What is a Treasury Bond? A Treasury bond (or T-Bond) is a long-term government debt security issued by the U.S. Treasury Department with a fixed rate of return. Maturity periods range from 20 to 30 years. T-bond holders receive semi-annual interest payments (called coupons) from inception until maturity, at which point the face value of…
What is Arc Elasticity? Arc elasticity is the sensitivity of one variable to another between two points on a curve. It is often used in the context of the law of demand to measure the inverse relationship between price and demand. Arc elasticity measures the responsiveness of demand to price changes over a range of values….
What is a Quant Fund? A quant fund (short for quantitative fund) is an investment fund that uses mathematical and statistical techniques together with automated algorithms and advanced quantitative models to make investment decisions and execute trades. There is no human intellect and judgment involved in investment selection and related decisions. Quant funds operate using…
What is the Par Yield Curve? The par yield curve is a graphical representation that shows the yield to maturity (YTM) for various types of bonds. Often, it is used to examine if treasury bonds are a strong investment in current market bond conditions. It gives the single discount rate that would be used to…
What is a Jumbo CD? A jumbo CD is similar to a conventional CD although the former generally requires a higher deposit and accrues interest at a higher rate. A CD is a certificate of deposit that is offered by banks for money deposited into a specific account that offers an interest rate in exchange…
What is an Internal Audit? An internal audit is performed by companies to evaluate and provide objective assurance that an organization’s internal controls, corporate governance, and accounting processes are operating effectively. They provide an introspective look into the current state of things and analyze what can be done better or what lessons can be learned…
What is an Interest-Only Mortgage? An interest-only mortgage is a unique type of mortgage that only requires the borrower to make regular interest payments on a mortgage without paying any of the principal amount. The payment terms usually last for a specified period, with a principal to be paid off at a later date in…
What is a Qualified Annuity? A qualified annuity refers to a retirement savings plan that is funded with pre-tax dollars, with tax-deferred features, and is approved by the Internal Revenue Service (IRS). IRS insists that all qualified plans must satisfy the Internal Revenue Code in form and operation. All funds deposited into a qualified annuity…
What are Interest Rate Derivatives (IRD)? Interest rate derivatives (IRD) are a derivative product that is based on a benchmark interest rate or group of interest rates. They are used by traders and borrowers to hedge their positions or speculate on movements in the market. Interest rate derivatives are often called IRDs and are subclassified…
What was the Savings and Loan Crisis? The savings and loan crisis refers to the collapse of 1,043 out of 3,234 savings and loan associations (S&Ls) in the United States during the 1980s and 1990s. The S&L crisis was considered to be one of the most devastating failures of the banking industry in the United…
