The current value of your zero-coupon municipal bond, taking into account interest that has been accumulating and automatically reinvested in the bond. Often the last tranche in a CMO, the accretion bond, or Z-tranche, receives no cash payments for an extended period of time until the previous tranches are retired. While the other tranches are outstanding, the Z-tranche receives credit for periodic interest payments that increase its face value but are not paid out.

When the other tranches are retired, the Z-tranche begins to receive cash payments that include both principal and continuing interest. Often the last tranche in a CMO, the accrual bond or Z-tranche receives no cash payments for an extended period of time until the previous tranches are retired. This is usually paid by the original purchaser to the issuer as part of the purchase price of the issue; 2 Interest deemed to be earned on a security but not yet paid to the investor.

A mortgage loan on which interest rates are adjusted at regular intervals according to predetermined criteria. A financing structure under which new bonds are issued to repay an outstanding bond issue prior to its first call date. Generally, the proceeds of the new issue are invested in government securities, which are placed in escrow.

The interest and principal repayments on these securities are then used to repay the old issue, usually on the first call date. A bond issued by two types of entities—1 Government Sponsored Enterprises GSEsusually federally-chartered but privately-owned corporations; and 2 Federal Government agencies which may issue or guarantee these bonds—to finance activities related to public purposes, such as increasing home ownership or providing agricultural assistance.

Agency bonds are issued in a variety of structures, coupon rates and maturities. Each GSE and Federal agency issues its own bonds, with sizes and terms appropriate to the needs and purposes of the financing. A sale and purchase of bonds in which the dealer places bonds with the buyer on a commission basis rather than selling bonds that the dealer owns. Legal document used principally in negotiated sales by underwriters.

The document consists of the instructions, terms and acceptances, and the standard terms and conditions.

Where the offeror of a block of bonds will only sell all of the available bonds and not only a portion of them. An alternative way of calculating income under the Internal Revenue Code. Interest on private-activity bonds [other than c 3 obligations] issued after August 7,is used for such a calculation.

In the municipal market, the difference in interest earned on funds borrowed at a lower tax-exempt rate and interest on funds that are invested at a higher-yielding taxable rate. Under the Tax Act, with very few exceptions, arbitrage earnings must be rebated back to the federal government. Transcript certificate evidencing compliance with the limitations on arbitrage imposed by the Internal Revenue Code and the applicable regulations. The interest rate structure which exists when long-term interest rates exceed short-term interest rates.

Asset-backed securities, called ABS, are bonds or notes backed by financial assets other than residential or commercial mortgages—an investor is purchasing an interest in pools of loans or other financial assets.

Typically these assets consist of receivables other than mortgage loans, such as credit card receivables, auto loans and consumer loans. As the underlying loans are paid off by the borrowers, the investors in ABS receive payments of interest and principal over time. The ABS market is for institutional investors and is not suitable for individual investors.

A separate state or local governmental issuer expressly created to issue bonds or run an enterprise, or to do both. Certain authorities issue bonds on their own behalf, such as transportation or power authorities. Authorities that issue bonds on the behalf of qualified nongovernmental issuers include health facilities and industrial development authorities. Issuer document which states the legal basis for debt issuance, and states the general terms of the financing. On a mortgage security, the average time to receipt of each dollar of principal, weighted by the amount of each principal prepayment, based on prepayment assumptions.

Smallest measure used in quoting yields on bonds and notes. One basis point is 0. The price of a security expressed in yield, or percentage of return on the investment. A security that has no identification as to owner. It is presumed to be owned by the bearer or the person who holds it. Bearer securities are freely and easily negotiable since ownership can quickly be transferred from seller to buyer. Tax-exempt municipal bonds are no longer being issued in bearer form.

A bond whose terms are used for comparison with other bonds of similar maturity. The global financial market typically looks to U. S Treasury securities as benchmarks. Schedule of bonds distributed by holder or broker to dealer in order to get a bid, or current price, on the bonds.

A short-term direct obligation of the U. Treasury that has a maturity of not more than one year for example,or week maturity. A memorandum for use by the account specifying the way a specific issue will be treated under state securities laws, frequently of all 50 states, Puerto Rico, and the District of Columbia.

This memorandum is prepared first in preliminary form, which may note that certain steps need to be taken in various jurisdictions in order to qualify the issue for sale within these jurisdictions. The memorandum is then issued in supplemental form and generally the supplemental form reports that the required actions in the various jurisdictions have been taken.

A note issued in anticipation of later issuance of bonds, usually payable from the proceeds of the sale of the bonds or of renewal notes. BANs can also be general obligations of the issuer. Agencies created by a few states to buy entire issues of bonds of municipalities. The purchases are financed by the issuance of bonds by the bond bank. The purpose is to provide better market access for small, lesser-known issuers.

The daily newspaper of the municipal bond market. The Bond Buyer publishes news stories, new-issuer calendars, results of bond sales, notices of redemptions and other items of interest to the market. The Bond Buyer also publishes weekly indexes of bond yields that are widely followed by the market.

Bond counsel is retained by the issuer. An adjustment to a CMO yield which reflects its greater present value, created because CMOs pay monthly or quarterly interest, as opposed to semiannual interest payments on most other types of bonds. Legal commitment by insurance company to make scheduled payment of interest and principal of a bond issue in the event that the issuer is unable to make those payments on time.

The cost of insurance is usually paid by the issuer in case of a new issue of bonds, and the insurance is not purchased unless the cost is far more than offset by the lower interest rate that can be incurred by the use of the insurance.

The contract between the issuer and the underwriter setting forth the terms of the sale, including the price of the bonds, the interest rate or rates which the bonds are to bear and the conditions to closing.

It is also called the purchase contract. Indentures and trust agreements are functionally similar types of documents, and the use of each depends on the individual issue and issuer. The sale of a bond and the purchase of another bond of similar market value. Swaps may be made to establish a tax loss, upgrade credit quality, extend or shorten maturity, etc.

An element in calculating average life of an issue and in calculating net interest cost and net interest rate on an issue. A method of registering and transferring ownership of securities electronically which eliminates the need for physical certificates. GSE-issued securities sold through negotiated direct placements or competitive bids, with terms and size determined by the immediate needs of the GSE.

