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18 Cards in this Set

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BASIS POINT
ONE ONE-HUNDREDTH OF A PERCENTAGE POINT.
COUPON BOND
A CREDIT MARKET INSTRUMENT THAT PAYS THE OWNER A FIXED INTEREST PAYMENT EVERY YEAR UNTIL THE MATURITY DATE, WHEN A SPECIFIED FINAL AMOUNT IS PAID.
COUPON RATE
THE DOLLAR AMOUNT OF THE YEARLY COUPON PAYMENT EXPRESSED AS A PERCENTAGE OF THE FACE VALUE OF A COUPON BOND.
CURRENT YIELD
AN APPROXIMATION OF THE YIELD TO MATURITY THAT EQUALS THE YEARLY COUPON PAYMENT DIVIDED BY THE PRICE OF A COUPON BOND.
DISCOUNT BOND (ALSO KNOWN AS A ZERO-COUPON BOND)
A CREDIT MARKET INSTRUMENT THAT IS BOUGHT AT A PRICE BELOW ITS FACE VALUE AND WHOSE FACE VALUE IS REPAID AT THE MATURITY DATE; IT DOWN NOT MAKE ANY INTEREST PAYMENTS.
DURATION
THE AVERAGE LIFETIME OF A DEBT SECURITY'S STREAM OF PAYMENTS.
FIXED PAYMENT LOAN
A CREDIT MARKET INSTRUMENT THAT PROVIDES A BORROWER WITH AN AMOUNT OF MONEY THAT IS REPAID BY MAKING A FIXED PAYMENT PERIODICALLY (USUALLY MONTHLY) FOR A SET NUMBER OF YEARS.
INDEXED BONDS
BONDS WHOSE INTEREST AND PRINCIPAL PAYMENTS ARE ADJUSTED FOR CHANGES IN THE PRICE LEVEL AND WHOSE INTEREST RATE THUS PROVIDES A DIRECT MEASURE OF A REAL INTEREST RATE.
NOMINAL INTEREST RATE
AN INTEREST RATE THAT DOES NOT TAKE INFLATION INTO ACCOUNT.
PERPETUITY
A PERPETUAL BOND WITH NO MATURITY DATE AND NO REPAYMENT OF PRINCIPAL THAT MAKES PERIODIC FIXED PAYMENTS FOREVER.
PRESENT VALUE
TODAY'S VALUE OF A PAYMENT TO BE RECEIVED IN THE FUTURE WHEN THE INTEREST RATE IS "I". ALSO CALLED PRESENT DISCOUNTED VALUE.
RATE OF CAPITAL GAIN
THE CHANGE IN A SECURITY'S PRICE RELATIVE TO THE INITIAL PURCHASE PRICE.
REAL INTEREST RATE
THE INTEREST RATE ADJUSTED FOR EXPECTED CHANGES IN INFLATION SO THAT IT MORE ACCURATELY REFLECTS THE TRUE COST OF BORROWING.
REAL TERMS
TERMS REFLECTING ACTUAL GOODS AND SERVICES ONE CAN BUY.
RATE OF RETURN
THE PAYMENTS TO THE OWNER OF A SECURITY PLUS THE CHANGE IN THE SECURITY'S VALUE, EXPRESSED AS A FRACTION OF ITS PURCHASE PRICE.
SIMPLE LOAN
A CREDIT MARKET INSTRUMENT PROVIDING THE BORROWER WITH AN AMOUNT OF FUNDS THAT MUST BE REPAID TO THE LENDER AT THE MATURITY DATE ALONG WITH INTEREST.
YIELD ON A DISCOUNT BASIS
THE MEASURE OF INTEREST RATES BY WHICH DEALERS IN BILL MARKETS QUOTE THE INTEREST RATE ON U.S. TREASURY BILLS. ALSO KNOWN AS THE DISCOUNT YIELD.
YIELD TO MATURITY
THE INTEREST RATE THAT EQUATES THE PRESENT VALUE OF PAYMENTS RECEIVED FROM A CREDIT MARKET INSTRUMENT WITH ITS VALUE TODAY.