Treasury Bill
A Treasury Bill (T-Bill) is a short-term debt obligation of the United States government. These securities have a maturity period of one year or less and sell at a discount from face value. Given their backing by the U.S. Department of the Treasury, investors generally regard T-Bills as low-risk and secure.
Underwriting
Underwriting is the process through which an individual or institution evaluates and assumes a financial risk. Generally, such risk involves insurance, investments, or loans. Thus, insurance companies indemnify against future loss, damage, or liability. Investment bankers guarantee the purchase of entire issues of stocks or bonds. And lending institutions provide capital for mortgages. The term “underwrite” dates back to the marine insurance market in 17th century. At famed insurer Lloyd's of London, each financial backer would write his name under the amount of maritime risk he was willing to assume for a specified premium.
Volatility
Volatility is a measure of risk based on an asset’s price fluctuation over time. Investors and traders calculate a security or index’s volatility according to its standard deviation of returns. Generally, the higher the volatility, the riskier the asset.
Yield
Yield is the income-only return on an investment over a set period of time. Usually stated as a percentage of the original investment, the calculation for yield is as follows:
Yield = Net Realized Return / Principal Amount
This cash flow measure applies to fixed-income securities, common stocks, preferred stocks, and convertible stocks and bonds. It also pertains to annuities and real estate investments.
Zero-Coupon Bond
A zero-coupon bond is a debt security that pays no interest during the term of the loan. Instead, these accrual bonds, which trade at a deep discount, offer full face value profits at maturity.