A firm or person who acts as an intermediary by buying and selling securities to dealers on an agency basis rather than for its own account. Build America Bonds BABs are new taxable municipal bonds that were authorized under the American Recovery and Reinvestment Act of Unlike municipal bonds, most of which are tax exempt, BABs are taxable bonds, which means that the interest is subject to taxation. Proceeds of these bonds can be used for the most of the same purposes as proceeds of regular tax-exempt government bonds.

The two types of BABs are: Direct Payment bonds on which the United States Treasury Department pays state or local government issuers a payment equal to 35 percent of the coupon interest payments on such bonds, and Tax Credit bonds on which the bond holders receive a tax credit equal to the 35 percent of interest on such bonds. Another term for call provisions is redemption provisions.

Bonds that are subject to payment of the principal amount and accrued interest prior to the stated maturity date, with or without payment of a call premium. Bonds can be callable under a number of different circumstances, including at the option of the issuer, or on a mandatory or extraordinary basis.

The date at which some bonds are redeemable by the issuer prior to the maturity date. The specified price at which a bond will be redeemed or called prior to maturity, typically either at a premium above par value or at par. As a consequence, investors may have to reinvest their principal at a lower rate of interest.

The cost of borrowing funds to finance an underwriting or trading position. A positive carry happens when the rate on the securities being financed is greater than the rate on the funds borrowed. A negative carry is when the rate on the funds borrowed is greater than the rate on the securities that are being financed.

COPs are a structure where investors buy certificates that entitle them to receive a participation, or share, in the lease payments from a particular project The lease payments are passed through the lessor to the certificate holders with the tax advantages intact.

The lessor typically assigns the lease and lease payments to a trustee, which then distributes the lease payments to the certificate holders. Also known as "sequential-pay CMO," the most basic type of CMO, in which all tranches receive regular interest payments, but principal payments are directed initially only to the first tranche until it is completely retired.

Once the first tranche is retired, the principal payments are applied to the second tranche until it is fully retired, and so on. An investment company created with a fixed number of shares, which are then traded as listed securities on a stock exchange. After the initial offering, existing shares can only be bought from existing shareholders. This is similar to a settlement date, but occurs for a new issuance of bonds.

The closing may be as long as 30 days in case of a competitively sold issue. Upper and lower limits cap and floor, respectively on the interest rate of a floating-rate security. Securities or property pledged by a borrower to secure payment of a loan. If the borrower fails to repay the loan, the lender may take ownership of the collateral. Collateral for CMOs consists primarily of mortgage pass-through securities or mortgage loans, but may also encompass letters of credit, insurance policies, or other credit enhancements.

The process by which a borrower pledges securities or property or other types of financial assets in order to provide security or collateral toward repayment of a loan or debt. A share representing participation in the ownership of an enterprise, generally with the right to participate in dividends and in most cases to vote on major matters affecting stockholder interests.

A CMO tranche that absorbs a higher level of the impact of collateral prepayment variability in order to stabilize the principal payment schedule for a PAC or TAC tranche in the same offering. A sale of municipal securities by an issuer in which underwriters or syndicates of underwriters submit sealed bids or oral auction bids to purchase the securities. The securities are won and purchased by the underwriter or syndicate of underwriters which submits the best bid according to guidelines in the notice of sale.

This is contrasted with a negotiated underwriting. The value of a zero-coupon bond at any given time, based on the principal, with interest compounded at a stated rate of return over time. Fractional discount from the public offering of new securities at which the underwriter sells the bonds to dealers not in the syndicate. A written document confirming an oral transaction in municipal securities that provides pertinent information to the buyer and seller concerning the securities and the terms of the transaction.

A series of indexes of various maturities one, three, five, seven or 10 years published by the Federal Reserve Board and based on the average yield of a range of Treasury securities adjusted to a constant maturity corresponding to that of the index. A document used by securities dealers and banks to state in writing the terms and execution of a verbal arrangement to buy or sell a security. The percentage of outstanding mortgage loan principal that prepays in one year, based on the annualization of the Single Monthly Mortality SMMwhich reflects the outstanding mortgage loan principal that prepays in one month.

The issuer must also provide notice of material events. A mortgage loan granted by a bank or thrift institution that is based solely on real estate as security and is not insured or guaranteed by a government agency. A corporate bond that may be converted into shares of another security under stated terms, often into the issuing company's common stock.

The more convex a security is, the more its duration will change with interest rate changes. A bank index reflecting the weighted average interest rate paid by savings institutions on their sources of funds.

There are national and regional COFI indexes. One of two entities in a traditional interest rate swap. In the municipal market a counterparty and a party can be a state or local government, a broker-dealer or a corporation.

This is the amount of interest due and the date on which payment is to be made. In the case of registered coupons see "Registered Bond"the interest payment is mailed directly to the registered holder. Bearer coupons are presented to the issuer's designated paying agent or deposited in a commerical bank for collection.

Coupons are generally payable semiannually. The actual dollar amount of interest paid to an investor. The amount is calculated by multiplying the interest of the bond by its face value.

The interest rate on a bond, expressed as a percentage of the bond's face value. Typically, it is expressed on a semi-annual basis. Covered bonds are debt issued by banks that are fully collateralized by residential or commercial mortgage loans or by loans to public sector institutions.

Covered bonds typically have high credit ratings, with most, but not all having double or triple-A ratings. Covered bonds offer an additional protection to bondholders than asset-backed debt because in addition to the collateral pool as an ultimate source of repayment, the issuing bank is also liable for repayment, although in some cases the rating of the covered bonds is based more on the collateral than on the rating of the bank. If the issuing bank is downgraded, then the covered bond may also be downgraded but this depends on the specific situation.

Unlike mortgage-backed securities MBScovered bonds remain on an issuer's balance sheet. Another difference from MBS is that the collateral—the pool of loans—for covered bonds is dynamic, so non-performing or prepaying loans are replaced with performing assets. And, if a covered bond repays investors at an amount less than the principal and interest owed, investors retain an unsecured claim on the issuer.

Covered bonds are popular in Europe, making up the second largest segment of the European bond market after government bonds. Covered bonds were first associated with Germany and Denmark and then spread throughout Europe. After the subprime crisis, the U. Treasury began promoting covered bonds as a safe investment for institutional investors and financing option for the housing market. Usually the Federal Reserve Commercial Paper Composite, calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial commercial paper for various maturities.

Most CP-based floating-rate notes are reset according to the and day CP composites. The index for measuring the inflation rate is the non-seasonally adjusted U. City Average All Items Consumer Price Index for All Urban Consumers CPI-Upublished monthly by the Bureau of Labor Statistics BLS.

