Bank discount basis

Similar financial terms

Bankrupt
This occurs when someone is unable to pay their debts and creditors move to secure what monies they can from any existing assets (property) held by that person. All property is then administered by the official receiver. A bankrupt - if still able to work - will only receive an allowance to live on after payments are made to creditors

European Central Bank (ECB)
The Central Bank for the new European Monetary Union.

Agency bank
A form of organization commonly used by foreign banks to enter the U.S. market. An agency bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent bank.

World Bank
A multilateral development finance agency created by the 1944 Bretton Woods, New Hampshire negotiations. It makes loans to developing countries for social overhead capital projects, which are guaranteed by the recipient country.

Wholesale mortgage banking
The purchasing of loans originated by others, with the servicing rights released to the purchaser.

Prepackaged bankruptcy
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or reorganization and then file it along with the bankruptcy petition.

PIBOR (Paris Interbank Offer Rate)
The deposit rate on interbank transactions in the Eurocurrency market quoted in Paris.

Money center banks
Banks that raise most of their funds from the domestic and international money markets , relying less on depositors for funds.

Merchant bank
A British term for a bank that specializes not in lending out its own funds, but in providing various financial services such as accepting bills arising out of trade, underwriting new issues, and providing advice on acquisitions, mergers, foreign exchange, portfolio management, etc.

Legal bankruptcy
A legal proceeding for liquidating or reorganizing a business.

Bank anticipation notes (BAN)
Notes issued by states and municipalities to obtain interim financing for projects that will eventually be funded long term through the sale of a bond issue.

Bank draft
A draft addressed to a bank.

Bank line
Line of credit granted by a bank to a customer.

Bank wire
A computer message system linking major banks. It is used not for effecting payments, but as a mechanism to advise the receiving bank of some action that has occurred, e.g. the payment by a customer of funds into that bank's account.

Banker's acceptance
A short-term credit investment created by a non-financial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts from face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions.

Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it now monitors and collects data on international banking activity and promulgates rules concerning international bank regulation.

Bankruptcy
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from the stockholders to the bondholders.

Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning.

Bankruptcy risk
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.

Bankruptcy view
The argument that expected bankruptcy costs preclude firms from being financed entirely with debt.

Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value payments operated by a group of major banks.

Consortium banks
A merchant banking subsidiary set up by several banks that may or may not be of the same nationality. Consortium banks are common in the Euromarket and are active in loan syndication.

Basel Committee on Banking Supervision
A committee that meets under the auspices of the Bank for International Settlements in Basel, Switzerland to set bank regulatory standards.

Federal Home Loan Bank Act of 1932
Law that created the Federal Home Loan Bank Board and a network of regional home loan banks.

Federal Home Loan Bank Board (FHLBB)
The FHLBB is an agency responsible for regulating and controlling savings and loan institutions, superseded by FIRREA in 1989.

Joint stock bank
A joint stock bank is one operated by a joint stock or limited company. It is therefore a bank with limited liability. This is in contrast to a private bank which may be owned by a family or individual. All commercial banks in the United Kingdom are joint stock banks.

International Financial and Banking Centre (IFC)
A country identified as being a tax haven.

Discount
A value lower than par value; the decreased market value of a bond resulting from its intrest rate and safety rating.

Discount rate
The loan intrest rate charged by the Federal Reserve Bank to its member banks.

Accretion (of a discount)
In portfolio accounting, a straight-line accumulation of capital gains on discount bond in anticipation of receipt of par at maturity.

Pure-discount bond
A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.

Original issue discount debt (OID debt)
Debt that is initially offered at a price below par.

Cash discount
An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days.

Discount broker
A brokerage house featuring relatively low commission rates in comparison to a full-service broker.

Basis point
One hundredth of 1 percent (0.01%). In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 10% is 50 basis points greater than an interest rate of 10.5%.

Agency basis
A means of compensating the broker of a program trade solely on the basis of commission established through bids submitted by various brokerage firms. agency incentive arrangement. A means of compensating the broker of a program trade using benchmark prices for issues to be traded in determining commissions or fees.

Price value of a basis point (PVBP)
Also called the dollar value of a basis point, a measure of the change in the price of the bond if the required yield changes by one basis point.

Basis
Regarding a futures contract, the difference between the cash price and the futures price observed in the market. Also, it is the price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold.

Basis price
Price expressed in terms of yield to maturity or annual rate of return.

Basis risk
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.

Bond-equivalent basis
The method used for computing the bond-equivalent yield.

Adjusted basis
The cost of property after adjustment for certain deductions or additions as permitted or prescribed by the U.S. tax laws. In some instances, the basis of property is derived from the basis of other parties - such as a donor or an estate.