|
|
Exact interest |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Exact interestInterest paid based on the basis of a 365-day/year schedule by a bank or other financial institution as opposed to a 360-day basis (ordinary interest). Difference can be material when large principal sums of money are involved.Exact interest Similar MatchesDeferred interest bondDeferred interest bondA bond that pays interest at a later date, usually in one lump sum, effectively reinvesting interest earned over the life of the bond. See: Zero coupon bond. Earnings before interest, taxes, and depreciation (EBITD)Earnings before interest, taxes, and depreciation (EBITD)A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation expenses are not included in the costs. Equilibrium rate of interestEquilibrium rate of interestThe interest rate that clears the market. Also called the trade-clearing interest rate. Add on interestAdd on interestThe interest a borrower pays on the principal for the duration of the loan. Permanent interest bearing sharesPermanent interest bearing sharesPibs are shares issued by building societies which pay a fixed rate of interest rather than a dividend. For the building societies concerned, they are a way of raising money without demutualising. As an investor, the rate of interest you receive will be the rate in effect at the time you bought your shares. Even though the rate on the PIB may change, your income will always be the same - the rate at the time you bought. It is important to note that the % rate applies to the original issue price of the PIB, not to the current share price. So if the interest rate is 10% when you buy and the original issue price is 100p, the annual interest will be 10p even if the current share price is 150p. Although Pibs are 'safe' in the sense that there is a quantifiable, regular and certain income, there is a risk of capital erosion if the share price falls below what you paid. On the plus side, if you sell your Pibs and make a capital gain, there is no CGT to pay. One of the disadvantages of Pibs is that minimum investment levels can be quite high (£20,000+) and liquidity is quite low. There aren't many building societies left to issue new Pibs, and trading in existing Pibs is quite low. Further SuggestionsShort interest theoryInterest rate parity line (IRP) Interest parity Gross interest Consumer interest Interest Cap Interest rate ceiling Future Interest Lessees Interest interest rate swap Amortizing interest rate swap Ordinary interest Risk Free Interest Rate bond interest yield Interest only strip (IO) Discount Interest Best interests of creditors test Party in interest Net interest cost (NIC) interest interest cover interest payable Spot interest rate Matured noninterest bearing debt Add on Interest |
|
|
|