Investment Services
Accrued interest Accumulated interest on a bond since the last coupon payment. The buyer of a bond pays the accrued interest to the seller in addition to the purchase price. The buyer is reimbursed on the next coupon payment date when the interest is paid in full. Annual Yield The yield to maturity calculated under the assumptions that the cash flows are reinvested. Ask (Offer) This represents the lowest price a prospective seller is willing to accept for a security. Basis point used in describing Bonds and Money Market yields; one basis point is 1/100th of a full percentage point. Bid This represents the highest price a prospective buyer is willing to pay for a security. Bond A security representing indebtedness where the issuer promises to pay the holder a specified amount of interest for a specified length of time and to repay the principal amount of the loan at its maturity. Commercial paper Short Term Debt securities issued by Corporations (non-financial institutions). Compound interest Sometimes referred to as "interest on interest". Interest calculated are not paid out, but added to the principal, which increases the principal for future calculations. This effectively reinvests the interest at the original yield of the security. Convertible bonds Type of bond, preferred stock, or other security that can be converted into another type of security if the owner so chooses, according to pre-set terms. Corporate Bond Bond issued by a corporation. Generally, these bonds pay higher rates than government or municipal bonds since the risk is relatively higher. Coupon (rate) Interest paid on debt securities, usually semi-annual per year expressed as an interest rate. Eurobond Bond issued and traded outside the country whose currency it is denominated in. Government Bond Bond issued by a government; i.e. Russian Federation Government Bond (OFZ). Maturity The specific future date a bond or debenture comes due and the principal is to be repaid to the investor. Money market The area of the capital markets in which short term financial obligations are traded. Municipal Bond Bond issued by a city or local government. Municipaliteties issue bond to raise capital for their activities and for specific projects that they might be undertaking. Par Value The principal or Face value of a bond. Price The dollar amount at which the ownership of securities is exchanged. In the case of most bonds, which have a par value of 100, price is the percentage of par value at which the ownership is exchanged. Principal Refers to the face value of bond or may refer to amount invested in a security. Redemption Repayment or the liquidation of indebtedness. Settlement date The date the purchaser of a security must pay for the transaction and the seller of the security must deliver the security. Strip Bonds A debt security, for which there are no regular interest payments, the difference between the purchase price and its maturing value is the interest earned and hence these products trade at a discount. Transaction date The date on which an agreement to buy or sell is entered into, often referred to as Trade Date. Treasury Bill (T-Bill) Short-term government debt issued on a discount to face or par value and usually maturing within a year from issue date. Yield to Maturity The rate of return that equates the present value of all future cash flows of a bond to its future price. Past performance is not a guarantee of future performance. Although the information contained herein is believed to be reliable, ZAO Citibank makes no representation as to the accuracy or completeness of any information contained herein or provided by ZAO Citibank. Citibank is not acting as your advisor. Prior to entering into any proposed transaction, you should determine without reliance upon ZAO Citibank, the risks and consequences of the transaction with respect to instruments underlying a proposed transaction. This document and its contents are proprietary information and products of ZAO Citibank and may not be reproduced in whole or in part without ZAO Citibank's written consent. |
|
