INDEX

accounting definitions 278

actuarial tables 102

add-on rate 89–90, 92

adjustment factor 262–3

adverse selection 51

agency problem 34

Ambac Financial Group 31

American Bar Association 172

American options 179, 181

AMEX (American Stock Exchange) 41, 44

amortization 225, 226

annuities 63, 99, 129

present value of 61–2, 124–5, 147, 213, 217

arbitrage 148–9, 180, 181, 225, 238, 274

bond coupons and 137–9

conditions for 135–6

covered interest 283–5

creating forward contracts from spot securities 141–3

cumulative cash flows 135–6, 138, 139, 140, 145

finding opportunities 147

forces link between spot and futures prices 239

forward interest rates and 143–5

long futures 240

longs and shorts 254

opportunities for 190, 239, 241, 245

present values and 136–7

profitable 182

proof of linear relationship between bond price and coupon 145–7