What is a High-Yield Bond? A high-yield bond is a bond that carries a relatively higher interest rate as a result of its lower credit rating, compared to investment-grade bonds. It is a corporate bond with a credit rating below Baa3 from Moody’s or BBB- from Standard and Poor’s (S&P) and Fitch. High-Yield Bonds and…
What is the High-Water Mark? High-water mark is the highest level of value reached by an investment account or portfolio. It is often used as a threshold to determine whether a fund manager can gain a performance fee. Investors benefit from a high-water mark by avoiding paying performance-based bonuses for poor performance or for the…
What is Technical Bankruptcy? Technical bankruptcy refers to a situation where an individual or entity (such as a corporation) is financially insolvent – has defaulted on debt payments – but neither they nor their creditor(s) has yet moved to file formal bankruptcy. In other words, they are effectively bankrupt, from a practical point of view,…
What is the Security Market Line (SML)? The security market line (SML) is a visual representation of the capital asset pricing model (CAPM). SML is a theoretical representation of the expected returns of assets based on systematic, non-diversifiable risk. Idiosyncratic risk is not included in the security market line. More broadly, the SML plots the…
What is Seigniorage? Seigniorage refers to the profit made by a government when it issues currency. It is simply the difference in the value of the currency versus the cost of producing it. For example, if a central government bank produces a bill worth $10 and it only costs $5 to make it, there is…
What is a Scatter Plot? A scatter plot is a chart type that is normally used to observe and visually display the relationship between variables. The values of the variables are represented by dots. The positioning of the dots on the vertical and horizontal axis will inform the value of the respective data point; hence,…
What are High Street Banks? High street banks are large retail banks that offer daily banking services (e.g. deposit and checking accounts, cash deposits and withdrawals, and credit facilities) to the public and small to mid-sized businesses. They are banks with many branches spreading into multiple cities and towns. Understanding High Street Banks The term “high…
What is the United States Dollar (USD)? The United States Dollar refers to the national currency of the U.S and is represented by the ISO code USD and is often abbreviated as US$. It is considered a standard currency and is the most widely used currency in international transactions. Additionally, USD is used as the…
What is the Turkish Lira (TRY)? The Turkish lira is the official currency of Northern Cyprus and Turkey. The new Turkish lira is the second issue that was introduced at the beginning of 2005. It is the same as 1 million of the previous Turkish lira. During the 2005 revaluation, the legislation deducted the last…
What is the Indian Rupee (INR)? The Indian rupee refers to India’s national currency and is represented by ISO code INR. It is regulated by the Reserve Bank of India (RBI), the country’s central bank. The Indian rupee is named after the “rupiya,” a silver coin issued for the first time in the 16th century….
