Lockup commitment


lockup commitment, 7 regulation of, 7, 129­131
returns on, 210
Common stock, 21, 26, 43, 51, 66­67, 73, 76, 87, 93­94
Compound returns, calculation of continuous compounding, 111
daily compounding, 110­111
equivalent interest rates for different
compounding frequencies, 112­113
monthly compounding, 111­112
quarterly compounding, 111­112
semiannual, 109­110
taxation, effect of, 113
Computer software programs
Excel, 110­113, 116
general ledger, 139
Consultants, functions of, 48, 54­55
Continuous compounding, 111
Convertible arbitrage, equity hedge funds, 25­26
Convertible arbitrage hedge funds,
investment techniques, 66­67
Convertible bond arbitrage, 17
Convexity, impact on bonds
benefits of, 184­185
prices, 183­184
risk management, 185
Corporate bonds, future value of, 109­110. See also Bond(s)
Corporate income tax, 49, 52, 80, 142
Corporate taxation, 76
Corporations, as investors, 35, 49
Coupon bonds, 143, 179. See also Zero coupon bonds
Coupon income, 141
Coverdell Educational Savings Accounts (ESAs), 43­44
Credit card receivables, 68
Credit default, 28
Credit derivatives, 28
Credit risk analysis, 63
implications of, 27
measurement of, 188­189
Credit spreads, 16, 26, 28, 68
CSFB Tremont, 20, 24, 43
Currency hedge funds, characterized, 29­30
Currency risk, 185
Currency trading, 89
Daily compounding, 110­111
Daily volume, 63
Day trading, 89
Dealer, taxation as, 161
Debt, 12
Debt/equity ratio, 88
Debt holders, liability of, 77
Default risk, 27, 63, 67, 82, 188­189
Deferred annuities, 52
Defined benefit plans, 48­49
Defined contribution plans, 48­49
Delivery mechanisms, 218­219
Delta, of options, 95, 189
Deposits, maintenance of, 151
Derivatives
advantages of, 203­205
calls on returns, 204, 207­208, 212
characterized, 65, 148
current status of, 215
downside protection, 212
leveraging, 91­92, 203­204, 206, 211
life insurance, 212­215
principal-protected notes, 211­212
puts on returns, 204, 208
total return swap, 205, 207, 211­212
types of, 205­212
valuation of, 138
zero coupon bonds, 209­211
Dirty price, bonds, 179, 182
Disclosure, in accounting system, 136
Disclosure requirements, 129, 131, 219
Discounted cash flow analysis, 64
Distress hedge funds, 28
Distributions, 49. See also Dividend(s); Yield Diversification
benefits of, 12­13, 65, 219
equity risk management and, 185­186
risk mitigation, 99
Divestitures, 61, 63­64
Dividend(s), generally capture, 65­66
characterized, 62, 132, 144, 146 income, 141
reinvestment, 49
Dollar-weighted returns, calculation of, 116­117


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