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Interest only strip (IO) |
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Interest only strip (IO)A security based solely on the interest payments from a pool of mortgages, Treasury bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop, and the value of the IO falls to zero.Interest only strip (IO) Similar MatchesEarnings before interest, taxes, depreciation, and amortization (EBITDA)Earnings before interest, taxes, depreciation, and amortization (EBITDA)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 and amortization expenses are not included in the costs. Compound interestCompound interestThe interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan. Uncovered interest parityUncovered interest parityEquality of expected returns on otherwise comparable financial assets denominated in two currencies, without any cover against exchange risk. Uncovered interest parity requires approximately that i = i* + a where i is the domestic interest rate, i* the foreign interest rate, and a the expected appreciation of foreign currency at an annualized percentage rate. Market interest rateMarket interest rateRates of interest paid on deposits and other investments, determined by the interaction of the supply of and demand for funds in the money market. Interest sensitive insurance policyInterest sensitive insurance policyA cash value life insurance policy whose insurance dividend rates vary with respect to inflation, enabling the policyholder to avoid the loss of purchasing power associated with inflation. Further SuggestionsInterest rate parity theoremMortgage interest deduction Covered Interest Rate Parity Interest parity Consumer interest open interest permanent interest bearing shares Times interest earned ratio Covered interest arbitrage reversionary interest Party in interest Interest rate ceiling Gross interest Unearned interest Interest Cap Interest payments Nominal interest rate Earnings before interest, taxes, and depreciation (EBITD) Short interest theory Covered interest rate Cash flow after interest and taxes interest cover mortgage interest deduction Effective Interest Rate Capitalized interest |
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