Net interest margin (NIM)

Similar financial terms

Safety-net return
The minimum available return that will trigger an immunization strategy in a contingent immunization strategy.

Payments netting
Reducing fund transfers between affiliates to only a netted amount. Netting can be done on a bilateral basis (between pairs of affiliates), or on a multi-lateral basis (taking all affiliates together).

Netting out
To get or bring in as a net; to clear as profit.

Netting
Reducing transfers of funds between subsidiaries or separate companies to a net amount.

Net worth
Common stockholders' equity which consists of common stock, surplus, and retained earnings.

Net working capital
Current assets minus current liabilities. Often simply referred to as working capital.

Net salvage value
The after-tax net cash flow for terminating the project.

Net profit margin
Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.

Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs should be rejected.

Net present value of future investments
The present value of the total sum of NPVs expected to result from all of the firm's future investments.

Net present value of growth opportunities
A model valuing a firm in which net present value of new investment opportunities is explicitly examined.

Net present value (NPV)
The present value of the expected future cash flows minus the cost.

Net period
The period of time between the end of the discount period and the date payment is due.

Net operating margin
The ratio of net operating income to net sales.

Net operating losses
Losses that a firm can take advantage of to reduce taxes.

Net lease
A lease arrangement under which the lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the asset in good working condition.

Net investment
Gross, or total, investment minus depreciation.

Net income
The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

Net float
Sum of disbursement float and collection float.

Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the financing cost exceeds the yield earned.

Net errors and omissions
In balance of payments accounting, net errors and omissions record the statistical discrepancies that arise in gathering balance of payments data.

Net change
This is the difference between a day's last trade and the previous day's last trade.

Net cash balance
Beginning cash balance plus cash receipts minus cash disbursements.

Net book value
The current book value of an asset or liability; that is, its original book value net of any accounting adjustments such as depreciation.

Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the total impact of leverage on firm value in the capital market imperfections view of capital structure.

Net assets
The difference between total assets on the one hand and current liabilities and noncapitalized longterm liabilities on the other hand.

Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.

Net advantage to merging
The difference in total post- and pre-merger market value minus the cost of the merger.

Net advantage to leasing
The net present value of entering into a lease financing arrangement rather than borrowing the necessary funds and buying the asset.

Net advantage of refunding
The net present value of the savings from a refunding.

Net adjusted present value
The adjusted present value minus the initial cost of an investment.

Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-term debt) are translated at the current rate while non-monetary items (e.g. inventory, fixed assets, and long-term investments) are translated at historical rates.

Monetary policy
Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.

Monetary gold
Gold held by governmental authorities as a financial asset.

Cabinet security
A stock or bond listed on a major exchange with low daily traded volume.

Monetary neutrality
A proposition that in the long run, a percentage rise in the money supply is matched by the same percentage rise in the price level, leaving unchanged the real money supply and all other economic variables such as interest rates.

This theory, a core belief of classical economics, was first put forward in the 18th century by David Hume. He set out the classical dichotomy that economic variables come in two varieties, nominal and real, and that the things that influence nominal variables ...

Net national product
The technical term for national income, it is GNP minus capital consumption.

High Net Worth (HNW) Person
An individual with more than $1,000,000 in liquid assets to manage.

Interest-rate risk on bonds
The price of a typical bond will change in the opposite direction from a change in interest rates. As interest rates rise, the price of a bond will fall; as interest rates fall, the price of a bond will rise. The actual degree of sensitivity of a bond’s price to changes in market interest rates depends on various characteristics of the issue maturity, coupon and special provisions.

Accrued interest
Interest earned but not yet due and payable. In the context of bond, it is the next coupon to be paid multiplied by the time elapsed since the last payment date and divided by the total coupon period.

Zero-coupon interest rate
The interest rate that would be earned on a bond that provides no coupons.

Term structure of interest rates
The relationship between interest rates and their maturities.

Fixed interest securities
Fixed interest securities relates to bonds, bills, stocks and debentures which offer a fixed rate of interest per period. The purchaser buys the income stream and the seller receives loan.

Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates rise (decline).

True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate required to provide an identical return assuming a coupon-bearing instrument of like maturity that pays interest in arrears.

Times-interest-earned ratio
Earnings before interest and tax, divided by interest payments.

Stated annual interest rate
The interest rate expressed as a per annum percentage, by which interest payment is determined.

