A mortgage income bond, normally tax-free for investors and secured by the monthly payment on a large group of homemade mortgages, is issued by a state or local housing authority. The revenue of these bonds usually focuses on assisting homebuyers with special funding schemes for the first time. These bonds are often secure for investors …
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LRB’s or Lease Revenue Bonds are state-borne or local government tax-exempt bonds with income from land leases, public facilities, and transportation assets, including parking facilities, light rail transits, water, and wastewater treatment facilities, and many other public amenities. LRB’s include tax-exempt bonds. A specific source of income thus backs the revenue bonds that finance projects …
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Two parts – general obligations and revenue bonds – are the ones in which municipal bonds can usually be categorized. General obligation, or GO bonds, are guaranteed by the issuing municipality’s general revenue, including tax. In contrast, revenue bonds are secured by specific sources of revenue, such as toll road revenue, hospital revenue, or the …
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A vertical spread option is a complex derivate option that involves both puts and calls at different price points. Each Vertical spread has two parts: Buying an option and the other part is writing an option. Writing an option means paying a premium to a writer, which allows you to buy or sell an option …
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Futures are contracts that obligate the contract holder to buy the underlying assets at an agreed-upon price in the future. The futures contracts are a hedging tool. They are mainly used to hedge against commodities. These contracts provide a stable future price to the buyer of the commodity and allow the trader on both sides …
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Ask and bid can be termed as two different sides of the same coin. Both of these are important for the smooth functioning of trading in a market. Without any one of these, the markets would not function smoothly. Bid A bid can be defined as the maximum amount a buyer is willing to pay …
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General obligation bonds are municipal bond which are backed by the ability of Government agency/entity to earn the revenue. The revenue can be made by the Government agency/entity in the form of tax revenues or any operating income from the projects. So, there is no collateral for the bonds but the creditworthiness of the governmental …
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Variation margin The variation margin is an additional fund required to be deposited to the future’s trading account to ensure the availability of sufficient margin when a future contract is subject to losses. To understand variation margin following terms need to be understood. Initial margin The initial margin is the amount required to be submitted …
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It’s an option to enter in an interest rate and other types of swaps. The Swaption gives the buyer a right to enter into a specified swap agreement on a specific future date. However, the buyer of the Swaption has to pay for options premium. An option premium is an income earned by the seller …
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Derivative instruments The derivatives are instruments that do not have intrinsic value. On the contrary, the value of the derivatives is derived from one or more underlying. These underlying can be stocks, bonds, currencies, stock indices, commodities, or precious metals. The basic theme of derivatives is to mitigate the risk by hedging. The science is …
