What Is a Country Fund? A country fund is a mutual fund that invests only in the securities of companies in one country. Though able to invest in a variety of sectors, country funds are considered to be greatly exposed to political risk without being able to diversify that risk away. Key Takeaways A country
What Is Country Risk Premium (CRP)? Country Risk Premium (CRP) is the additional return or premium demanded by investors to compensate them for the higher risk associated with investing in a foreign country, compared with investing in the domestic market. Overseas investment opportunities are accompanied by higher risk because of the plethora of geopolitical and
What Is a Coupon? A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a year divided by the
What Is a Coupon Bond? A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments. With coupon bonds, there are no records of the purchaser kept by the issuer; the purchaser’s name is also not printed on any kind of
What Is Coupon Stripping? Coupon stripping is the separation of a straight bond’s periodic interest payments from its principal repayment obligation to create a series of individual securities. In coupon stripping, the underlying bond becomes a zero-coupon bond known as a strip bond and each interest payment becomes its own separate zero-coupon bond. Key Takeaways
What Is Covariance? Covariance measures the directional relationship between the returns on two assets. A positive covariance means asset returns move together, while a negative covariance means they move inversely. Covariance is calculated by analyzing at-return surprises (standard deviations from the expected return) or multiplying the correlation between the two random variables by the standard deviation of each
What Is a Covenant? In its broadest sense, a covenant is a promise, agreement, or contract between two parties. As part of the covenant, the two parties agree that certain activities will or will not be carried out. Covenants in finance most often relate to terms in a financial contract, such as a loan document
What Is a Covenant-Lite Loan? A covenant-lite loan is a type of financing that is issued with fewer restrictions on the borrower and fewer protections for the lender. By contrast, traditional loans generally have protective covenants built into the contract for the safety of the lender, including financial maintenance tests that measure the debt-service capabilities of
What is Covenant Not To Execute A covenant not to execute is a lawsuit agreement in which the plaintiff agrees not to execute a judgment against the defendant. A covenant not to execute in an insurance claim lawsuit is typically provided by a plaintiff who wants to seek a portion of the overall damages from the
What Is a Coverage Ratio? A coverage ratio, broadly, is a metric intended to measure a company’s ability to service its debt and meet its financial obligations, such as interest payments or dividends. The higher the coverage ratio, the easier it should be to make interest payments on its debt or pay dividends. The trend
