A type of preferred equity security that does not qualify for the dividends-received deduction for corporations of typical preferred securities, defined in Section 243 of the Internal Revenue Service (IRS) Code. Taxable preferred securities are usually junior level liabilities, and the coupons tied to them can either be fixed or variable, and for indefinite or specific maturities. As with regular preferred stocks, these securities trade like bonds with regular denominations of $25 par and $1,000 par. The dividends paid are treated as regular income instead of dividends to the investor, but receive favorable tax treatment for the issuing company. Also known as "hybrid preferred securities". Taobiz explains Taxable Preferred Securites The tax treatment of these securities is more favorable for corporations and less for investors, causing them to typically trade at higher yield spreads than regular preferreds. This type of security started to take off in the mid-1990s. Their proliferation has led to several funds and exchange-traded funds that invest solely in taxable preferreds. The $25 par securities are usually bought and sold by retail investors, whereas institutional investors primarily deal in the $1,000 par securities.
A payment-in-kind bond, where the issuer has the option to defer an interest payment by agreeing to pay an increased coupon in the future. With toggle notes, all deferred payments must be settled by the bond's maturity. |||Toggle notes provide firms with a way to raise debt while staying afloat during times of strained cash flow. When cash is at a minimum, the firm can use the toggle to defer an interest payment. While this seems like an attractive option for the firm, it does come at a cost. The increased interest rate provides ample incentive to not miss an interest payment.
A corporate action in which a publicly traded company spins off one of its business units as an entirely new company. The spun off company becomes its own publicly traded corporation with its own ticker symbol, board of directors, management team, etc. This type of transaction is deemed to be "tax free" because the parent company is still able to divest the business it wants to separate from; however, the company does not incur capital gains tax on the divestiture, which would be the case in an outright sale of the business unit to another company. Taobiz explains Tax-Free Spinoff There are typically two ways that a company can undertake a tax-free spin off of a business unit. First, a company can choose to simply distribute shares of the spun off company to existing shareholders on a pro rata basis. For example, if you owned 3% of ABC corporation and it was spinning off XYZ corporation, you would receive 3% of the shares issues for XYZ. Secondly, a company may choose to undertake the spin off by issuing an exchange offer to current shareholders. With this method, current shareholders are given the option to exchange shares of the parent company for shares of the spun off company.
The belief that shareholders prefer equity appreciation to dividends because capital gains are effectively taxed at lower rates than dividends. Corporations that adopt this viewpoint generally have lower targeted payout ratios, or a long-term dividend-to-earnings ratio, as dividend payments are set rather than variable. Watch: Dividend Taobiz explains Tax Differential View Of Dividend Policy Because companies that assume a tax differential viewpoint are focused on share appreciation, they often have more funds available for growth and expansion than companies focused merely on increasing their dividends. The extent of the opinion depends on the tax structure of the region in which the company operates.
A term used to describe a forward mortgage-backed securities trade. Pass-through securities issued by Freddie Mac, Fannie Mae and Ginnie Mae trade in the TBA market. The term TBA is derived from the fact that the actual mortgage-backed security that will be delivered to fulfill a TBA trade is not designated at the time the trade is made. The securities are "to be announced" 48 hours prior to the established trade settlement date. |||The settlement procedures of mortgage-backed securities TBA trades are established by the Bond Market Association. Each type of agency pass-through security is given a specific trade settlement date for each month. Trade counterparties are required to exchange pool information by 3:00 pm (EST) 48 hours prior to the established settlement date. Trades are allocated in $1 million lots.
The securities market in Israel. Securities exchange in Israel began in 1935 through the Exchange Bureau for Securities, before Israel was a state. Israel became a state in 1948, and its securities market became formalized in 1953 with the Tel Aviv Stock Exchange (TASE). Its major index since 1992 has been the TA-25, a capitalization-weighted index of the Exchange's largest 25 stocks. Taobiz explains Tel Aviv Stock Exchange (TLV) .TA A privately-held company, the Exchange trades in stocks, convertible securities, corporate and government bonds, short-term certificates and a variety of derivatives. The TASE has used a fully electronic trading system for all trades since 1999 and is open Sunday through Thursday to allow a slight overlap with U.S. market hours. Its regulatory body is the Israel Securities Authority.
Thrifts are savings and loans associations. Thrifts also refer to credit unions and mutual savings banks that provide a variety saving and loans services. There are two basic thrift savings and loans: a general purpose loan which requires repayment within five years and a residential loan which must be repayed within 15 years. |||A residential loan must be used for the purposes of constructing a residence. Thrifts can be traded between institutions and investors in the form of collateralized debt obligations (CDO). Securing thrifts into pass through securities helps investors spread out the underlying prepayment risk.
A method of calculating a Dow Jones index (most often the DJIA) that assumes all index components hit their high or low at the same time during the day. Taobiz explains Theoretical Dow Jones Index In other words, the "theoretical Dow" uses the daily highs for all 30 Dow components to calculate the index high, and the lows to calculate the index low. In January of 1992, Dow Jones started using the "actual" method, which calculates the index at 10-second intervals throughout the day. Before this point, the theoretical calculation was the only way to compute the high and low of the index. This method assumes that all stocks hit their high or low at the same time. Because this rarely happens, the theoretical high will almost always be higher than the actual, and the theoretical low will almost always be lower than the actual.
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