The CPI-U was selected by the Treasury because it is the best known and most widely accepted measure of inflation. The use of the credit of a stronger entity to strengthen the credit of a weaker entity in bond or note financing. This term is used in the context of bond insurance, bank facilities and government programs.

A company that analyzes the credit worthiness of a company or security, and indicates that credit quality by means of a grade, or credit rating. A yield difference, typically in relation to a comparable U. Credit spread also refers to the difference between the value of two securities with similar interest rates and maturities when one is sold at a higher price than the other is purchased.

The current remaining monthly principal on a mortgage security. Current face is computed by multiplying the original face value of the security by the current principal balance factor.

A financing structure under which the old bonds are called or mature within 90 days of the issuance of the new refunding bonds. The ratio of interest to the actual market price of the bond, stated as a percentage.

The Committee on Uniform Security Identification Procedures, which was established under the auspices of the American Bankers Association to develop a uniform method of identifying municipal, U. When issued, each bond is assigned a unique CUSIP number consisting of nine alphanumeric characters.

The date of a bond issue from which the bondholder is entitled to receive interest, even though the bonds may actually be sold or delivered at some other date. The convention used to calculate the number of days in an interest payment period. A securities firm or department of a commercial bank that engages in the underwriting, trading and sale of municipal or other securities. Department of commercial bank that engages in the underwriting, trading and sale of municipal or other securities.

Unsecured debt obligation, issued against the general credit of a corporation, rather than against a specific asset. Statutory or constitutional limit on the principal amount of debt that an issuer may incur or that it may have outstanding at any one time. The fund into which are paid monies which are required by the trust agreement or indenture as a reserve against a temporary interruption in the receipt of the revenues or other amounts which are pledged for the payment of the bonds.

Failure to pay principal or interest when due. Defaults can also occur for failure to meet nonpayment obligations, such as reporting requirements, or when a material problem occurs for the issuer, such as a bankruptcy.

Termination of the rights and interests of the trustee and bondholders under a trust agreement or indenture upon final payment or provision for payment of all debt service and premiums, and other costs, as specifically provided for in the trust instrument.

The face amount, or par value, of a bond or note that the issuer promises to pay on the maturity date. A financial product that derives its value from an underlying security. In the tax-exempt market, there are primary and secondary derivative products.

European Callable Bond

Investors who sell such discos prior to maturity may lose money. The effective spread to maturity of a floating-rate security after discounting the yield value of a price other than par over the life of the security. Short-term obligations issued at discount from face value, with maturities ranging from overnight to days.

Return of principal to unit trust shareholders, usually when a bond in the portfolio reaches maturity, is called or, if necessary, is sold prior to maturity. Account structure that is divided as to liability, and not as to sales. Securities that are exempt from state and local as well as federal income taxes are said to have double or triple tax-exemption. In some states a bond secured in the first instance by a user charge, e. An exception to this rule is the bond debt of U.

Debt of Puerto Rico is also double exempt. A provision within a bond giving either the issuer or the bondholder an option to take some action against the other party. The most common embedded option is a call option, giving the issuer the right to call, or retire, the debt before the scheduled maturity date. The net amount of interest payments from the underlying assets after bondholders and expenses are paid and after all losses are covered.

Excess spread may be paid into a reserve account and used as a partial credit enhancement or it may be released to the seller or the originator of the assets.

A fund that tracks an index, a commodity or a basket of assets. It is passively-managed like an index fund, but traded like a stock on an exchange, experiencing price changes throughout the day as they are bought and sold.

Bond ETFs like bond mutual funds, hold a portfolio of bonds and can differ widely in their investment strategies. Refers to those types of privately owned or privately used facilities which are authorized to be issued on a tax-exempt basis under the Internal Revenue Code.

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The Tax Reform Act of amended prior law to exclude the following types of facilities from those which can be financed on a tax-exempt basis: The date on which principal is projected to be paid to investors.

It is based on assumptions about collateral performance. The risk that rising interest rates will slow the anticipated rate at which mortgages or other loans in a pool will be repaid, causing investors to find their principal committed longer than expected. As a result, they may miss the opportunity to earn a higher rate of interest on their money.

This is how to get a million starcoins on msp from optional redemption, or mandatory redemption, in that it occurs under an unusual flipdog work at home jobs, such as destruction of the facility financed.

The par value i. A decimal value reflecting the proportion of the outstanding principal balance of a mortgage security, which changes over time, in relation to its original principal value. Fannie Mae, Freddie Mac and trustees of private-label CMOs also publish CMO tranche factors. The interest rate charged by banks on overnight loans of their excess reserve funds to other banks. Calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial Commercial Paper for various maturities.

The date on which the principal must be paid to investors, which is later than the expected maturity date. Also called legal maturity date. A consultant to an issuer of municipal securities who provides the issuer with advice with respect to the structure, timing, terms or other similar matters concerning a new issue of securities.

A municipal securities employee who is required to meet qualifications standards established by the MSRB. The individual is the person designated to be in charge of the preparation and filing of financial reports to the SEC and other regulatory bodies.

Created in July through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. A mortgage featuring level monthly payments, determined at the outset, which remain constant over the life of the mortgage.

A bond for which the interest rate is adjusted periodically according to a predetermined formula, usually linked to an index. A CMO tranche which pays an adjustable rate of interest tied to a representative sonepar stock options rate index such as the London Interbank Offered Rate LIBORthe Constant Maturity Treasury CMTor the Cost of Funds Index COFI.

Refers to the structure which is established in the bond resolution or the trust documents which sets forth the order in which funds generated by the enterprise will be allocated to various purposes. A security that is registered as to principal and interest, payment of which is made only to or on the order of the registered owner. In the municipal market, an agreement to purchase or sell the municipal bond index The Bond Buyer Bond Index for delivery in the future. The value of an asset at a specified date in the future, calculated using a specified rate of return.

Pass-through mortgage securities on which registered holders receive separate principal and interest payments on each of their certificates. Ginnie Mae I securities are single-issuer pools. Pass-through mortgage securities on which registered holders receive an aggregate principal and interest mossberg 500 tactical stock set from a central paying agent on all of their Ginnie Mae II certificates.

