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22 Cards in this Set
- Front
- Back
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Trade Flat
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Do not have accrued interest, they include income bonds, zeros, bonds in default, and bonds that settle on an interest payment date
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Interest accrues
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From the dated date up to but not including the settlement date
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PACs
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Planned Amortization Class
Mortgage backed securities Have established maturity dates b/c both prepayment and extension risks are transferred to support or companion tranches. |
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Nominal Yield
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Coupon Rate
Fixed percentage of par |
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Eurodollar Bonds
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Issued outside the US, trades in US and foriegn exchanges
Principal and interest are both paid in dollars therefore a US investor bears no currency risk and a foreign does. |
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BONDS
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Represent a loan to the issuer
Are issued to finance capital expenditures to raise working capital |
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Money Market Funds include
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T-bills, T-bonds with a S-T maturity, Negotiable CDs
NOT common stock |
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Trading Flat
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There is no accrued interest
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Normal YLD curve, MKT interest rates change what is the effect on bond prices?
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Long Term bond prices move more sharply
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As the conversion ratio increases...
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THe conversion price decreases
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Treasury Bills
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Mature in less than one year
Their interest is exempt from the taxation at the state level Issued at a discount. Pay interest at maturity |
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Zero coupon Bond issued by B/D is..
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Treasury Receipt: B/D Issue
Treasury Strips: Government Issue |
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Convertible Bonds
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Holders may share in growth of the common stock
The issuer pays a lower interest rate Holders have a fixed interest rate. Holders DO NOT recieve a higher int rate. Always convert using Par Value. |
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What are Notes and Bonds Quoted in?
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32nds
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How does FOMC influence Interest Rates?
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Buying and Selling treasury bills
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discount rate
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is the charge on loans to member banks by the New York Federal Reserve Bank.
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The prime rate
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is the base rate on corporate loans at large U.S. money center commercial banks
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The federal funds rate
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is the rate charged on reserves traded among commercial banks for overnight use in amounts of $1 million or more
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The call rate
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or broker call loan rate, is the charge on loans to brokers for margin loans.
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Ranking YLDS (lowest to highest)
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nominal,CY,YTM, YTC
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Ranking Premiums(L to H)
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YTC,YTM,CY, Nominal
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trust indentureo
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contract between the issuer and a trustee for the benefit of a bondholder.
Spells out the covenants and the ability take action on behalf of the bondholder |
