An amortized loan is a loan that is repaid through regular payments including both principal and interest over a specified period.
A loan in which the repayment is made in more than one installment, as opposed to a bullet loan where the repayment is made in a single lump sum at the end of the term.
Annual Debt Service refers to the required annual principal and interest payments for a loan. In corporate finance, it is the cash required in a year for payments of interest and current maturities of principal on outstanding debt.
A bearer bond, also known as a coupon bond, is a type of debt security that is not registered in the name of the owner. Instead, it is payable to whoever holds it (i.e., the bearer). Bearer bonds come with attached coupons that the bondholder must clip and present for interest payments.
A biweekly loan is a mortgage that requires principal and interest payments at two-week intervals. Each payment is exactly half of what a monthly payment would be. Over a year's time, the 26 payments are equivalent to 13 monthly payments, leading to faster amortization than a standard monthly payment mortgage.
Borrowed capital refers to funds obtained by a firm through loans or other forms of debt to finance its operations or investments. Compared to equity financing, borrowed capital involves a fixed cost in terms of interest payments.
Borrowing costs refer to the expenses incurred by an organization when it borrows money. These costs typically include interest payments and may also encompass arrangement fees and intermediary fees. Depending on accounting standards and conditions, they can either be expensed immediately or capitalized as an asset.
A loan in which the whole of the principal is repaid in a single final payment known as a 'bullet', although interest may be paid in interim payments. Compare with an amortizing loan.
A bunny bond is a specialized financial instrument that gives bondholders the option to receive interest payments or additional bonds, commonly referred to as 'coupon bonds.' This flexible feature makes bunny bonds an appealing choice for investors seeking growth through compounding interest.
The contract rate, also known as the face interest rate, refers to the interest rate stated on a financial instrument, such as a bond or loan, which dictates the amount of interest the issuer will pay periodically to the holder.
A bond issued with detachable coupons that need to be presented to a paying agent or the issuer to receive semiannual interest payments. These are bearer bonds, meaning the interest is payable to whoever holds the coupon.
Debt capital refers to borrowed funds that a firm utilizes to support its business operations, growth, or investment projects. These funds come with the obligation to pay back with interest and can be sourced from various lenders, such as banks, bond investors, or other financial institutions.
Debt service refers to the cash required in a given period, usually one year, for payments of interest and current maturities of principal on outstanding debt. This includes obligations from mortgage loans, corporate bond issues, and government bonds. Understanding debt service is crucial for assessing the financial stability and repayment ability of an individual or entity.
The due date is a fixed time when a payment for debt, tax, interest, or other financial obligation is required.
A financial expense is an outlay of funds recorded in a company's financial records, rather than cost records. Common examples include interest paid on borrowed funds and directors' fees.
The Fixed-Charge Coverage Ratio measures a firm's ability to meet its fixed financial obligations, including interest payments on long-term debt and other contractual commitments, relative to its earnings before interest and taxes.
Fixed-interest securities provide defined interest payments and are considered lower-risk investments. Examples include gilt-edged securities, bonds, preference shares, and debentures.
A fully amortized loan is one in which payments of both interest and principal are made regularly according to a set schedule, which are sufficient to liquidate the loan over its term; it is essentially self-liquidating.
Index-linked gilt refers to a type of government bond issued by the UK in which both the interest payments and the redemption value are adjusted in line with inflation, as measured by the Retail Price Index (RPI).
Investment interest expenses are interest payments made on loans used to purchase investments such as stocks, bonds, and undeveloped land. These expenses can be tax-deductible but are limited to the net investment income received.
Loan amortization refers to the reduction of debt by scheduled, regular payments of principal and interest sufficient to repay the loan at maturity. It is a fundamental concept in financial planning, allowing borrowers to understand how their loan is repaid over time.
Loan capital refers to the funds borrowed by an organization to finance its operations, subject to the payment of interest over the life of the loan, which is repaid at the end of the loan term.
A Loan Creditor is an individual or institution that provides financing to a business or individual, thereby becoming entitled to repayment of the principal amount along with interest.
Long-term debt, also known as long-term liability, refers to loans and financial obligations that are due in more than a year. These obligations often include bonds and notes payable, with periodic interest payments and the principal due upon maturity.
Understanding the net investment in a lease involves considering the total amount of funds that a lessor has invested in a leased asset. This includes the cost of the asset, received grants, rental payments, taxation implications, residual values, and various interest payments and receipts.
A type of debt instrument for which the issuer typically has neither the right nor the obligation to repay the principal amount of the debt. Interest is usually paid at a constant rate or at a fixed margin over a benchmark, such as the London Inter Bank Offered Rate (LIBOR).
Redemption yield, also known as yield to maturity, is a measure of the annual return an investor can expect to earn if a bond is held until maturity. It factors in both the bond's current market price and its interest payments.
A Self-Amortizing Mortgage is a mortgage designed to be paid off entirely through regular principal and interest payments over the loan term, without requiring a large lump sum payment at the end.
A multifaceted concept in finance and legal agreements, referring to either the period during which conditions of a contract will be carried out or the specific provisions within an agreement.
