DEBENTURE

DEBENTURE

Debenture includes debenture, bonds or any other security of a company evidencing a debt. Simply put, its like a loan to the company which can be traded like one trades stocks.

DEBENTURE TRUSTEE (DT)

DEBENTURE TRUSTEE (DT)

This is an entity appointed by issuers to represent the debenture holders and protect their interests. DTs act as a representative of debenture holders and also as a liaison between the issuers and bondholders. 

DEBT

DEBT

A borrowing by an entity from a lender. It constitutes an agreement to pay interest and repay the principal borrowed at specified terms.

DEBT-EQUITY RATIO

DEBT-EQUITY RATIO

A ratio indicating the portion of debt and equity financing used in a company . It shows a company financing through debt and equity. A higher ratio means a higher debt finance and a higher leverage.

DEFAULT

DEFAULT

Failure to pay principle or interest when due OR other fulfil obligations such as financial reporting requirements.

DIRTY PRICE

DIRTY PRICE

A price of bond which includes the amount of interest that has accrued on the bond since the date of last interest payment.

DISCOUNT BOND

DISCOUNT BOND

A bond issued/trading at less than the par value.

DISCOUNTED PRICE

DISCOUNTED PRICE

The price of a financial instrument when it trades at a price lower than its face value / par value.

DIVERSIFICATION

DIVERSIFICATION

The process of allocating resources to multiple asset classes/ securities to reduce exposure to a single asset class, thus lowering risk.

DURATION

DURATION

Measure of years it takes for the price/value of a bond to be paid by its cash flows. The duration of a bond is its weighted average of times of cash flow. The weight is calculated for the present value of cash flow to the bond value. Also the duration of a bond expresses the sensitivity of the bond price to changes in the interest rate.