A discount margin (DM) is the average expected return of a floating-rate security (typically a bond) that’s earned in addition to the index underlying, or reference rate of, the security. The size of the discount margin depends on the price of the floating- or variable-rate security.

Yield Measures for Floating Rate Notes (FRN) The term “quoted margin” refers to the specific yield spread over the reference rate and the term “required margin” (or “discount margin”) refers to the yield spread making the bond valued at par on the reset date.

The margin is the percentage of the bond value you have to keep in your account. Federal bonds are so safe that you only need 5 percent of the value to buy bonds that mature in 20 years or less, or 10 percent for longer periods. Convertible corporate bonds, which are riskier, require a 50 percent margin.

That is, EM = lower income, worse governance. DM = higher income, better governance. It’s a bit of a “chicken vs the egg” issue in terms of what comes first (higher income or better governance) but they are certainly prone to self-reinforce.

The margin is calculated by subtracting the unit costs of sale, i.e. the extra costs incurred each time you sell one more unit of this product/service, from the unit selling price. This will give you the value of the margin that you currently make per unit.

Percentage discount is a discount that is given to a product or service that is given as an amount per hundred. For example, a percentage discount of 20% would mean that an item that originally cost $100 would now cost $80.

A dirty price is a bond pricing quote, which refers to the cost of a bond that includes accrued interest based on the coupon rate. Bond price quotes between coupon payment dates reflect the accrued interest up to the day of the quote. In short, a dirty bond price includes accrued interest while a clean price does not.

An FRN, or FCC registration number, is a 10-digit number that is assigned to a business or individual registering with the FCC. This unique FRN is used to identify the registrant’s business dealings with the FCC. The FCC will use the FRN to determine if all of a registrant’s fees have been paid.

Example of Non-Marginable Securities As well, mutual funds are allowed if they’re owned form more than 30 days, as are investment-grade corporate, treasury, municipal, and government bonds. IPOs above a certain volatility level are not marginable.

As a resident of the US trading bonds in US you are subjected to Rules-based margin. The following rules apply to both long and short positions for Margin and Portfolio Margin accounts. Bonds must be paid-in-full in a Cash account. FINRA and the NYSE have imposed rules to limit small investor day trading.

A CLO is a type of collateralized debt obligation. Known as syndicated loans and originated by a lead bank with the intention of the majority of the loans being immediately “syndicated”, or sold, to the collateralized loan obligation owners.

CLO issuance has soared since then, culminating in full-year 2013 CLO issuance in the U.S. of $81.9 billion, the most since the pre-Lehman era of 2006-07, as a combination of rising interest rates and below-trend default rates drew significant amounts of capital to the leveraged loan asset class.

The discount rate for senior and mezzanine CLO debt tranches can be determined by a matrix-pricing or benchmarking approach in which the observed prices for new-issuance or secondary-market bonds can be used to derive implied credit spreads.

CLOs accomplish this through a ‘tranche’ structure. Instead of a regular lending situation where a lender can earn a fixed interest rate but be at risk for a loss if the business does not repay the loan, CLOs combine multiple loans but don’t transmit the loan payments equally to the CLO owners.