EQUITY CAPITAL Definition

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EQUITY CAPITAL is a form of financing where equity in a business is sold to private investors.

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INTEREST RATE RISK results from increases and decreases in bond prices caused by changes in interest rates. When interest rates rise, the prices of bonds fall to compensate for the higher level of income demanded by investors. Bonds that carry less than the new market rate of interest must sell for lower prices. For example, if an investor purchases a bond at par value ($1,000) with a 7% coupon and interest rates rise to the point where the same bond later yields 9%, the bond will decline in price to the point where its yield to maturity is equivalent to the yield to maturity on a 9% current coupon. In other words, the investor will earn the prevail­ing market rate of 9%- by buying a bond priced at par with the 9% coupon, or by buying the bond at a discount to par with a 7% coupon.

ASSOCIATED CREDIT is where a charitable or a not for profit entity (a university for example) may acknowledge the efforts of persons, other than the legal donor(s), who were instrumental in facilitating or providing for a gift by providing 'soft' (or associated) credit for gifts. Associated credit allows the entity to acknowledge these efforts without compromising the entity's legal obligation to record the gift according to IRS regulations. Associated credit is given for donor recognition purposes, allowing their names to be listed in publications such as the "Report to Contributors" and other donor recognition publications. For example an individual may write a corporate gift to a university, i.e. the individual would get the associated credit. Also known as SOFT CREDIT.

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