The difference between a bank guarantee and a bond

July 7, 2024 No Comments

A: A bank guarantee is a promise from a bank or lending institution that, if a borrower defaults on repayment of a loan, the bank will cover the loss. A bond is a debt instrument in which an investor loans money to a corporation or

The difference between fixed and current assets

July 7, 2024 No Comments

A: Fixed assets, also known as property, plant and equipment (PP&E), are tangible assets that a company expects to use for more than one accounting period. They are part of the non-current assets of an entity, and are different from cash and other current assets

The Differences Between a Collateralized Debt Obligation (CDO) and an Asset Backed Security (ABS)

July 7, 2024 No Comments

A: An asset-backed security (ABS) is a security created by pooling non-mortgage assets that is then resold to investors. A collateralized debt obligation (CDO) is a complex type of ABS that can be based on non-mortgage assets, mortgage assets or both together. Understanding the Differences

The interest rate used to define the “risk-free” rate of return is the

July 7, 2024 No Comments

A: a. discount rate. b. 90-day Treasury bill rate. c. five-year Treasury note rate. d. federal funds rate. Answers: b The 90-day Treasury bill rate is used because there is no credit risk, and the maturity is so short that there is no liquidity or

How should I estimate my income from fixed sources like bonds, CDs and stocks?

July 7, 2024 No Comments

A: Once investors know the approximate due dates and yields of their holdings, they can do a few simple calculations in a spreadsheet or other program to calculate thier income. Here is a breakdown of the due dates for some common fixed-income sources: Bonds &

If caught, what implications does money laundering have on a business?

July 7, 2024 No Comments

A: Money laundering is a multibillion dollar industry that impacts legitimate business interests by making it much more difficult for honest businesses to compete in the market since money launderers often provide products or services at less than market value. Where a financial institution or

If I buy a $1,000 bond with a coupon of 10% and a maturity in 10 years, will I receive $100 each year regardless of what the yield is?

July 7, 2024 No Comments

A: Simply put: yes, you will. The beauty of a fixed-income security is that the investor can expect to receive a certain amount of cash, provided the bond or debt instrument is held until maturity (and its issuer does not default). Most bonds pay interest

Interest Rate Risk Between Long-Term and Short-Term Bonds

July 7, 2024 No Comments

A: The answer to this question lies in the fixed income nature of bonds and debentures, often referred to together simply as “bonds.” When an investor purchases a given corporate bond, for instance, they are actually purchasing a portion of a company’s debt. This debt

How does the money from the interest on my bond get to me?

July 7, 2024 No Comments

A: When you buy a regular coupon bond, you are entitled to a coupon, which is typically paid at regular intervals, and the face value of the bond (the amount you initially invested), which is typically paid upon maturity. Most coupons are paid on a

Is variance good or bad for stock investors?

July 7, 2024 No Comments

Variance is neither good nor bad for investors in and of itself. However, high variance in a stock is associated with higher risk, along with a higher return. Low variance is associated with lower risk and a lower return. High variance stocks tend to be

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