Cyber*School

The effective interest rate can not be obtained from the bond conditions. It depends on the nominal interest rate, the issue price of the bond, the redemption price of the bond, the majurity and the incidental costs.

revenue gained by an investment over several periods of interest payments in consideration of compound interest

Term for the tradable securities on the capital market.

Also optimal portfolio. A portfolio, which corresponds to the risk attitude of the investor and ensures the highest income starting from a given risk level or includes the lowest risk with an expected yield.

Known range from portfolio theory of those portfolios in which risk and return are not dominated by other portfolios.

Cashable bills of exchange at the Bank of England. An Eligible Bill is a discount instrument and is trading with a discount.

In order to be handled as a recognized credit rating agency under Basel II, a CRA must meet six criteria: objectivity, independence, International access / Transparency, publication, resources, credibility.

The Banking Act requires banks to back up at least 8% of their basis of assessment with own funds. (ie, 0% of the volume of loans to federals, states and municipalities, 20% for interbank loans, 50% for housing loans 100% for other assets) Own funds include in particular registered capital, disclosed reserves, liability reserves, valuation reserves and profit after dividends and taxes (net income). Meaning of the provision is to build up sufficient risk capital for risks from the lending business, with which a corresponding depositor and shareholder protection should be achieved.

release of securities at the primary market with the objective of raising funds in terms of equity capital (shares) or bonded capital (bonds, CD, CP, etc.)

The value of a security as measured by the portfolio. The weight of a particular asset class, an industry or sector.

To an employee of a company's issued share, often at a discounted price. The employee usually has to wait for a lock-up period prior to the sale

a transaction with a term starting and ending at the last days of the month (mainly deposit, forward contract, FX-swap)example: A two-months deposit, which starts on the 31. March and would end on the 31. May. If the 31. May would be a weekend or a holiday, the muturity date would be the last bank day in the month May, not as usual the next working day, i.e. the 29. or 30.

see interest method actual/365

abbr. for Euro Overnight Index Average,is the benchmark for overnight EUR and is calculated as a weighted average of all unsecured overnight-transactions of the banks which participate in the fixing,www.euribor.org

EUR interest rate swap where the floating rate is linked to EONIA see also: OIS

risk factor of options, also called rho expresses how much the price of an option changes if the level of interest rates changes

Regulatory term. Own funds include, in particular registered capital, disclosed reserves, liability reserves, valuation reserves as well as profit after dividends and taxes (net income). It serves to cover the risks from the lending business with which a corresponding depositor and shareholder protection should be achieved.

calculative return, which is assumed that the equity of a bank should bear equity cost is the result of the aimed return on equity (ROE) target, set by the board, minus the risk free interest rate (e.g. government bonds)

Under the Basel II agreement, equity exposures are defined on the basis of the economic substance of the instrument. They include both direct and indirect ownership interests and must meet a set of requirements to be classified as such

A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. The owner of shares of such a fund has the possibility to be involved indirectly in the substance and the yields of public limited companies.