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Copyright © 2007 - 2021 | Eastern Caribbean Securities Regulatory Commission
The terms provided in this section are intended to empower the user to interact with a trained/licensed individual in an informed manner. The terms are not designed to replace the service of these individuals. The ECSRC strongly recommends that the user seeks professional advice before taking action on any investment matter.
<p>TEST.2 24/10/2025</p>
<p>Annualize means to convert a rate of return from a periodic basis to on an annual basis.</p>
The annualized holding period yield, also known as the effective annual yield, is a yield measure used to facilitate comparison with other investments.
An asset means anything having commercial or exchange value that is owned by a business, institution, or individual. Financial instruments, in the form of securities, are classified as capital/financial assets.
A bond is an interest bearing or discounted government or corporate debt security that obligates the issuer (corporate or government entity) to pay the bondholder (investor).
Callable refers to a bond that may be redeemable by the issuer before the scheduled maturity date.
The call date is the date on which a bond may be redeemed before maturity. If called, the bond may be redeemed at par or at a slight premium to par.
Call Protection is the length of time during which a security cannot be redeemed by the issuer.
Capital Gain refers to the increase in the value of a financial asset.
Capital Gains Yield is the positive change in the price of an asset (capital gain) divided by the purchase price, expressed as a percentage.
Capital loss is the amount by which the proceeds from the sale of a capital asset are less than the price paid to acquire the asset.
In investment securities, cash flows represents cash revenues (cash inflows) and cash expenses (cash outflows), excluding non-cash items such as depreciation and unrealized gains or losses.
The compound annual average rate of return or compound annual growth rate is the year-over-year growth rate of an investment over a specified period of time.
The coupon represents the interest rate on a debt security the issuer promises to pay to the holder until maturity, expressed as a percentage of the bond's face value.
Current Yield is the annual interest on a bond divided by the current market price of the bond.
Reference is made to?cash flows?in investment securities. Discounted cash flows refer to the value of future or expected cash revenues or expenditures at a common date.
Dividend yield is the annual percentage of return earned by an investor on a common or preferred stock.
Dividend is the distribution of corporate earnings to investors, prorated by class of security, and may be paid in the form of money, stock or scrip.
Expected return or mean return is the average of all the likely returns of the investments comprising a portfolio of securities.
Face value is the par or nominal value of a bond, note or other security.
The financial health of a firm or individual speaks to the state of a firm or an individual's personal financial situation.
A comprehensive evaluation of an investor's current and future financial state is undertaken during financial planning.
The future value concept is the reverse of the?present value?method. Future value refers to the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
Holding period refers to the length of time an asset is held by its owner.
An indenture is a formal agreement, also called a Deed of Trust, between an issuer of bonds and the bond holder.
The internal rate of return is a discount rate at which the present value of all future payments would equal the present price of an investment.
An issuer is a legal entity that has the power to issue and distribute a security (debt, equity, etc.).
A liability is a claim on the assets of a company or individual, excluding ownership equity.
A lump sum is a large payment of money received, or made, at one point in time instead of in periodic payments.
When referring to debt securities, maturity signifies reaching the date at which a debt instrument is due and payable.
Net worth represents the amount by which assets exceed liabilities.
In terms of common stocks, par value may represent: 1) the original investment behind each share of stock; or 2) the assigned value derived from the dollar accounting value of common stock on a company's balance sheet.
Any measure calculated on a per-dollar-invested basis, such as the holding period yield indicates the percentage return of each dollar invested.
A personal balance sheet is an individual's account of his/her assets and liabilities at a stated point in time.
Present value refers to the value today of a future payment or stream of payments, discounted at some compound interest or discount rate.
To redeem an investment in stocks or bonds means to exchange or cash in your holdings for money.
A security is an investment instrument that signifies an ownership position in a corporation, a creditor relationship with a corporation or government body or rights to ownership.
A share or stock is a financial instrument in the form of equity ownership.
The tenor of an investment refers to the period of time during which the conditions or terms of the contractual agreement are to be carried out.
Generally, yield refers to the return on an investor's capital investment.
Yield to call is the yield on a bond assuming the bond will be redeemed by the issuer at the first?call date?specified in the?indenture agreement.
The Yield to Maturity (YTM) is a finance concept used to determine the rate of return an investor will receive if a long-term, interest bearing investment, such as a bond, is held to its scheduled maturity date.