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Interest on interest |
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Interest on interestInterest earned on reinvestment of each interest payment on money invested. See: compound interest.Interest on interest Similar MatchesInterest expenseInterest expenseInterest expense is the money the corporation or individual pays out in interest on loans. Interest coverInterest coverInterest cover measures the amount of interest paid by a company on its borrowings against its operating profit in the same period.The ratio shows the impact of gearing on a company's profit and loss account. If the figure is low, a small reduction in operating profits, or a rise in the cost of borrowing, can wipe out pre-tax profits. To calculate interest cover, divide the operating profits by the interest paid.Example: a company which has profits of £4m and which pays net interest of £1m, has interest cover of 4. Open interestOpen interestThe total number of derivatives contracts traded that have not yet been liquidated either by an offsetting derivative transaction or by delivery. Related: Liquidation. Stepped interest debenture stocksStepped interest debenture stocksA debenture stock where the rate of interest payable to lenders is increased in stages over the initial life until a certain rate is reached. Thereafter, the rate remains fixed until the redemption date. This type of debenture is advantageous to an investment trust in that interest payments will be lower than the norm in the initial years (whilst the trust consolidates its growth) and above the norm in the later years (when it will be expected that the trust's assets can afford the extra interest). Deferred 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. Further SuggestionsMatured noninterest bearing debtInterest Exact interest gross interest reversionary interest Equilibrium rate of interest Interest rate ceiling prevailing interest rate Gross interest Short term interest rates Interest in Arrears Interest rate futures contract Noninterest bearing note Compound interest Interest sensitive stock Applied or nominal interest rate Interim interest Nominal interest rate Interest tax shield bond interest yield Interest parity Covered Interest Rate Parity Effective annual interest rate Interest rate open interest |
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