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23 Cards in this Set
- Front
- Back
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Capital gain
Page 68 |
An increase in the market price of an asset.
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Capital loss
Page 68 |
A decrease in the market price of an asset.
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Compounding
Page 54 |
The process of earning interest on interest as savings accumulate over time.
Such as bonds from accounting and earning interest on the interest that was earned. |
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Coupon bond
Page 60 |
A debt instrument that requires multiple payments of interest on a regular basis, such as semiannually or annually, and a payment of the face value at maturity.
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Credit market instrument
Page 59 |
Methods of financing debt, including simple loans, discount bonds, and fixed payment loans.
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Debt instruments
Page 59 |
Methods of financing debt, including simple loans, discount bonds, and fixed payment loans.
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Delation
Page 75 |
A sustained decline in the price level
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Discount bond
Page 60 |
A debt instrument in which the borrower repays the amount of the loan in a single payment at maturity but receives less than the face value of the bond initially.
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Discounting
Page 56 |
The process of finding the present value of funds that will be received in the future.
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Equity
Page 59 |
A claim to part ownership of a firm; common stock issued by a corporation.
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Financial arbitrage
Page 70 |
The process of buying and selling securities to profit from price changes over a brief period of time.
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Fixed-income assets
Page 59 |
Methods of financing debt, including simple loans, discount bonds, and fixed payment loans.
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Fixed payment loan
Page 61 |
a debt instrument that requires the borrower to make regular periodic and interest to the lender.
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Future value
Page 53 |
The value at some future time of an investment made today.
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Interest-rate risk
Page 73 |
The risk that the price of a financial asset will fluctuate in response to changes in the market interest rates.
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Nominal interest rate
Page 74 |
An interest rate that is not adjusted for changes in purchasing power.
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Present value
Page 56 |
The value today of funds that will be received in the future.
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Rate of return
page 72 |
The return on a security as a percentage of the initial price; for a bond, the coupon payment plus the change in the price of a bond divided by the initial price.
R=Coupon+Capital Gain/Purchase price |
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Real interest rate
Page 74 |
An interest rate that is adjusted for changes in purchasing power.
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Return
Page 72 |
The total earnings from a security; for a bond, the coupon payment plus the change in the price of the bond.
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Simple loan
Page 59 |
A debt instrument in which the borrower receives fro the lender an amount called the principal and agrees to repay the lender the principal plus interest on a specific data when the loan matures.
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Time value of money
Page 56 |
The way that the value of a payment changes depending on when payment is received.
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Yield to maturity
Page 63 |
The interest rate that makes the present value of the payments from an asset equal to the asset's price today.
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