Across
- 3. An investment's annual income (interest or dividends) divided by the current price of the security
- 6. The lending interest rate adjusted for inflation as measured by the GDP deflator
- 11. The possibility that an investor might be unable to reinvest cash flows at a rate comparable to their current rate of return
- 13. is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default
- 14. is an interest rate applicable to a financial transaction that will take place in the future
- 18. shows that long-term U.S. Treasury debt interest rates are less than short-term interest rates
- 19. Bonds in which payment of income on the principal is related to a specific price index, usually the Consumer Price Index
- 20. Is a security that is issued for less than its par or face value
- 22. theory states that the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a liquidity premium (also referred to as a term premium) that responds to supply-and-demand conditions for that bond
- 23. Is a type of loan where the interest rate remains unchanged for the entire term of the loan or for a part of the loan term
- 25. The percentage increase in the value of an asset or investment over a specific period of time. It is calculated by taking the difference between the final and initial value of the asset, divided by the initial value, and then multiplying by 100
- 28. The probability of a decline in the value of an asset resulting from unexpected fluctuations in interest rates
- 29. is the failure to make required interest or principal repayments on a debt, whether that debt is a loan or a security
- 31. bonds with no default risk
- 32. explains why bonds of the same maturity but issued by different economic entities have different yields
Down
- 1. Is a financial term used to describe a security’s nominal or dollar value as given by its issuer. For bonds, it’s the amount paid to the holder at maturity
- 2. maps out the relationship between interest rates and the time to maturity for a given debt instrument, typically government bonds
- 3. A debt obligation with coupons attached that represent semiannual interest payments
- 4. states that current long-term rates can be used to predict short term rates of future
- 5. is the annualized return on a debt instrument based on the total payments received from the date of initial purchase until the maturation date
- 7. Measures how long it takes, in years, for an investor to be repaid a bond’s price through its total cash flows
- 8. Is the current value of a future sum of money or stream of cash flows
- 9. The movement of money into and out of a company over a certain period of time
- 10. theory sees markets for different-maturity bonds as separate and segmented
- 12. is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost
- 15. Is a percentage that describes how much is paid by a fixed-income security to the owner of that security during the duration of that bond
- 16. bonds that carry a higher risk of default than most bonds issued by corporations and governments
- 17. is the investment return an asset is expected to yield in excess of the risk-free rate of return
- 21. Is the annual rate you find on financial products, not adjusted for inflation, fees, or compounding
- 24. is the price quoted for immediate settlement on an interest rate, commodity, a security, or a currency
- 26. a line that plots the yields or interest rates of bonds that have equal credit quality but different maturity dates
- 27. Is an investment asset that pays a stated return for an infinite amount of time. An annuity with no termination date is an example of it
- 30. Values that have been adjusted for inflation, providing a more accurate representation of the purchasing power of money over time