What is Call Protection? Call protection refers to protection from investment risk to bond investors that exists by limiting the conditions under which a bond issuer may elect to call, i.e., redeem bonds before a bond’s stated maturity date. A call protection provision in a bond’s indenture, which outlines all the terms of the bond,…
What is a Call Ratio Back Spread? A call ratio back spread is a bullish options trading strategy that involves both buying and selling call options. The strategy is designed to maximally profit from a significant upward movement in the price of the underlying stock in the near term. The combination of options bought and…
What is a Call Provision? A call provision refers to a clause – essentially, an embedded option – in a bond purchase contract that gives the bond’s issuer the right to redeem the bond early, before its maturity date. Call provisions may also exist with preferred stock shares but are most commonly associated with bonds….
What is a Call Report? A call report is a quarterly report known as the Consolidated Report of Condition and Income that all commercial banks and similar financial institutions in the United States are required to file at the end of each calendar quarter. The report, also referred to as the RC report, is required…
What is the Asian Infrastructure Investment Bank (AIIB)? The Asian Infrastructure Investment Bank (AIIB) is an international development bank with the stated goal of improving social and economic conditions throughout Asia. The creation of the AIIB was led by China, which maintains a controlling interest in the bank’s operations. The AIIB is headquartered in Beijing,…
What is Call Risk? Call risk is the risk for a bond buyer that exists in purchasing a callable bond. The chance that the bond may be redeemed (i.e., called) before its scheduled maturity date represents an investment risk for the buyer, as it can result in them earning less from their bond purchase investment…
What is the Effective Interest Method? The Effective Interest Method is a technique used for amortizing bonds to show the actual interest rate in effect during any period in the life of a bond before maturity. It is based on the bond’s book value at the beginning of any given accounting period. The effective interest…
What is the Comorian Franc (KMF)? The Comorian Franc (KMF) is the official currency of the island nation, the Union of Comoros, which is located in the Indian Ocean, near Madagascar and Mozambique. Originally pegged to the French franc, the Comorian franc is, as of 2020, pegged to the euro. The franc of Comoros is…
What is Early Exercise? Early exercise refers specifically to options contracts. The early exercise of an options contract refers to the process of buying and/or selling shares of a particular stock that include the underlying terms of a corresponding options contract before its expiration date. How It Works The underlying terms of an options contract…
What is a Direct Quote? A direct quote is an exchange rate quotation in the foreign exchange market. It quotes a fixed unit of a foreign currency against a variable amount of the domestic currency. In other words, a direct quote depicts the amount of foreign currency that can be bought for a certain unit…
