FALLEN ANGEL

Fallen Angel

FALLEN ANGEL

What Is Fallen Angel The fallen angel is a term used in finance to describe an organization that was given an investment-grade status but due to its declining financial condition, the organization had been reduced to junk bond status. The fallen angel is also used to describe stocks whose price has been reduced drastically from the all-time high position. (more…)
Money market funds

Money Market Funds

Money Market Funds

Money market funds are short-term debt funds that invest in highly liquid,  near-term instruments such as cash and cash equivalent securities, high credit rating debt-based securities with short-term maturities. These include debt funds that lend up to a period of 1 year. Money market funds are proposed so that financial advisors can generate high returns and liquidity while taking the low risk. A high loan period generally comes with higher returns. They are also referred to as market mutual funds. (more…)
Gilt-Edged Securities

Gilt-Edged Securities

Gilt-Edged Securities

Gilt-edged securities are high-grade bonds that are issued by some national governments and private organizations issue to generate revenue. As the name suggests, gilt-edged securities refer to high-quality items whose value remains more or less constant over time.

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EXCHANGE TRADED NOTES

Exchange Traded Notes

Exchange-Traded Notes

Exchange-traded notes also known as ETN belong to a different category of debt instruments like senior, unsubordinated and unsecured debt. ETN is issued by financial institutions or entities like banks. Generally, they are held till maturity but if the investor wants, he can sell them anytime. The decision depends on the investor's will. One of the drawbacks of investing in ETN is the investor is exposed to the possibility of credit risk. However, the returns earned by an investor are associated with the stock index as the price of ETN fluctuates like the price of a stock. An investor must understand its working procedure, features, benefits as well as the risks associated while investing in ETN. (more…)
Floating Rate Note

Floating Rate Note

Floating Rate Note

A floating-rate note is a debt instrument with a variable interest cost. The financing cost for an FRN is attached to a benchmark rate. Benchmarks incorporate the U.S. treasury note rate, the Federal Reserve funds rates known as the Fed funds---the London Interbank Offered Rate (LIBOR). The rate is changed month to month or quarterly corresponding to the benchmark. The maturity period of FRN’s change however is commonly in the scope of two to five years. These notes are regularly traded over-the-counter. (more…)
CMO vs CDO

CMO vs CDO

CMO vs CDO

There are several product categories within the Investment Bank and one of them is the Structured Finance Category.  It is a complex method of financing that aims to reduce significant risks associated with complex assets. These instruments are designed to meet the unique requirements of an investor, depending on the risk tolerance, with a variation of customized assets. (more…)
Debt Issue

Debt Issue

Debt Issue

A Debt Issue is a financial obligation that allows the issuer to rain funds by promising the issuer to repay the lender at a certain point in the future which will be in accordance with the term of the contract. A debt issue is a fixed corporate or government obligation such as a bond or a debenture. These also include notes, certificates, mortgages, leases, or other agreements between the issuer or borrower, and the lender. (more…)
Debt Restructuring

Debt Restructuring

Debt Restructuring

Whenever a company faces business and profitability disturbances, it can be a challenge to attain the desired capital structure. In such situations, there may be a need for refinancing or rescheduling, since passive shareholders may become activists and conventional capital market opportunities may be restricted. (more…)
Non-Performing Asset

Non-Performing Asset

Non-Performing Asset

When a borrower is unable to repay the money lent by a lender, such a type of the loan becomes non-performing in the accounts of financial firms. It is also not certain if a lender will receive the money loaned to the borrower. They are the banks' investments that don't offer any returns. (more…)
Hybrid Securities

Hybrid Securities

Hybrid Securities

What are Hybrid Securities? Hybrid securities are a group of tradable investment instruments which combine the features of two or more type of securities, usually both equity and debt. These securities tend to give higher returns than the fixed income securities such as bonds, but lower returns than the variable income securities such as stocks. The security will have the assured payment feature of the bond, while at the same time it will have the opportunity for capital appreciation of the stock. (more…)