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The cost of carry or carrying charge is the cost of holding a security or a physical commodity over a period of time. The carrying charge includes insurance , storage and interest on the invested funds as well as other incidental costs.
In simple terms, the notional principal amount is essentially how much of an asset or bonds a person owns. For example, if a premium bond were bought for £1, then the notional principal amount would be the face value amount of the premium bond that £1 was able to purchase. Hence, the notional principal amount is the quantity of the assets and ...
A Romanian stamp from 1947 showing a face value of 12 Lei. The face value, sometimes called nominal value, is the value of a coin, bond, stamp or paper money as printed on the coin, stamp or bill itself [1] by the issuing authority. The face value of coins, stamps, or bill is usually its legal value. However, their market value need not bear ...
The carry of an asset is the return obtained from holding it (if positive), or the cost of holding it (if negative) (see also Cost of carry). [1] For instance, commodities are usually negative carry assets, as they incur storage costs or may suffer from depreciation.
The carrying value is defined as the value of the asset appearing on the balance sheet. The recoverable amount is the higher of either the asset's future value [ 12 ] for the company or the amount it can be sold for, minus any transaction costs .
After the bonds are sold, the book value of Bonds Payable is increased or decreased to reflect the actual amount received in payment for the bonds. If the bonds sell for less than face value, the contra account Discount on Bonds Payable is debited for the difference between the amount of cash received and the face value of the bonds. [10]
On the other hand, funds equivalent to the face value of the treasury bills is moved from the account of the lender to the borrower's current account with the Central Bank of Nigeria. This product offers flexibility, but with interest rate and bank stability risk. It is a product for short-term liquidity.
The credit is provided by charging a rate of interest and requiring a certain amount of collateral, in a similar way that banks provide loans. Even though the value of securities (stocks or other financial instruments such as options) fluctuates in the market, the value of accounts is not computed in real time. Marking-to-market is performed ...