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Home Dictionary N Normal Yield Curve A normal yield curve is a yield curve in which short-term debt instruments have a lower yield than long-term debt instruments of the same credit quality. A rising yield curve suggests higher interest rates in the future. A descending yield curve predicts lower interest rates in the future. Accretion of Discount
September 25, 2022 Increasing discount refers to an increase in the value of a discount security as it approaches its maturity date. Asset-Backed Commercial Paper (ABCP)
September 25, 2022 Asset-backed commercial paper (ABCP) is a type of short-term investment with a maturity of 270 days or less. Average Life
September 25, 2022 Average life is the average length of time it takes to pay off the outstanding principal on a debt instrument, such as a treasury bill, bond, loan, or mortgage-backed security. Barbell
September 25, 2022 Barbell is a portfolio strategy with a fixed income, in which half of the investments are short-term instruments, and the other half are long-term. Credit Linked Note (CLN)
September 25, 2022 Credit note (CLN) is a financial instrument that allows the issuer to transfer certain credit risks to credit investors. Debt Security
September 25, 2022 Debt securities are financial assets that entitle their holders to a stream of interest payments. Fixed Income Clearing Corporation (FICC)
September 25, 2022 The Fixed Income Clearing Corporation is the clearing house for certain fixed income securities traded in the United States. Floating Charge
September 25, 2022 A floating fee is a security interest or lien over a group of non-permanent assets that fluctuate in quantity and value. Humped Yield Curve
September 25, 2022 A humped yield curve occurs when medium-term interest rates are higher than both short-term and long-term rates. Interpolated Yield Curve (I Curve)
September 25, 2022 An interpolated yield curve or “curve I” refers to a yield curve constructed using data on the yield and maturity of outstanding Treasury securities. Liquidity Preference Theory
September 25, 2022 Liquidity preference theory refers to the demand for money as measured by liquidity. Negative Arbitrage
September 25, 2022 Negative arbitrage is the lost profits of holding debt proceeds in escrow until the project can actually be funded. Negative Bond Yield
September 25, 2022 Negative bond yield is when an investor receives less money on redemption of the bond than the original purchase price of the bond. Non-Competitive Tender
September 25, 2022 An out-of-competition tender is an offer to purchase Treasury securities made by smaller investors. Non-Marketable Security
September 25, 2022 Non-marketable securities are assets that cannot be cashed out easily and in a timely manner or at minimal cost. Prepayment Risk
September 25, 2022 Prepayment risk is the risk associated with the early repayment of principal on a fixed income security. Realized Yield
September 25, 2022 Realized yield is the actual profit earned during the investment’s holding period and may include dividends, interest payments, and other cash payments. Reinvestment Rate
September 25, 2022 The reinvestment rate is the return that an investor expects to receive after reinvesting cash flows received from previous investments. Repudiation
September 25, 2022 A waiver occurs when one party refuses to honor a contract with the other party. Unsecured Note
September 25, 2022 An unsecured bond is corporate debt that does not come with collateral and therefore represents a riskier prospect for the investor. Variable Coupon Renewable Note (VCR)
September 25, 2022 Revolving debt with a variable coupon is repaid every week, with the principal reinvested at a new interest rate, which is reset at a fixed spread relative to the base rate. Weighted Average Remaining Term (WART)
September 25, 2022 The weighted average remaining term (WART) is a measure of the average time to maturity of a fixed income portfolio. Workout Period
September 25, 2022 An adjustment period occurs when the price or yield of a bond is adjusted so that it is more in line with similar bonds in the market. Yield Basis
September 25, 2022 The yield-based method specifies the price of a fixed income security (such as a bond) as a percentage of yield rather than in dollars. Zero-Coupon Certificate Of Deposit (CD)
September 25, 2022 A zero-coupon deposit is a type of certificate of deposit that pays no interest for the duration of its validity.