Ginnie Mae II securities are collateralized by multiple-issuer pools or custom pools, which contain loans from one issuer, but interest rates that may vary within one percentage point. The issuance platform used by most GSEs when issuing "global" debt into 3d forex llc international marketplace or a particular foreign market.

Has same credit characteristics as nonglobal debt but is more easily "cleared" through international clearing facilities. Also called good-faith check, if delivered as a check, or good-faith deposit.

Financing entities created royal bank canada stock price history Congress to fund loans to certain groups of borrowers, such as homeowners, farmers and students. Debt issued by government-sponsored enterprises GSEs —those financing entities created by Congress to fund loans to certain groups of borrowers such as best investment plan in kerala, farmers and students.

Through the stock market vs fed balance sheet of GSEs, the government has sought to address various public policy concerns regarding the ability of members of these groups to borrow sufficient funds at affordable rates. There are organizational differences among the GSEs although all are established with a public purpose.

All GSE debt is not guaranteed by the federal government. GSE-issued debt securities can be structured to offer investors fixed or floating interest rates. While the basic structures share many characteristics of non-structured fixed- or floating-rate debt, many variations are possible. A special-purpose vehicle set up to issue fixed-rate capital securities and use the proceeds to purchase debt of the parent company.

An investment made with the intention of minimizing the impact of adverse movements in interest rates or securities prices. Bonds issued by lower-rated corporations, sovereign countries and stock option deferral cra entities rated Ba or BB or below and offering a higher yield than more creditworthy securities; obama crash stock market effect on economy known as junk bonds.

A type of inflation-adjusted security issued by the Treasury. Series I savings bonds pay interest according to joptionpane input string earning rate that is partly a fixed rate of return and partly adjusted for inflation.

Bond resolutions and trust agreements are functionally similarly types of documents, and the use of each depends on just cause 2 mods pc black market individual issue and issuer.

For any particular date and any particular inflation-indexed security, the Reference CPI-U applicable to such date divided by the Reference CPI-U applicable to the original issue date or dated date, when the dated date is different from the original issue date.

Tax-exempt bonds where the rate is periodically reset on a formula that incorporates an index, such as The Bond Market Association Swap Index.

A security issued by a state, political subdivision or certain agencies or authorities, for certain specific purposes, but backed by the credit of a private enterprise.

For an inflation-indexed security, the principal amount of the security, derived by multiplying the par amount by the applicable index ratio. Securities designed to protect investors and the future value of their fantasy football stock market game investments from the adverse effects of inflation.

Also known as Treasury Inflation Protected Securities TIPS or Treasury Inflation-Indexed Securities TIIS. Notes periodically issued by the GSEs whose return is adjusted with changes in the PPI or CPI. The delivery of a new issue by the issuer to the original purchaser, upon payment of the purchase price. The price forex trading 1468 upon yield to maturity stated as eastland australia day trading hours percentage of par at which the account determines to market the issue during a set period of time, called the initial offering period.

Members of the account may not offer any part of the issue at any other price during that period. The major insurers are identified by these symbols:.

The compensation paid or to be paid for the use of money, usually expressed as an annual percentage rate. Interest rates change in response to a number of things including revised expectations about inflation, and such changes in the prevailing level of interest rates affects the value of all outstanding bonds. An agreement where a party pays a premium up front or in installments to the counterparty. If the floating interest rate exceeds a stated fixed rate during the time of the cap agreement, the counterparty will pay the difference, based on the notional amount.

The cap rate is also called the strike rate. An interest rate cap can protect the purchaser against rising interest rates. A CMO tranche that pays an adjustable rate of interest that moves in the opposite trading price action trends ebook pdf from movements in a representative interest rate index such as the London Interbank Offered Rate LIBORthe Constant Maturity Treasury CMT or the Cost of Funds Index COFI.

A primary derivative tax-exempt bond. The interest payable is based on a formula that has a ceiling rate less a specified floating rate index or bond. The interest rate structure which exists when short-term interest rates exceed long-term interest rates. In the case of a CMO, an IO tranche is created deliberately to pay investors only interest and not principal.

IO securities are priced at a deep discount to the "notional" amount of principal used to calculate the amount of interest due. The issue description includes the name of the issuer of the bonds.

If a municipal bond, the issuer is typically a state, political subdivision, agency or authority which borrows money through the sale of bonds or notes. Corporate bonds are issued by private corporations. A state, political subdivision, agency, authority or corporation that borrows through the sale of bonds or notes. Underwriting accounts are headed by a manager.

Ginnie Mae II pass-through mortgage securities collateralized by pools which are generally larger and contain mortgages that are often more geographically diverse than single-issuer pools. Mortgage loans in jumbo pools may vary in terms of the interest rate within one percentage point. A Z-tranche that may start receiving principal payments before prior tranches are retired if market forces create a "triggering" event, such as a drop in Treasury yields to a defined level, or a prepayment experience that differs from assumptions by a specific margin.

Although jump Z-tranches are no longer issued, some still trade in the secondary market. For example, common stock is junior to preferred stock, which is junior to unsecured debt such as debentures, which is junior to secured debt.

A debt obligation with a rating of Ba or BB or lower, generally paying interest above the return on more highly rated bonds, sometimes known as high-yield bonds. An opinion concerning the validity of a securities issue with respect to statutory authority, constitutionality, procedural conformity and usually the exemption of interest from federal income taxes.

The legal opinion is usually rendered by a law firm recognized as specializing in public borrowings, often referred to as "bond counsel. A commitment, usually issued by a bank, used to guarantee the payment how to make money pocket frogs principal and interest on debt issues.

A debt service schedule forex investment management companies total annual principal plus interest is approximately the same throughout the life of the bond. This entails a maturity schedule with increasing principal amounts each year. A debt service schedule where total annual principal plus interest declines throughout the life of the bond. This entails a maturity schedule with the same amount of principal maturing each year, with a resulting smaller interest component each year.

This is also called declining debt service. The rate banks charge each other for short-term Eurodollar loans. LIBOR is frequently used as the base for resetting rates on floating-rate securities. A special-purpose company how do u earn money on msp under day trading the s&p e mini limited-liability company legislation enacted in many states overseas stock market update foreign countries.

This type of entity is structured as a "pass-through" and treated like a partnership for tax purposes. A commitment by a bank to provide funds to a borrower, if certain conditions have been met, or if certain conditions do not exist. The obligation of an issuer of a corporate bond forex trading notes pay a premium to an investor if the issuer pays off its bond before the final maturity.