Spot interest rate
Interest rate fixed today on a loan that is made today.

Simple interest
Interest calculated only on the initial investment.

Short interest
This is the total number of shares of a security that investors have borrowed, then sold in the hope that the security will fall in value. An investor then buys back the shares and pockets the difference as profit.

Real interest rate
The rate of interest excluding the effect of inflation; that is, the rate that is earned in terms of constant-purchasing-power dollars. Interest rate expressed in terms of real goods, i.e. nominal interest rate adjusted for inflation.

Rate of interest
The rate, as a proportion of the principal, at which interest is computed.

Pooling of interests
An accounting method for reporting acquisitions accomplished through the use of equity. The combined assets of the merged entity are consolidated using book value, as opposed to the purchase method, which uses market value. The merging entities' financial results are combined as though the two entities have always been a single entity.

Open interest
The total number of derivative contracts traded that not yet been liquidated either by an offsetting derivative transaction or by delivery.

Nominal interest rate
The interest rate unadjusted for inflation.

Minority interest
An outside ownership interest in a subsidiary that is consolidated with the parent for financial reporting purposes.

Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered on a comparable-maturity Treasury security that was most recently issued ("on-the-run").

Best-interests-of-creditors test
The requirement that a claim holder voting against a plan of reorganization must receive at least as much as he would have if the debtor were liquidated.

Capitalized interest
Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time.

Cash flow after interest and taxes
Net income plus depreciation.

Compound interest
Interest paid on previously earned interest as well as on the principal.

Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges his resulting foreign exchange risk by selling the proceeds of the investment forward for dollars.

Separate Trading of Registered Interest (STRIPS)
Separate Trading of Registered Interest and Principal Securities (STRIPS) are securities that have their periodic interest payments separated from the final maturity payment and the two cash flows are sold to different investors.

Nominal rate of interest
The annual return form lending money expressed as a percentage, without having taken account of the rate of inflation.

Variation margin
The variation margin is an extra margin required to bring the balance in a margin account up to the initial margin when there is a margin call.

Gross margin
The percentage of gross profit (sales minus direct costs) to sales, which should remain fairly consistent when sales rise or fall.

After-tax profit margin
The ratio of net income to net sales.

Profit margin
Indicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage.

Original margin
The margin needed to cover a specific new position.

Operating profit margin
The ratio of operating margin to net sales.

Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.

Marginal
Incremental.

Margin requirement (Options)
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intra-day price changes.

Margin of safety
With respect to working capital management, the difference between (a) the amount of longterm financing, and (b) the sum of fixed assets and the permanent component of current assets.

Margin call
A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance

Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

Margin
This allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes.

Maintenance margin requirement
A sum, usually smaller than -but part of the original margin, which must be maintained on deposit at all times. If a customer's equity in any futures position drops to, or under, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level.

Before-tax profit margin
The ratio of net income before taxes to net sales.

Buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares themselves as collateral.

Contribution margin
The difference between variable revenue and variable cost.

Equitize a Margin Call
An event whereby a previously unsatisfied margin call is eliminated by an effective transfer of ownership. In 1998, Long Term Capital Management transfered a portion of ownership to its creditors. In some respects, it was a debt for equity swap.

Variation Margin
Payment made on a daily or intraday basis by a clearing member to the clearing organization based on adverse price movement in positions carried by the clearing member, calculated separately for customer and proprietary positions.

Variance minimization approach to tracking
An approach to bond indexing that uses historical data to estimate the variance of the tracking error.

Minimum-variance portfolio
The portfolio of risky assets with lowest variance.

Minimum-variance frontier
Graph of the lowest possible portfolio variance that is attainable for a given portfolio expected return.

Minimum purchases
For mutual funds, the amount required to open a new account (Minimum Initial Purchase) or to deposit into an existing account (Minimum Additional Purchase). These minimums may be lowered for buyers participating in an automatic purchase plan

Minimum price fluctuation
Smallest increment of price movement possible in trading a given contract. Also called point or tick. The zero-beta portfolio with the least risk.

Societe Anonyme (SA) or Sociedad Anonima (SA)
A Societe Anonyme is a limited liability corporation established under French Law. Requires a minimum of seven shareholders. In Spanish speaking countries, it is known as the Sociedad Anonima. Important characteristic of both is that the liability of the shareholder is limited up to the amount of their capital contribution.