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Glossary of Financial Terms — Y, Z 

Glossary_YZ 

  

 

 


Terms — Y
Terms — Z


Yankee Securities

Dollar denominated bonds issued in the U.S. by foreign banks and corporations for trade in U.S. markets.

 

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Yield

The rate of annual income return on an investment expressed as a percentage. Income yield is obtained by dividing the current dollar income by the current market price of the security.

 

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Yield Curve

A graphic depiction of interest rates across all maturities, 0–30 years. The shape of the curve is largely influenced by the Federal Reserve Policy as well as factors listed under “Interest Rates” above.

 

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Yield Maintenance

For a GNMA or other mortgage security bought under a futures contract or standby commitment, the adjustment of the price upon delivery necessary to provide the same yield to the buyer that was specified in the original agreement. Yield maintenance becomes necessary when the coupon on the GNMA that is delivered is different from the coupon that had been expected at the time the agreement was made.

 

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Yield to Adjusted Minimum Maturity

A measure designed to give the yield to the shortest possible life of a bond. It is based on the assumption of maximum sinking fund operation and a call on the bond as early as possible.

 

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Yield to Average Life

The yield derived when the average life date (average maturity) is substituted for the maturity date of the issue.

 

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Yield to Call

The yield computed assuming cash flow is the coupon stream to the call date, when the issue is redeemed at its call date, when the issue is redeemed at its call price.

 

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Yield to Maturity

The return a bond earns on the price at which it was purchased if it were held to maturity. It is greater than the current yield if the bond is selling at a discount and less than the current yield if the bond is selling at a premium. It assumes that coupon payments can be reinvested at the yield to maturity.

 

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Yield to Put

The return a bond earns assuming that it is held until a certain date and put (sold) to the issuing company at a specific price (the put price).

 

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Yield to Worst

The yield resulting from the most adverse set of circumstances from the investor’s point of view; the lowest of all possible yields.

 

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Zero Coupon Bonds

Security that pays no interest but is sold at a discount to its redemption value.

 

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Information contained herein is believed to be reliable, but the accuracy and completeness of this material cannot be guaranteed.

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