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DOOMSDAY RATIO is related to the quick (acid test) ratio in that it is a conservative approach to debt coverage. The doomsday ratio only considers the cash on hand when evaluating if an entity can cover their current liabilities. The approach is that if the business were to go bankrupt today, would the business have enough cash on hand to cover current debts. The ratio is considered a good indicator of the cash cushion of safety. It may spot cash shortages, thereby assisting in avoiding a credit crisis. It is calculated: Cash divided by Current Liabilities.
SPOT RATE is the price at which a currency can be purchased or sold and then delivered within two business days, e.g., spot dollar.
DURATION, in securities, is a measure in years of interest rate risk for a specific security or portfolio. Duration is the weighted average time to receive the present value of cash flows from a specific security or portfolio. When the duration is divided by the discount rate plus one, the resulting modified duration measures the sensitivity of a bond to changes in interest rates. Used by bond managers instead of maturity as it accounts for all principal and interest cash flows in addition to the final maturity payment. For example, the duration of a 10-year zero-coupon bond equals its maturity of 10, while the duration of a 10-year 7.5% coupon bond is less than seven years.
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