The following terms have been used in this manual.
Corpus
It is the principal amount of a debt instrument, or the underlying assets in a trust.This content can be found in the URL http://www.investorwords.com/1141/corpus.html.
Coupon
It is the interest rate on a fixed income security, determined upon issuance, and expressed as a percentage of par.
ISMA
It stands for the International Securities Markets Association. It is a self-regulatory organization and trade association originally located in Zürich, Switzerland, that encourages systematic and compliant trading in the international securities market.
ISITC
It stands for the International Securities Association for Institutional Trade Communication. It is an organization that develops invaluable recommendations for straight-through processing and other electronic trade and communications procedures — recommendations that are repeatedly adopted by the industry and become standards that have transformed trading processes.
Redemption
It is the return of an investor's principal in a security, such as a bond, preferred stock or mutual fund shares, at or prior to maturity.
Redemption Premium
It is the amount paid to the holder of the security called for redemption in addition to the principal amount of (and any accrued interest on) the security.
Yield
It is the income return on an investment. This refers to the interest or dividends received from a security and are usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.
Yield to Maturity
It is the rate of return anticipated on a bond if it is held until the maturity date. YTM is considered a long-term bond yield expressed as an annual rate.
Yield to Worst
It is the lowest potential yield that can be received on a bond without the issuer actually defaulting. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer.
Yield to Call
It is the the yield of a bond or note if you were to buy and hold the security until the call date. This yield is valid only if the security is called prior to maturity.
Current Yield
It is the annual income (interest or dividends) divided by the current price of the security. This measure looks at the current price of a bond instead of its face value and represents the return an investor would expect if he or she purchased the bond and held it for a year.
Nominal Yield
The interest rate stated on the face of a bond, which represents the percentage of interest to be paid by the issuer on the face value of the bond.
Yield Curve
It is a line that plots the interest rates, at a set point in time of bonds having equal credit quality, but differing maturity dates.
Effective Interest Method
It is the manner of accounting for bond premiums or discounts. The interest expense equals the carrying value of a bond at the beginning of the accounting period times the Effective Interest Rate (yield); also called scientific amortization.
MTM
It stands for ‘Mark to Market’. It is the act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
LOCOM
It stands for ‘Lower of Cost or Market’. It is an accounting method used to establish the dollar amount at which assets are recorded on a savings association's books. The amount established is the lower of the cost of the asset or the current market value. Under this method, assets must be written down if the market value falls below the cost. They may also be written up but not above their amortized cost.
Intrinsic Value
It stands for a measure of the value of an option or a warrant if immediately exercised that is the extent to which it is in-the-money. The amount by which the current price for the underlying commodity or futures contract is above the strike price of a call option or below the strike price of a put option for the commodity or futures contract
Renounceable Right
It is an offer issued by a corporation to shareholders to purchase more shares of the corporation's stock (usually at a discount). Renounceable rights have a value and can be traded.
Restricted
Restricted stock, also known as letter stock or restricted securities, refers to stock of a company that is not fully transferable until certain conditions have been met. Upon satisfaction of those conditions, the stock becomes transferable by the person holding the award.
Convertible
It stands for a bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.