A cash distribution of net income after taxes by a company to its shareholders is a cash dividend. It is commonly expressed as a certain amount of money per share for common stock…
What are capital, pre-tax and after-tax returns?
Performance figures can cover a rolling period, whether annually, monthly, weekly or daily. Rolling returns are a fund’s total returns reported in an overlapping series of rolling…
What are capital requirements?
Credit risk is the dominant source of risk for banks and leasing companies. The amount of capital in relation to risk weighted assets required by regulatory authorities that finan…
What are benchmark yield curves?
The US Treasury yield curve plots the rates that are interpolated by the US Treasury Department from the daily yield curve – constant maturity treasury (CMT) rates – calculated fro…
What are bank discount yield (BDY) and effective annual yield (EAY)?
Bank discount yield (BDY) is the annualized discount rate expected from the face value of a money market instrument on a 360-day simple interest basis (i.e., without compounding) e…
What are asset-backed securities (ABSs)?
An asset-backed security (ABS) is a marketable security that is issued by a special purpose vehicle (SPV) that buys financial receivables, such as automotive leases and consumer lo…
What are ADR programs?
An unsponsored ADR (UADR) is an American depositary receipt (ADR) that is issued by a US depositary bank in an unsponsored program without the contractual involvement of the issuer…
Investment Funds Images & Tables
The Key Parties in a Mutual Fund and Their Roles Board of Directors Fund Manager Principal Underwriter Fund Administrator Fund Transfer Agent Fund Custodian Oversees fund managemen…
How is yield in different markets measured?
The yield on a money market instrument depends on whether it is a discount instrument or add-on instrument. Discount instruments, such as Euronotes and often Euro-CP, are issued a…
How is CP program paper sold?
Commercial paper programs are established for the issuance of CP in domestic markets and in foreign markets, in the form of Euro-CP (ECP). The paper of commercial paper programs i…
How is bond yield measured?
Current yield is the amount of return on an investment based on the clean price of a bond determined by dividing its annual coupon (nominal yield) by its market price. It simply s…
How is bond equivalent yield measured?
The semiannual yield to maturity is the yield to maturity on a semiannual-pay bond equal to the discounted rate per semiannual period times two. As such, these yields are not effe…
How do stock splits effect share value?
If either an increase in the number of authorized shares and/or a change in par value are necessary, a split up or split down requires an amendment to the company’s articles of inc…
How do lessors classify leases under ASC 842 and IFRS 16?
Accounting standards require lessors to identify lease transactions that transfer to the lessee control over the leased asset and substantially all of the risks and rewards inciden…
How do lessors classify leases under ASC 840 and IAS 17?
Except for real estate leasing, leases are classified by the lessors on the basis of an assessment of the characteristics of the arrangement at the inception or modification of the…
How are US Treasuries issued?
US Treasury securities can be bought directly for accounts held with the US Treasury via TreasuryDirect. TreasuryDirect is a web-based system established by the US Bureau of Publi…
How are stock dividends accounted for?
The usual accounting for a stock dividend is to decrease retained earnings and increase the paid-in capital accounts by a corresponding amount, the amount transferred depending on…
How are shares issued?
A public offering involves the sale of new securities and/or the resale of a block of previously issued shares to the general investing public with the objective of attracting inte…
How are leases classified by lessees under ASC 842 and IFRS 16?
Under both IFRS 16 and ASC 842 lessees are required to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new accountin…
How are leases classified by lessees under ASC 840 and IAS 17?
IAS 17 requires finance lease classification when the lease term is a “major part” of the asset’s economic life or the present value of the lease payments is equal to “substantiall…
How are investment funds taxed?
US mutual funds are not subject to US federal income tax at the fund level if they satisfy certain tax requirements and distribute all their income to shareholders. Generally, the…
How are government debt securities categorized?
Government debt instruments are commonly categorized according to their maturity: Government bill – A short-term discount debt instrument issued by a central government with a matu…
How are fund returns measured?
The returns on investment funds are reported in terms their total return. It comprises income return and capital return. The total return on an investment fund is its net asset va…
How are bonds priced?
The amount of money that must be invested today in order to realize a certain value in the future is present value (PV), which is the current price of a claim on a single payment o…
How are bond prices quoted?
The price at which a quoting dealer is prepared to buy prepared to pay for an amount of a bond at a particular time is the bid, it representing the demand side of the transaction….