Financial Glossary – Y
Yankee Bond – a bond that is issued by a foreign government, foreign bank, or foreign company in US territory, denominated in US dollars. The Yankee bond issuer must first apply to the US Securities and Exchange Commission (SEC), which checks out its credit worthiness. It may be a few months before the applying issuer gets approval.
Yankee Market – where the trading of non-US securities occurs within the United States. Yankee bonds, for example, form part of the Yankee market. Non-Americans sometimes refer to the US stock market as the Yankee makret.
Yellow-Dog Contract – a contract that employers would make their workers sign, in which they would pledge never to join a union while working for that employer. If they joined a union, the employer could fire them. In 1932, the yellow-dog contract practice became illegal.
Yellow Knight – when the predatory company in a hostile bid attempt backs off or gets cold feet, and decides to propose a merger of equals to the business it had tried to acquire, the predatory company has become a yellow knight. A hostile bidder that sees the whole thing through – does not change its aggressive approach – is known as a black knight. Using the word ‘yellow’ is derogatory, it implies that the hostile bidder lost its nerve; got scared.
Yellow Pages – a telephone directory of businesses. The Yellow Pages directory, which is printed using yellow paper, has existed since 1886. The directory exists in most countries across the globe, and lists businesses according to category. It contrasts with the White Pages, which is an A-to-Z list of residences’ telephone numbers.
Yield – the amount of money that an investment generates in cash in percentage terms. For example, with a company’s shares it is the annual dividend as a percentage of the share price.
Yield Curve – often called the “term structure of interest rates”, the yield curve is a curve that plots the yields or interest rates for debt contracts, according to their maturity dates.
Yield Gap – 1. In investment markets: the difference between the yields on long-term bonds and equities. It is used to determine whether shares are priced too high, just right, or too low. 2. In Agriculture: the difference between what a farm currently yields and what it could yield if it had good management and the latest equipment. Also used to compare productivity in the farms of the advanced economies with those in the rest of the world.
Yield Spread Strategy – a method of taking advantage of the yield spread of a specific bond.