Interest -Denotes a share or ownership in property. - Price that is paid in for funds that are borrowed. Expressed in the form of a percentage rate pertaining to a specific period. Represents the exchange rate of consumption at present for consumption in future. … [Read more...]
Interest Coverage Ratio
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Interest Coverage Ratio A comparison in the form of a ratio of the earnings (prior to interest and tax adjustment) to yearly interest expense. Used to evaluate the ability to fulfill interest payments. … [Read more...]
Interest Coverage Test
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Interest Coverage Test A method of limiting debt that prohibits the issuer from taking additional debt for the long term when the interest coverage will decline below a set minimum as a consequence of the new debt. … [Read more...]
Interest Equalization Tax
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Interest Equalization Tax Abolished in 1974. Tax payable on foreign investments by U.S. … [Read more...]
Interest Payments
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Interest Payments Debt payments made as per terms of a contract, determined by principal amount and the coupon rate of interest. … [Read more...]
Interest Rate Call Option
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Interest Rate Call Option Derivative based on interest rates where the holder has a right to take interest payments based on a variable rate, and subsequently pay interest at a fixed rate. … [Read more...]
Interest on Interest
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Interest on Interest Related: compound interest. Interest payable on reinvestment of every interest payment on the original sum invested. … [Read more...]
Interest-Only Strip (IO)
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Interest-Only Strip (IO) Any security that is dependent only on the interest payments arising from a mortgage, Treasury bonds, or other bond pool. When the principal amount has been repaid on the bonds or mortgages, the IO has zero value and the interest payments come to an end. … [Read more...]
Interest Rate Agreement
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Interest Rate Agreement A formal agreement wherein one party undertakes to compensate the other whenever the reference rate (designated rate) varies from a strike rate (predetermined level). This compensation is assured by the party in return for an upfront premium. … [Read more...]
Interest Rate Cap
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Interest Rate Cap Refer: interest rate ceiling. Agreement pertaining to interest rates payable wherein payments are made when the strike rate is crossed by the reference rate. … [Read more...]
Interest Rate Ceiling
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Interest Rate Ceiling Related: interest rate cap. The maximum interest rate that may be charged. … [Read more...]
Interest Rate Differential – IRD
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Interest Rate Differential - IRD A differential evaluating the interest rate gap in between two similar assets that yield interest. Forex traders use IRDs in pricing forward exchange rates. … [Read more...]
Interest Rate Floor
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Interest Rate Floor An agreement relating to interest rates where the reference rate must decline below strike rate for payments to become due. … [Read more...]
Interest Rate on Debt
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Interest Rate on Debt Debt capital costs incurred by the firm. … [Read more...]
Interest Rate Parity Theorem
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Interest Rate Parity Theorem Difference in interest rate between two countries equals the difference seen between the spot rate and the forward foreign exchange rate. … [Read more...]
Interest Rate Risk
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Interest Rate Risk -Risk possible in the form of fluctuation in security value, arising from changes in interest rates. For example, price decline in a bond when interest rates rise. -For depository institutions, risk arising from any change in rates of interest that impact … [Read more...]
Interest Rate Swap
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Interest Rate Swap Formal understanding, that is legally binding between counterparties, outlining the terms of exchange of interest payments receivable periodically on a notional principal, which is a predetermined dollar amount. For example, one of the parties will receive … [Read more...]
Interest Shortfall
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Interest Shortfall Interest remaining due after loan payments are fulfilled. Occurs when the interest accrues but has not been accounted into the immediate payment actually made. … [Read more...]
Interest Subsidy
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Interest Subsidy The deduction of interest payments on the debt owed by a firm from the earnings before the tax due is calculated as per current taxation law provisions. … [Read more...]
Interest Tax Shield
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Interest Tax Shield Difference in the interest rates on bonds with the same maturity from two different sectors of the bond market. … [Read more...]
