Lessons:
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Glossary
A comprehensive A-to-Z listing of 2,500 financial terms
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- Yankee bonds
- Foreign bonds denominated in US$ issued in the United
States by foreign banks and corporations. These bonds are usually
registered with the
SEC.
For example, bonds issued by originators with roots in Japan are called
Samurai bonds.
- Yankee CD
- A CD
issued in the domestic market, typically New York, by a branch
of a foreign bank.
- Yankee market
- The foreign market
in the United States.
- Yard
- Slang for one billion dollars. Used particularly in
currency trading, e.g. for Japanese yen since on billion yen only
equals approximately US$10 million. It is clearer to say, " I'm a
buyer of a yard of yen," than to say, "I'm a buyer of a
billion yen," which could be misheard as, "I'm a buyer
of a million yen."
- Yield
- The percentage rate of return
paid on a stock in the form of dividends, or the effective rate of
interest paid on a
bond or note.
- Yield curve
- The graphical depiction of the relationship between
the yield on bonds of the same
credit quality but different maturities.
Related: Term structure of
interest rates. Harvey (1991)
finds that the inversions of the yield curve (short-term rates greater than
long term rates) have preceded the last five U.S. recessions. The yield curve
can accurately forecast the turning points of the business cycle.
- Yield curve
option-pricing models
- Models that can incorporate different
volatility assumptions
along the yield curve, such as the
Black-Derman-Toy model. Also called
arbitrage-free option-pricing models.
- Yield curve strategies
- Positioning a portfolio
to capitalize on expected changes in the shape of the Treasury
yield curve.
- Yield ratio
- The quotient of two bond
yields.
- Yield spread strategies
- Strategies that involve positioning a
portfolio to capitalize on
expected changes in yield
spreads between sectors of the bond
market.
- Yield to call
- The percentage rate of a bond
or note, if you were to buy and hold the
security until the
call date. This
yield is valid only if the security is
called prior to maturity. Generally bonds are callable over several
years and normally are called at a slight
premium. The calculation of
yield to call is based on the
coupon rate, length of time
to the call and the market price.
- Yield to maturity
- The percentage rate of return
paid on a bond, note or other fixed
income security if you buy and hold
it to its maturity date.
The calculation for YTM is based on the
coupon rate, length of time to
maturity and market price. It assumes that coupon
interest paid over the
life of the bond will be
reinvested at the same rate.
- Yield to worst
- The bond
yield computed by using the
lower of either the yield
to maturity or the yield to call
on every possible call date.
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