment grade corporate debt instruments with maturities of one year or greater. The Lehman Brothers Government/Corporate Bond Index is a total return benchmark index for many bond funds. |||The Government/Corporate Bond Index is a subset of the Lehman Aggregate Bond Index. Lehman determines if a bond is investment grade by its listed credit rating by Moody's. Investment grade bonds have a rating of Baa or higher on the Moody's scale. If the bond is unrated by Moody's, an S&P rating of BBB or higher will suffice. The index's measures performance by total return, which includes the capital appreciation or depreciation of the bond, combined with its coupon income as a percentage of the original investment.
1. When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders. 2. Any transaction that offsets or closes out a long or short position. |||Creditors liquidate assets to try and get as much of the money owed to them as possible. They have first priority to whatever is sold off. After creditors are paid, the shareholders get whatever is left with preferred shareholders having preference over common shareholders.
A zero coupon bond that is callable (by issuer), putable (by investor), and convertible. LYONs are synthetic products that are financially engineered by Merrill Lynch. |||A LYON typically assures the holder a positive return. This return is maintained until the opportunity to put the security back to the issuer at a premium over the issue price no longer exists.
A debt in which the creditor has limited claims on the loan in the event of default. Limited recourse debt sits in between secured bonds and unsecured bonds in terms of the backing behind the loan. Often a limited recourse debt contract is structured so that the debt transitions to unsecured, or "non-recourse", debt pending the completion of a specific event. That event may be the completion of a project or the establishment of a specific revenue stream for which the debt was issued. |||For example, terms for limited recourse debt for a large project such as a power plant could mean that a creditor is guaranteed to receive 25% of the principal in the event of a default up until completion of the power plant.Limited recourse debt will typically pay a lower rate than standard issue unsecured bonds because of its relative safety. Claims on limited recourse debt sit above both stockholders and unsecured bondholders in terms of payout hierarchy.
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