Archive for the 'Y Glossary' Category

Yield to worst

Yield to worst

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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Yield to maturity

Yield to maturity

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.



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Yield to call

Yield to call

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.



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Yield spread strategies

Yield spread strategies

Yield spread strategies

Strategies that involve positioning a portfolio to capitalize on expected changes in yield spreads between sectors of the bond market.



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Yield ratio

Yield ratio

Yield ratio

The quotient of two bond yields.



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Yield curve strategies

Yield curve strategies

Yield curve strategies

Positioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve.



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Yield curve option-pricing models

Yield curve option-pricing models

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.



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Yield curve

Yield curve

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.



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Yield

Yield

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.



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Yard

Yard

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.



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