The premium is based on a formula that compensates the investor for future coupon payments that it wil not receive because the bonds have been called. The underwriter that serves as the lead underwriter for an account. A requirement to redeem a salary stock broker scottrade portion of term bonds, which may comprise the entire issue, in accordance with a fixed schedule.

Although the principal amount of the bonds to be redeemed is fixed, the specific bonds which will be called to satisfy the requirement as to amount are selected by the trustee on a lot basis. A measure of the ease with which a security can be sold in the primary and secondary market without an undue price concession. For securities traded through an exchange, the last reported price at which a security was sold; for securities traded "over-the-counter," the current price of the security in the market.

In the municipal market, with regard to Rule 15c, convexity call options of 11 specified events that must be disclosed to investors if they occur. The date when the principal amount of a security becomes due and payable, if not subject to prior call or redemption. A debt security issued under a program that allows an issuer to offer notes continuously to investors through an agent.

The size and terms of medium-term notes may be customized to meet investors' needs. Maturities can range from one to 30 years. Duration adjusted to price and yield levels to represent percent change relationship of price and yield. A Triple-A-rated company that guarantees that all interest and principal payments on a bond will be paid as scheduled and that participates in no other line of insurance business.

Mortgage-backed securities, called MBS are bonds or notes backed by mortgages on residential or commercial properties—an investor is purchasing an interest the random walk hypothesis for chinese stock markets pools of loans or other financial assets.

As the underlying loans are paid off by the borrowers, the investors in MBS receive payments of interest and principal over time. The MBS market is for institutional investors and is not suitable for individual investors. A security representing a direct interest in a pool of mortgage loans. The pass-through issuer or servicer collects the payments on the loans in the pool and "passes through" the principal and interest to the security holders on a pro rata basis.

Mortgage pass-through securities are also known as mortgage-backed securities MBS and participation certificates Stock market evil genius. A security issued by a state, certain agencies or authorities, or a local government to make or purchase loans including mortgages or other owner-financing with respect to single-family or multifamily residences.

Spread measures the relative difference between the municipal bond index future price and the U. Treasury bond futures price. A municipal securities employee under MSRB rules who has supervisory responsibility for the municipal securities operations of the firm. The broadest class of municipal securities professionals who are required to pass a qualifications examination under the rules of the MSRB. This group includes individuals who underwrite, trade or sell municipal securities, do research or offer investment advice, provide financial advisory services or communicate with investors in municipal securities.

An independent self-regulatory organization established by the Securities Acts Amendments ofwhich is charged with primary rulemaking authority over dealers, dealer banks and brokers in municipal securities. Its 15 members are divided into three categories — securities firms representatives, bank dealer representatives and public members — each category having equal representation on the Board.

Also known as an open-end investment company, to differentiate it from a closed-end investment company. A characteristic of callable or prepayable securities that causes investors to have their principal returned sooner than expected in a declining interest rate environment or later than expected in a rising interest rate environment. In a negotiated underwriting, the sale of bonds is by negotiation and agreement with an underwriter or underwriting syndicate selected by the issuer prior to the moment of sale.

This is in contrast to a competitive or an advertised sale. Total direct debt of a municipality less all self-supporting debt, any sinking funds, and short-term debt such as tax anticipation notes and revenue anticipation nintendo stock market chart. The traditional method of calculating bids for new forecast euro rand exchange rate of municipal securities.

The total dollar amount of interest over the life of the bonds is adjusted by the amount of premium or discount bid, and then reduced to an average annual rate. Bond sold to investors at the price or yield shown in the reoffering scale. This is the price with no concessions.

Price paid to a dealer for bonds when the dealer acts as principal in a transaction, i. A bond that cannot be called for redemption at the option of the issuer before its specified maturity date. Bonds that are non-investment grade are also called high-yield bonds. Short-term promises to pay specified amounts of money, secured usually by specific sources of future revenues, such as taxes, federal and state aid payments, and bond proceeds.

An official document disseminated by an issuer of municipal securities that gives pertinent information regarding an upcoming bond broker ecn forex and invites bids from prospective underwriters. The price at which members of an underwriting syndicate for a new issue will offer securities to investors.

The disclosure document prepared by the issuer that gives in detail security and financial information about the issuer and the bonds or notes. The offering document for municipal securities that is prepared by the issuer. The final OS contains the pricing information on the issue that is not contained in the preliminary official statement. Those sold in the secondary market rather than "on-the-run" Treasury Securities, which are those most recently issued by the Government.

For noncallable bonds modified duration and effective duration are the same. The average spread over the AAA spot curve, based on potential paths that can be realized in the future for interest rates. Term used to describe callable securities issued by the FHLB with either fixed- or floating-rate structures. A right to retire an issue or european call option bonds payable portion thereof prior to the stated maturity thereof during a specified period of years.

The right can be exercised at the option of the issuer or, in pass-through issues, of the primary obligor. In the case of fixed-rate capital securities, original-issue discount is also generally considered to exist if the issuer is entitled to elect to defer distributions.

A bond initially issued at a dollar price less than daily stock market prices nigeria which qualifies for special treatment under federal tax law.

Under federal tax law for tax-exempt bonds, the difference between the issue price and par value is treated as najam mahmood forex interest rather than capital how to bet on stock options basics. A type of credit enhancement in which the principal amount of collateral used to secure a given transaction exceeds the principal of the securities issued.

As an example, a county usually includes several smaller governmental units and its debt is apportioned to them for payment based on the ratio of the assessed value of each smaller unit to the assessed value of the county. Another example is when a school district includes two or more municipalities within its bounds. A lyrics shake ya money maker market day forex trader trading system domino is conducted by dealers throughout the country through negotiation of price rather than through the use of an auction system as represented by a stock exchange.

An amortizing structure best forex broker europe permits significant cash-flow engineering, which is generally prohibited with grantor trusts. Owner trusts are often used with auto loans, equipment leases and student loans. The term used to refer to regularly scheduled payments or prepayments of principal and of interest on mortgage securities.

A CMO tranche that uses a mechanism similar to a sinking yield curve trading strategies pdf to determine a fixed principal payment schedule that will apply over a range of prepayment assumptions.

The effect of the prepayment variability that is removed from a PAC bond is transferred to a companion tranche. Securities issued or to be issued with equal and ratable claim on the same underlying security and source of payment for debt service.

