Investments & Financial Planning

A " Alligator spread " is a term used to describe a spread in the options market that generates such a large commission to a broker that the client is unlikely to make a profit even if the markets move as the investor anticipated.

Basis point in the bond market is the smallest measure used for quoting yields. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 6% is 50 basis points higher than an interest rate of 5.5%. In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points higher than an interest rate of 4.5%. In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points higher than an interest rate of 4.5%.

The Barron's confidence index is an index measuring the ratio of the average yield on 10 top grade bonds to the average yield on 10 intermediate grade bonds. The difference between high rated top grade bonds and low rated bond yields, establishes a measure that is believed to be indicative of investor confidence.

A Banker's acceptance is a short term credit investment created by a nonfinancial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts to face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions.

It is a feature allowing fund holders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge. It Gives retroactive value to purchases from the earlier date.

The Advance Computerized Execution System is a system run by Nasdaq. The Advance Computerized Execution System automates trades between order entry and market maker firms that have established trading relationships with each other. Securities are designated as specified for automatic execution

Interest that has accumulated between the most recent payment and the sale of a bond or other fixed income security.
At the time of a sale, the buyer pays the seller the bonds price plus any "accrued interest".
The accrued interest is calculated by multiplying the coupon rate by the fraction of the coupon period that has elapsed since the last payment.

US Treasuries are bonds that their value is increased yearly to keep up with inflation. They are thus designed to cut out the inflation risk of an investment. Inflation-indexed bonds pay a periodic coupon that is equal to the product of the inflation index and the nominal coupon rate. The relationship between coupon payments, breakeven inflation and real interest rates is given by the Fisher equation. A rise in coupon payments is a result of an increase in inflation expectations, real rates, or both.

Uniform Transfer to Minors and Gift to Minors accounts are custodial accounts set up in a child's name. There are no income eligibility limits to set up an account. Contributions are not tax deductible. You may put up to $13,000 a year without any gift tax consequences. As the custodian you have the choice to invest the money in any investment you choose. The current year tax consequences are that the first $950 of the investment earnings is tax free, the next $950 will be taxed at the child's tax rate. Any earnings above $1,900 will be taxed at the parents rate until the child is 18 years of age. After 18 the earnings are taxed at the child's rate. An important item to note with these custodial accounts is that the account belongs to the child. The child gains full control of the Uniform Gift account at age 18 and gains control of the Uniform Transfer account at age 21.
Speak to your local CPA for more information on these custodial accounts.