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What is asset securitization?

Securitization is the creation and issuance of marketable debt securities either through true-sale securitization or synthetic securitization. A true-sale securitization is the out…


What is an operating lease?

An operating lease is a contractual arrangement in which the right to possess and use an asset is acquired for a period of time that is significantly shorter than the asset’s econo…


What is an investment fund?

An investment fund is an investment vehicle established for the purpose of pooling the funds of numerous separate and unrelated investors in a portfolio of securities based on a sp…


What is an ABCP conduit?

An ABCP conduit is the bankruptcy remote special purpose vehicle (SPV) that is set up and operated by the program’s sponsor to purchase the receivables and other financial assets (…


What is ABCP?

By means of ABCP, securitization is applied to short-term corporate funding.  Asset-backed commercial paper (ABCP) is commercial paper (CP) that is issued by a bankruptcy-remo…


What is a yield spread?

The difference in the required yield of a financial instrument relative to its benchmark is a yield spread, it reflecting the difference in the creditworthiness of an issue and/or…


What is a yield curve?

The yield curve is a graph plotting the observed yields to maturity of the most recently issued (“on-the-run”) benchmark debt securities in a market – generally central government…


What is a stock split?

A stock split is an increase in the number of a company’s outstanding shares while proportionately decreasing each individual share’s book value by decreasing the par or stated val…


What is a stock dividend?

A stock dividend is a pro rata distribution of a company’s own shares to its shareholders in place of or in addition to a cash dividend and achieved by transferring a certain value…


What is a security market line?

The CAPM enables the plotting of a security market line (SML), which illustrates that the expected return on an individual investment (E) is directly proportional to its relative c…


What is a rights offering?

The distribution of subscription rights to existing shareholders in proportion to their ownership interest is a rights offering.  The period of time in a rights offering during whi…


What is a lease?

A lease is a contractual financing arrangement in which one party – the lessee – is granted the right to possess and use a specific asset or group of assets owned by another party…


What is a lease purchase?

A lease purchase is a full-payout equipment leasing arrangement with a lease term equal to the asset’s estimated economic life and a bargain purchase option for the lessee to exerc…


What is a lease assignment?

Leases are assigned to lenders to facilitate the orderly and more effective enforcement of the security in the leased property.  The lessor assigns to lease funders the rights asso…


What is a lease asset?

The equipment (personal property) or real estate (real property) that is the subject of a lease and currently leased is a leased asset.  In general, any identifiable, tangible and…


What is a government security?

A government security any debt instrument issued by a central government, including bills, notes and bonds, whether discounted, variable- or fixed-rate, negotiable or nonnegotiable…


What is a finance or capital lease?

Any lease that is not classified for accounting purposes as an operating lease is a finance lease.  A finance lease (more commonly known as a “capital lease” in the US) is a noncan…


What is a Eurobond?

A Eurobond is a generally unsecured, unsubordinated intermediate- to long-term coupon-bearing Euromarket debt instrument ordinarily issued in bearer form on a “one-off basis” and u…


What is a Euro-medium term note (EMTN)?

A Euro-medium term note (EMTN) is an intermediate- to long-term generally unsecured and unsubordinated, fixed- or variable-rate interest-bearing bearer debt instrument issued in on…


What is a CP back-up line of credit?

Commercial paper usually has the highest yield of the money market instruments on the respective market due to their higher default risk relative to the other money market instrume…


What is a conditional sale?

A conditional sale is the sale of an asset with title to the asset withheld from the buyer by the financing manufacturer, bank or finance company until all payment for the asset ha…


What is a commercial paper program?

A commercial paper program is an ongoing arrangement for the continuous issuance of commercial paper on a tap basis established for several years or open-ended, whereby paper is co…


What is a collateralized debt obligation (CDO)?

A tranched ABS issued by a special purpose vehicle (SPV) that is backed by a pool of receivables structured into multiple tranches, each having different rights over the portfolio…


What is a certificate of deposit (CD)?

A negotiable unsecured money market instrument issued by a bank evidencing a time (term) deposit with that bank, typically in book-entry form, usually at a fixed rate, with a matur…


What is a bond’s invoice price?

When buying a bond, all interest that has accrued since its last interest payment is added to the dealer’s ask price and received by the buyer at the next interest payment date.  A…


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