What Is the Fixed-Charge Coverage Ratio? The fixed-charge coverage ratio (FCCR) measures a firm’s ability to cover its fixed charges, such as debt payments, interest expense, and equipment lease expense. It shows how well a company’s earnings can cover its fixed expenses. Banks will often look at this ratio when evaluating whether to lend money to
What Is a Fixed Cost? Fixed cost refers to the cost of a business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, and insurance. Since fixed
What Is a Fixed Exchange Rate? A fixed exchange rate is a regime applied by a government or central bank that ties the country’s official currency exchange rate to another country’s currency or the price of gold. The purpose of a fixed exchange rate system is to keep a currency’s value within a narrow band. Key Takeaways The
What Is a Fixed-for-Fixed Swap? A fixed-for-fixed swap refers to a type of foreign currency swap in which two parties exchange currencies with one another. In this agreement, both parties pay each other a fixed interest rate on the principal amount. A fixed-for-fixed swap can be used to take advantage of situations where interest rates
What Is Fixed Income? Fixed income broadly refers to those types of investment security that pay investors fixed interest or dividend payments until their maturity date. At maturity, investors are repaid the principal amount they had invested. Government and corporate bonds are the most common types of fixed-income products. Unlike equities that may pay out
What Is a Fixed-Income Security? A fixed-income security is an investment that provides a return in the form of fixed periodic interest payments and the eventual return of principal at maturity. Unlike variable-income securities, where payments change based on some underlying measure—such as short-term interest rates—the payments of a fixed-income security are known in advance.
What Is a Fixed-Income Style Box? A fixed-income style box provides a visual representation of the investment characteristics of fixed-income investments. Fixed-income style boxes were created by Morningstar and are most commonly used for mutual funds. They are a valuable tool for investors to use in determining the risk-return structures of their fixed-income investments. They
What Is a Fixed-Interest Security? A fixed-interest security is a debt instrument such as a bond, debenture, or gilt-edged bond that investors use to loan money to a company in exchange for interest payments. A fixed-interest security pays a specified rate of interest that does not change over the life of the instrument. The face
What Is a Fixed Price Purchase Option? A fixed price purchase option is the right, but not the obligation, to buy a leased item at the end of a lease term at a price determined from the onset of the lease agreement. A fixed price purchase option’s purchase price is established when the lease terms
What Is a Fixed Rate Bond? A fixed rate bond is a bond that pays the same level of interest over its entire term. An investor who wants to earn a guaranteed interest rate for a specified term could purchase a fixed rate bond in the form of a Treasury, corporate bond, municipal bond, or