One of two entities, in a traditional interest rate swap. In the municipal market a counterparty and a party can be a state or local government, a broker dealer, or a corporation. Place where principal and interest are payable. Usually a designated bank or the office of the treasurer of the issuer. The date that actual principal and interest payments are paid to the registered owner of a security. In the case of a CMO, a PO tranche is created deliberately to pay investors principal only and not stock market volatility in kenya. PO securities are priced at a deep discount from their face value.

A debt security issued by a state, certain agencies or authorities, a local government, or development corporation to finance the construction of air- or water-pollution control facilities or sewage or solid waste disposal facilities pursuant to federal law.

The bonds are backed by the credit of the beneficiary of the financing rather than the credit of the issuer. New issues of these bonds are prohibited under the Tax Law. A collection of mortgage loans assembled by an originator or master servicer as the basis for a security.

In the case of Ginnie Mae, Fannie Mae, or Freddie Mac mortgage pass-through securities, pools are identified by a number assigned by the issuing agency. The dividend can be fixed or floating and is usually stated as a percentage of par value. Preferred stock usually has no voting rights and frequently has a mandatory or optional redemption provision. The offering document for municipal securities, in preliminary form, which does not contain pricing information.

It is also called a POS, or a red herring. When the dollar price of a bond is above its face value, it is said to be selling at a premium. When the dollar price is below face value, it is said to be selling at a discount. The unscheduled partial or complete payment of the principal amount outstanding on a mortgage loan or other debt before it is due.

Provision specifying that, and at what time and on what terms, repayment of the principal amount may be made by the issuer prior to the stated maturity. The risk that falling interest rates will lead to heavy prepayments of mortgage or other loans, forcing the investor to reinvest at lower prevailing rates.

The current value of a future payment or stream of payments, given a specified interest rate, also referred to as a discount rate.

The dollar amount to be paid for a security, stated as a percentage of its face value, or par. Bond prices are best reflected in their yields, which vary inversely with the dollar price. The price you pay for a bond is based on a host of variables, including interest rates, supply and demand, credit quality, maturity and call features, tax status, state of issuance, market events and the size of the transaction. These are based on bonds issued by state and local governments.

Examples include inverse floater bonds; bonds with embedded swaps and caps; and bonds based on interest rate tax-exempt derivative products that are based on a custodial receipt, stock market today backtesting software trust certificate, or another security that is not directly issued by a state or local government.

Examples include tender option bonds, trust certificates with interest rate swaps, and stripped interest rate bonds. A sale and purchase of bonds in which the dealer commits its own capital in effecting the transaction. Under the Code, PABs are defined as any municipal obligation, irrespective of the purpose for which it is issued or the source of payment, if.

These two tests — the "private business use test" and the "private payment or security test" — must be examined in connection with the issuance of any municipal security. The term used to describe a mortgage security whose issuer is an entity other than a U.

Such issuers may be subsidiaries of investment banks, financial institutions or home builders. The aggregate value of securities in a unit investment trust fund, divided by the number of units, plus the applicable sales charge.

This is the price at which units are offered for sale to the public. A concept often used with HELs and manufactured-housing transactions to describe a series of increasing monthly prepayment speeds, prior to a plateau, on which the expected average life of a security is based.

A covenant in the financing proceedings requiring the charging of rates or fees for the use of specified facilities or operations at least sufficient to achieve a stated minimum coverage. The adjustment of the interest rate on a floating-rate security according to a prescribed formula.

For an inflation-indexed security, the yield based on the payment stream in constant dollars, i. A downturn in economic activity on a large scale, such as in the U. The Commerce Department defines a recession as two or more quarters of decline in output, as measured by Gross National Product GNP or Gross Domestic Product GDP. The doctrine that many believe provides the constitutional basis for the exemption from federal taxation of the interest earned on municipal securities.

The doctrine holds that the states are immune from taxation by the federal government and vice versa. The advocates of tax-exemption for bonds believe that a tax on the interest income a taxpayer receives constitutes a tax on the issuer of the bonds.

The date for determining the owner entitled to the next scheduled payment of principal or interest on a mortgage security. The paying off or buying back of a bond by the issuer; also, repurchase of investment trust units by the trustee, at the bid price.

Another term for call provisions. Sale of a new issue, the proceeds of which are to be used, immediately or in the future, to retire an outstanding issue by, essentially, replacing the outstanding issue with the new issue. Refundings are done to save interest cost, extend the maturity of the debt, or to relax existing restrictive covenants. A bond whose owner is registered with the issuer or its agent either as to both principal and interest or as to principal only.

Transfer of ownership can only be accomplished when the securities are properly endorsed by the registered owner. The name in which a security is registered, as stated on the certificate or on the books of the paying agent.

The risk that interest income or principal repayments will have to be reinvested at lower rates in a declining rate environment. A formal re-underwriting of a bond for which the form or structure is being changed. A dealer or dealer bank responsible for the pricing of variable-rate demand bonds. The remarketing agent periodically sets and resets the interest rate of a VRDN.

Because of changes in the Tax Reform Act, most CMOs are now issued in REMIC form to create certain tax advantages for the issuer. The terms REMIC and CMO are now used interchangeably.

Repurchase agreements repos are widely used as a source of financing by primary dealers, other securities firms, banking firms, and institutional investors, among others.

A repo involves an agreement between a seller and a buyer, typically of U. A reverse repurchase agreement is the flip side of the transaction, with the buyer "buying" the securities from the seller and simultaneously agreeing to resell them at a future point in time.

The outstanding volume of repos and reverse repos is enormous. In a CMO, the residual is that tranche which collects any cash flow from the collateral that remains after obligations to the other tranches have been met. RANs are issued in anticipation of sources of future revenue other than taxes. This may include intergovernmental aid.

A bond on which the debt service is payable solely from the revenue generated from the operation of the project being financed or a category of facilities, or from other non-tax sources. A securitization structure frequently used for assets with high turnover rates, such as credit card, trade and dealer floor-plan receivables. It is characterized by having a revolving period and an accumulation or controlled-amortization period. There are many different risks, including:. The storage and protection of customers' securities, typically held in a vault, provided as a service by a bank or institution acting as agent for the customer.

Examining the likely performance of an investment under a wide range of possible interest rate environments. The age of accounts. In the ABS market, this term refers to the fact that various asset types have different seasoning patterns, which are characterized by periods of rising and then declining losses. The section of the Internal Revenue Code under which not-for-profit organizations receive their tax-exempt status.

