ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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ORDINARY INCOME Definition
ORDINARY INCOME is the income derived from the regular operating activities of a business or individual, but exclusive of capital gains. Net income from a business, along with personal wages, interest, and dividends are examples of ordinary income.
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DEFEASANCE is a. the release of a debtor from the primary obligation for a debt. A legal defeasance could take place in absolute terms, i.e., the debt could cease to exist for anyone (by being forgiven or set aside), or the creditor could formally recognize that another party has taken over the primary obligation for the debt; and, b. in securities, a technique used by bond issuers to discharge old, low-rate debt by purchasing a smaller amount of higher-yielding U.S. Treasury debt. The Treasuries are held in trust to service the old debt being retired.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) is a private corporation chartered by the U.S. Government that issues pass-through securities, known as participation certificates, based on conventional mortgages. FHLMC pass-throughs are traded in a very liquid market and are used as collateral for other activities such as repurchase agreements. FHLMC guarantees the timely payment of interest and ultimate payment of principal. FHLMC is commonly called "Freddie Mac".