Essay about Pool of Term

Submitted By PUCCA01
Words: 1836
Pages: 8

* American Stock Exchange: A national stock exchange. The AMEX name was first changed to NYSE Alternext US, then became known as NYSE Amex Equities. It used to be a strong competitor to the New York Stock Exchange but the Nasdaq has since filled that role. Today, almost all trading on the AMEX is in small-cap stocks, exchange-traded funds and derivatives. * Amortized Loan: a loan that is paid off in equal periodic payments. * Annuities Due: an annuity in which the payments occur at the beginning of each period. * Annuity: a series of equal dollar payments made for a specified number of years. * Any unsecured long-term debt: Debentures are unsecured long-term debt. For issuing firm, debentures provide the benefit of not tying up property as collateral. For bondholders, debentures are more risky than secured bonds and provide a higher yield than secured bonds. * Bond ratings: Reflect the future risk potential of the bonds. Three prominent bond rating agencies are Standard & Poor, Moody’s, and Fitch Investor services. Lower bond rating indicated higher probability of default. It also means that the rate of return demanded by the capital markets will be higher on such bonds. * AAA and AA: High credit-quality investment grade * AA and BBB: Medium credit-quality investment grade * BB, B, CCC, CC, * C: Low credit-quality (non-investment grade), or "junk bonds" * D: Bonds in default for non-payment of principal and/or interest * Bond Valuation: A technique for determining the fair value of a particular bond. Bond valuation includes calculating the present value (PV) of the bond's future interest payments, also known as its cash flow, and the bond's value upon maturity, also known as its face value or par value. Because a bond's par value and interest payments are fixed, an investor uses bond valuation to determine what rate of return is required for an investment in a particular bond to be worthwhile. * Call provision: a provision that entitles the corporation to repurchase its preferred stock from investors at stated prices over specified periods. (BONDS): An option available to a company issuing a bond whereby the issuer can call/redeem the bond before it matures. This is usually done if the interest rates decline below what the firm is paying on the bond. * Callable Preferred: a type of preferred stock that carries the provision that the issuer has the right to call in the stock at a certain price and retire it. Also known as "redeemable preferred stock". * Chicago Stock Exchange: Small exchange. Doesn’t have an actual trading floor. It’s an electronic exchange. * Claims on assets and income (Seniority in claims): In the case of insolvency, claims of debt, including bonds are honored before those of common or preferred stock. * Compound Interest: The situation in which interest paid on an investment during the first period is added to the principal. During the second period, interest is earned on the original principal plus the interest earned during the first period. * Congress passed in July 2002 the Public Accounting and Reform and Investor Protection Act * Convertibility: Convertible preferred stock can, at the discretion of the holder, be converted into a predetermined number of shares of common stock. * Coupon interest rate: the interest rate contractually owed on a bond as a percent of its par value. * Cumulative dividends: Requires that all past, unpaid preferred stock dividends be paid before any common stock dividends are declared. * Cumulative voting: each share of stock allows the stockholder a number of votes equal to the number of directors being elected. * Current Yield: the ratio of a bond’s annual interest payment to its market price. * Debentures: any unsecured long-term debt. * Direct Securities – financial claims purchased by financial intermediaries with proceeds from the sale of indirect