The grouping of securities into a category, based upon similarities that they share. Typically, securities found in a distinct industry are grouped together. Debt backed by specific assets or revenues of the borrower. In the event of default, secured lenders can force the sale of such assets to meet their claims. Securitization may be broadly defined as the process of issuing new securities backed by a pool of existing assets such as loans, residential or commercial mortgages, credit card debt, or other assets.

Securitization includes a diverse array of assets, such as residential and commercial mortgage loans, trade receivables, credit card balances, consumer loans, lease receivables, automobile loans, insurance receivables, commercial bank loans, health care receivables, obligations of purchasers to natural gas producers, future rights to entertainment royalty payments and other consumer and business receivables.

Specific revenue sources or assets pledged by an issuer to the bondholder to secure repayment of the bond. A selling group includes dealers or brokers who have been asked to join in the offering of a new issue of securities, but are neither liable for any unsold syndicate balance, nor share in the profits of the overall syndicate.

They obtain securities for sale less the take-down. The underwriter who coordinates the sale of a bond or note issue and manages a syndicate or selling group. A senior manager is usually used only with regard to a negotiated financing.

The most basic type of CMO, in which all tranches receive regular interest payments, but principal payments are directed initially only to the first tranche until it is completely retired. All or a portion of an issue with stated maturities in consecutive years as opposed to mandatory sinking fund redemption amounts.

Collection and pooling of principal, interest and escrow payments on mortgage loans and mortgage pools, as well as certain operational procedures such as accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquency loan follow-up and loan analysis. The party providing the servicing receives a servicing fee. The amount retained by the mortgage servicer from monthly interest payments made on a mortgage loan.

Borrowing and then selling securities that one does not own, in anticipation of a price decline. Generally, debt which matures in one year or less. However, certain securities that mature in up to three years may be considered short-term debt.

Separate accumulation of cash or investments including earnings on investments in a fund in accordance with the terms of a trust agreement or indenture, funded by periodic deposits by the issuer or other entity responsible for debt servicefor the purpose of assuring timely availability of moneys for payment of debt service. Usually used in connection with term bonds. A bankruptcy-remote entity set up to insulate the issuer of ABS the trust from the sponsor, or originator, of the assets.

Also called special-purpose corporation SPC.

When buying or selling a bond through a brokerage firm, an individual investor will be charged a commission or spread, which is the difference between the market price and cost of purchase, and sometimes a service fee.

Spreads differ based on several factors including liquidity. A model based on historical mortgage prepayment rates that is used to estimate prepayment rates on mortgage securities. Projected and historical prepayment rates are often expressed as "percentage of PSA" Prepayment Speed Assumptions. Separate Trading of Registered Interest and Principal of Securities.

Securities issued as subordinated debt will pay interest and principal but only after all interest that is due and payable has been paid on any and all senior debt. A floating-rate CMO tranche whose rate is based on a formulaic relationship to a representative interest rate index. Also known as a "companion tranche. A bond that backs the performance of another. In the ABS market, a surety bond is an insurance policy typically provided by a rated and regulated monoline insurance company to guarantee securities holders against default.

A transaction in which an investor sells one security and simultaneously buys another with the proceeds, usually for about the same price and frequently for tax purposes. A group of underwriters formed for the purpose of participating jointly in the initial public offering of a new issue of municipal securities. A TAC tranche uses a mechanism similar to that of a sinking fund to determine a fixed principal payment schedule based on an assumed prepayment rate.

The effect of prepayment variability that is removed from the TAC tranche is transferred to a companion tranche. The discount from the list price allowed to a member of an underwriting account on any bonds purchased from the account. TANs are issued by states or local governmental units to finance current operations in anticipation of future tax receipts.

TRANS are notes that are issued in anticipation of both taxes and revenues. A municipal bond whose interest is not excluded from the gross income of its owners for federal income tax purposes. Certain municipal bonds are taxable because they are issued for purposes which the federal government deems not to provide a significant benefit to the public at large.

A broad category of bonds that are secured by taxes levied by the obligor. The taxes are not necessarily unlimited as to rate or amount, so while all general obligation bonds are tax backed, not all tax-backed bonds are general obligations. Examples of tax-backed bonds include moral obligations and appropriation-backed bonds. This category is also known as tax-supported. A common term for municipal bonds. The interest on the bond is excluded from the gross income of its owners for federal income tax purposes under Section of the Internal Revenue Code ofas amended.

Municipal bonds that are also exempt from state and local as well as federal income taxes are said to have double or triple tax exemption. A short-term promissory note issued for periods up to days, often used in lieu of fixed-rate BANs, TANs and RANs because of the greater flexibility offered in setting both maturities and determining rates. The purpose for issuing TECP or TXCP can be the same as that for BANs, TANs and RANs.

A formula which converts the lower yield of a tax-exempt security into the higher yield of a taxable security. This allows investors to compare equivalent yields on the two securities.

The weekly average auction rate of the three-month Treasury bill stated as the bond equivalent yield. A default under the bond indenture terms, other than nonpayment of interest or principal. Examples of technical default are failure to maintain required reserves, or to maintain adequate fees and charges for service.

Bonds of an issue that have a single stated maturity date. Mandatory redemption provisions require the issuer to call or purchase a certain amount of the term bonds using money set aside in a sinking fund at regular intervals before the stated maturity date.

The sum of the total bond debt and any unfunded debt typically, short-term notes of a municipality. Investment performance measure over a stated time period which includes coupon interest, interest on interest, and any realized and unrealized gains or losses. A class of bonds in a CMO offering which shares the same characteristics. A party appointed by an issuer to maintain records of securities owners, to cancel and issue certificates and to address issues arising from lost, destroyed or stolen certificates.

The concept of disseminating price, volume and other information to the public about transactions in the municipal market. Using the Consumer Price Index as a guide, the value of the securities' principal is adjusted to reflect the effects of inflation.

Also known as Treasury Inflation Protected Securities TIPS. The market interest rate at which the terms of a security might change. Triggers are common on index amortization notes and range securities. Designation for insurers offering superior security on both an absolute and a relative basis.

Such insurers have been judged to possess the highest safety and have the capacity to meet policyholder obligations. Rating agencies usually require what is called a true-sale opinion from a law firm before the securities can receive a rating higher than that of the sponsor. The rate of return to the investor taking into account the payment of capital gains at maturity on a bond bought at a discount. Generally does not include an assignment to the trustee of collateral to secure the payment of debt service.

