ARBITRAGE Definition

ARBITRAGE is the movements of funds to take advantage of differences in exchange or interest rates; such movements quickly eliminate any such differences.

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HOLDING COMPANY is a company which owns or controls other companies. (Control can occur through the ownership of 50 per cent or more of the voting rights or through the exercise of a dominant influence.).

HIGH YIELD (JUNK) is bonds and preferred stocks having an S&P/Moody's rating of BB+/Ba1 or lower, and NAIC ratings of"3", "4", "5", or "6". Below investment grade securities have greater risk and therefore compensate investors with higher market yields. In addition to new issues, high yield securities can evolve from older issues with declining ratings, or can be created through lever­aged buyouts where management uses the assets of the company as collateral for the issue.

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