Corporate Inflation-Linked Securities

Corporate Inflation-Linked Securities

Corporate debt financing securities that offer their holders protection against fluctuations in the rate of inflation as measured by the consumer price index (CPI). The yields of these securities adjust monthly with respect to the current rate of inflation. Although they are not as common as conventional debt instruments, inflation-protected corporate debt can provide an investor with a balanced risk exposure: these securities pose all of the normal risks associated with regular corporate debt securities - such as default risk - but they remove the possibility of inflationary changes eroding their real returns.

Estimated Current Return

Estimated Current Return

The estimated return for a unit investment trust over the short term. The estimated current return is calculated by taking the estimated annual interest income from the securities of the portfolio and dividing by the maximum public offering price, net of the maximum sales charge for the trust. This measure is less exact than the estimated long-term return and is more susceptible to interest rate risk during the life of the portfolio.

Distribution Reinvestment

Distribution Reinvestment

A process whereby the distribution from a limited partnership, real estate investment trust (REIT) or other pooled investment is automatically reinvested into common units or shares in a fund, often at a discount to the current market price. Investors can set up distribution reinvestment plans with the partnership itself, or with a broker through which the units are held. Also known as a DRIP, but not to be confused with dividend reinvestment plans (also called DRIPs), which are found in many large-cap stocks and mutual funds. Most distributions are done quarterly, but some may occur on a monthly basis. Investors who participate in these programs also generally have commissions and other fees waived, making it an advantageous and affordable way to grow their investment. Meanwhile, the financial managers have a stable way to grow assets with current investors.

Taxable Preferred Securites

Taxable Preferred Securites

A type of preferred equity security that does not qualify for the dividends-received deduction for corporations of typical preferred securities, defined in Section 243 of the Internal Revenue Service (IRS) Code. Taxable preferred securities are usually junior level liabilities, and the coupons tied to them can either be fixed or variable, and for indefinite or specific maturities. As with regular preferred stocks, these securities trade like bonds with regular denominations of $25 par and $1,000 par. The dividends paid are treated as regular income instead of dividends to the investor, but receive favorable tax treatment for the issuing company. Also known as "hybrid preferred securities".

Treasury Inflation Protected Securities - TIPS

Treasury Inflation Protected Securities - TIPS

A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed. Interest on TIPS is paid semiannually. TIPS can be purchased directly from the government through the Treasury Direct system in $100 increments with a minimum investment of $100 and are available with 5-, 10-, and 20-year maturities.

Triple Net Lease

Triple Net Lease

A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name. Because the tenant is covering these costs (which would otherwise be the responsibility of the property owner), the rent charged in the triple net lease is generally lower than the rent charged in a standard lease agreement.

Closed-End Lease

Closed-End Lease

A rental agreement that puts no obligation on the lessee (the person making periodic lease payments) to purchase the leased asset at the end of the agreement. Since the lessee has no obligation to purchase the leased asset upon lease expiration, that person does not have to worry about whether the asset will depreciate more than expected throughout the course of the lease. Thus, it is argued that the closed-end leases are better for the average person.

Leveraged Lease

Leveraged Lease

A lease agreement wherein the lessor, by borrowing funds from a lending institution, finances the purchase of the asset being leased. The lessor pays the lending institution back by way of the lease payments received from the lessee. Under the loan agreement, the debtor has rights to the asset and the lease payments if the lessor defaults.

Single Stock Future - SSF

Single Stock Future - SSF

A futures contract with an underlying of one particular stock, usually in batches of 100. No transmission of share rights or dividends occur. Behaving exactly like a futures contract, an SSFs give investors increased capabilities to leverage themselves within the market. Additionally, these products, unlike most options, can be traded on margin.

Subprime Credit Card

Subprime Credit Card

A type of credit card issued to people with substandard credit scores or limited credit histories. These cards will typically carry much higher interest rates than credit cards granted to prime borrowers; they also come with extra fees and lower credit limits. Subprime credit cards are issued by both major issuers and smaller financial institutions that focus only on subprime lending.

Limit-On-Close Order

Limit-On-Close Order

A type of limit order to buy or sell shares near the market close only if the closing price is trading better than the limit price. This order is an expansion of the market-on-close order, adding to it a limit condition, which places a maximum on the entry price and minimum on the selling price. Say a trader believes that, because of increased volume, the best price he or she will receive is at the market close - the trader might then enter a market-on-close order. But if the trader does not want to face an unpredictable entry price, he or she will enter a limit-on-close order. For example, if the trader entered a buy limit-on-close order for 100 shares of ABC at $52.50 and the shares at the end of the day traded at $50, the order would be executed. If, on the other hand, the price rose to $54 right at the end of the day, the order would not be filled.

Market-With-Protection Order

Market-With-Protection Order

A type of market order that is canceled and re-submitted as a limit order if the price of the asset moves dramatically after the investor places the order. The limit on the limit order is placed at around the current market price as determined by a broker. This type of order adds a protective measure, helping the investor ensure his or her market order will not be completed at a price that is far off from the market price at the time of the order.

Subprime Credit Card

Subprime Credit Card

A type of credit card issued to people with substandard credit scores or limited credit histories. These cards will typically carry much higher interest rates than credit cards granted to prime borrowers; they also come with extra fees and lower credit limits. Subprime credit cards are issued by both major issuers and smaller financial institutions that focus only on subprime lending.