What Is a Distribution Waterfall? A distribution waterfall is a way to allocate investment returns or capital gains among participants of a group or pooled investment. Commonly associated with private equity funds, the distribution waterfall defines the pecking order in which distributions are allocated to limited and general partners. Usually, the general partners receive a
What is a Distribution Yield? A distribution yield is the measurement of cash flow paid by an exchange-traded fund (ETF), real estate investment trust, or another type of income-paying vehicle. Rather than calculating the yield based on an aggregate of distributions, the most recent distribution is annualized and divided by the net asset value (NAV)
What Is Diversification? Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk. The rationale behind this technique is that a portfolio constructed of
What Is a Discount Note? A discount note is a short-term debt obligation issued at a discount to par. Discount notes are similar to zero-coupon bonds and Treasury bills (T-Bills) and are typically issued by government-sponsored agencies or highly-rated corporate borrowers. Discount notes have maturity dates of up to one year in length. Discount notes
What Is a Discount Window? The discount window is a central bank lending facility meant to help commercial banks manage short-term liquidity needs. Banks that are unable to borrow from other banks in the fed funds market may borrow directly from the central bank’s discount window paying the federal discount rate. Current discount rates are
What Is the Discount Yield? The discount yield is a way of calculating a bond’s return when it is sold at a discount to its face value, expressed as a percentage. Discount yield is commonly used to calculate the yield on municipal notes, commercial paper and treasury bills sold at a discount. Key Takeaways Discount
What Is a Discouraged Worker? A discouraged worker is a person who is eligible for employment and can work, but who is currently unemployed and has not attempted to find employment in the last four weeks. Discouraged workers usually have given up on searching for a job because they found no suitable employment options or
What Is Discover Card? Discover is a credit card brand that is issued by the American financial services company Discover Financial (DFS). Originally issued by retailer Sears, Roebuck & Co. in 1985, Discover cards launched nationally in 1986, and first distinguished themselves for their reduced fee structure and pioneering cash-back rewards program. Discover has been
What Is a Discretionary ARM? A discretionary ARM is a type of adjustable-rate mortgage that allows the lender to change the interest rate at its discretion. Discretionary ARMs are not available in the United States but are common in Europe, Australia, and some other parts of the world. Key Takeaways A discretionary ARM is a
What is a Discretionary Account? A discretionary account is an investment account that allows an authorized broker to buy and sell securities without the client’s consent for each trade. The client must sign a discretionary disclosure with the broker as documentation of the client’s consent. A discretionary account is sometimes referred to as a managed
