TERMS FOR TEXT B

Date: 2015-10-07; view: 471.

A bearer is the owner of a security or other instrument. One may bear any type of security. While technically a bearer is identical to a holder, the term "bearer" implies one who holds a security with no ownership information, automatically making the bearer the presumed owner.

A deep marketis one with many different buyers and sellers.

A discount loan is a loan where all the interest on it is paid at once. That is, the interest is deducted from the amount the borrower receives at the beginning of the loan.

A liquid marketis one in which securities can be bought and sold quickly and with low transaction costs.

Book entry is a certificate of ownership in a security that is maintained electronically. Rather than printing paper certificates, issuers of securities sometimes rely upon book-entries to reduce the risk of theft or destruction of the certificate.

Collateralis property or other assets that a borrower offers a lender to secure a loan.

Direct placement is selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors.

Eurodollars -United States dollar held as Eurocurrency.

Federal funds are non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve requirements. Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements.

Interest is the price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption.

London interbank bid rate, (LIBID) is the average interest rate which major London banks borrow Eurocurrency deposits from other banks. LIBID is calculated through a survey of London banks to determine the interest rate which they are willing to borrow large Eurocurrency deposits.

London interbank offer rate, (LIBOR) is an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year.

Principal - 1.The amount borrowed or the amount still owed on a loan, separate from interest. 2. The original amount invested, separate from earnings. 3. The face value of a bond.4. The owner of a private company. 5. The main party to a transaction, acting as either a buyer or seller for his/her own account and risk.

Reserve requirement is a central bank requirement that stipulates the minimum amount of reserves each bank must hold as a proportion of customer deposits and notes.