A bank designated by the issuer as the custodian of funds and official representative of bondholders. Trustees are appointed to ensure compliance with the bond documents and to represent bondholders in enforcing their contract with the issuer.

The securities dealer who purchases a bond or note issue from an issuer and resells it to investors. If a syndicate or selling group is formed, the underwriter who coordinates the financing and runs the group is called the senior or lead manager.

The difference between the offering price to the public by the underwriter and the purchase price the underwriter pays to the issuer.

Syndicate account structure that is undivided as to sales and liability. Investment funds created with a fixed portfolio of investments that never changes over the life of the trust. They are created by brokerage houses, and are liquidated as investments within the trust are paid off. They provide a steady, periodic flow of income to investors. A long-term bond the interest rate of which is adjusted periodically, typically based upon specific market indicators.

A bond which bears interest at a variable, or floating, rate established at specified intervals e. It contains a put option permitting the bondholder to tender the bond for purchase when a new interest rate is established.

A statistical measure of the variance of price or yield over time. Volatility is low if the price does not change very much over a short period of time, and high if there is a greater change. Dollar limitation of private-activity bonds that are allowed to be issued, by state, each year. Legislation enacted by Congress sets the volume cap. The weighted average interest rate of the underlying mortgage loans or pools that serve as collateral for a security, weighted by the size of the principal loan balances.

The weighted average number of months since the date of the loan origination of the mortgages in a mortgage pass-through security pool issued by Freddie Mac, weighted by the size of the principal loan balances.

The weighted average number of months to the final payment of each loan backing a mortgage security, weighted by the size of the principal loan balances.

Glossary of Bond Terms

Also known as weighted average remaining maturity WARM and weighted average remaining term WART. In a CMO bond, the period of time between the expected first payment of principal and the expected last payment of principal. The annual percentage rate of return earned on a security. In a refunding, the practice of a dealer marking up the price of the securities to be put in an escrow, in order to "burn the yield down" to levels that do not violate federal arbitrage regulations.

Yield burning has a negative connotation. The graphical relationship between yield and maturity among bonds of different maturities and the same credit quality. This line shows the term structure of interest rates. A yield on a security calculated by assuming that interest payments will be paid until the call date, when the security will be redeemed at the call price. A yield on a security calculated by assuming that interest payments will be made until the final maturity date, at which point the principal will be repaid by the issuer.

Yield to maturity is essentially the discount rate at which the present value of future payments investment income and return of principal equals the price of the security. A bond for which no periodic interest payments are made. The investor receives one payment at maturity equal to the principal invested plus interest earned compounded semiannually at the original interest rate to maturity.

Often the last tranche in a CMO, the Z-tranche receives no cash payments for an extended period of time until the previous tranches are retired. Glossary of Bond Terms Glossary of Bond Terms A B C D E F G H I J K L M N O P Q R S T U V W X Y Z accreted value The current value of your zero-coupon municipal bond, taking into account interest that has been accumulating and automatically reinvested in the bond. Agreement Among Underwriters AAU Legal document used principally in negotiated sales by underwriters.

Alternative Minimum Tax AMT An alternative way of calculating income under the Internal Revenue Code. Also called the offer. Build America Bonds BABs Build America Bonds BABs are new taxable municipal bonds that were authorized under the American Recovery and Reinvestment Act of Cost of Funds Index COFI A bank index reflecting the weighted average interest rate paid by savings institutions on their sources of funds. CP Index Usually the Federal Reserve Commercial Paper Composite, calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial commercial paper for various maturities.

CPI-U The index for measuring the inflation rate is the non-seasonally adjusted U. CUSIP The Committee on Uniform Security Identification Procedures, which was established under the auspices of the American Bankers Association to develop a uniform method of identifying municipal, U.

Federal Reserve commercial paper composite Calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial Commercial Paper for various maturities.

FINRA Created in July through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. Ginnie Mae I Pass-through mortgage securities on which registered holders receive separate principal and interest payments on each of their certificates.

Ginnie Mae II Pass-through mortgage securities on which registered holders receive an aggregate principal and interest payment from a central paying agent on all of their Ginnie Mae II certificates.

GSE debt security Debt issued by government-sponsored enterprises GSEs —those financing entities created by Congress to fund loans to certain groups of borrowers such as homeowners, farmers and students. I Bonds A type of inflation-adjusted security issued by the Treasury. The major insurers are identified by these symbols: IO interest-only security In the case of a CMO, an IO tranche is created deliberately to pay investors only interest and not principal.

LIBOR London Interbank Offered Rate The rate banks charge each other for short-term Eurodollar loans. Municipal Securities Rulemaking Board MSRB An independent self-regulatory organization established by the Securities Acts Amendments ofwhich is charged with primary rulemaking authority over dealers, dealer banks and brokers in municipal securities.

This is in contrast to a competitive or an advertised sale, net direct debt Total direct debt of a municipality less all self-supporting debt, any sinking funds, and short-term debt such as tax anticipation notes and revenue anticipation notes. PAC planned amortization class tranche A CMO tranche that uses a mechanism similar to a sinking fund to determine a fixed principal payment schedule that will apply over a range of prepayment assumptions.

Also known as par value. PO principal-only security In the case of a CMO, a PO tranche is created deliberately to pay investors principal only and not interest. REMIC Real Estate Mortgage Investment Conduit Because of changes in the Tax Reform Act, most CMOs are now issued in REMIC form to create certain tax advantages for the issuer. There are many different risks, including: Also called the winning scale.

Section c 3 The section of the Internal Revenue Code under which not-for-profit organizations receive their tax-exempt status. For example, the spread between a year Treasury yielding 4. Standard Prepayment Model of The Securities Industry and Financial Markets Association A model based on historical mortgage prepayment rates that is used to estimate prepayment rates on mortgage securities.

STRIPS Separate Trading of Registered Interest and Principal of Securities. Tax Anticipation Note TAN TANs are issued by states or local governmental units to finance current operations in anticipation of future tax receipts.

T-bill rate The weekly average auction rate of the three-month Treasury bill stated as the bond equivalent yield. Treasury Inflation-Indexed Securities TIIS Securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation. Z-tranche Often the last tranche in a CMO, the Z-tranche receives no cash payments for an extended period of time until the previous tranches are retired.