What Is a Discount Margin—DM? A discount margin (DM) is the average expected return of a floating-rate security (typically a bond) that’s earned in addition to the index underlying, or reference rate of, the security. The size of the discount margin depends on the price of the floating- or variable-rate security. The return of floating-rate…
Hedge funds are pooled investments that use a variety of strategies in an effort to generate outsized profits for their investors. The hedge fund manager decides what to buy and sell, and there are few restrictions on their choices. Assets held in the fund can include stocks, bonds, derivatives, commodities, and currencies, among other choices….
What Is a Bed and Breakfast Deal? In investing, a bed and breakfast deal is a practice in the United Kingdom whereby the holder of a security sells it at the end of the day on the last day of the financial year and buys it back the next morning. The purpose of a bed…
What Is a Feeder Fund? A feeder fund is one of several sub-funds that put all of their investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading. This two-tiered investment structure of a feeder fund and a master fund is…
What Is Detection Risk? Detection risk is the chance that an auditor will fail to find material misstatements that exist in an entity’s financial statements. These misstatements may be due to either fraud or error. Auditors make use of audit procedures to detect these misstatements. However, because of the nature of audit procedures, some detection risk…
What Is a Target-Risk Fund? A target-risk fund is a type of investment fund with a portfolio asset allocation that holds a diversified mix of stocks, bonds, and other investments to create a desired risk profile. The fund manager of a target-risk fund is responsible for overseeing all the securities owned within the fund to…
Refinance applications jump 26% in the past week Mortgage applications climb 15% Refinance applications soared 26% last week compared with the week prior, according to the Mortgage Bankers Association. Total mortgage applications were up 15.1%. These figures are expected to rise after the Fed cut interest rates by 0.50 % and 10-Year U.S. Treasury yields fell…
The net asset value (NAV) is one of the best metrics to use when assessing the value of a real estate investment trust (REIT). A REIT is a security traded like regular stocks that invests solely in real estate holdings, properties, or mortgages. The primary function of a REIT is to manage clusters of properties…
Short- and long-term bond yields have crashed to all-time lows in reaction to the coronavirus slowdown and the Federal Reserve’s 50-basis-point rate cut. Low yields will encourage risk taking through equities and real estate, but they’re unlikely to restart the slumping economy because money is already “cheap” and employers have entered a defensive mode that…