Net Interest Cost (NIC)

Filed Under »
Dictionary Says

Definition of 'Net Interest Cost (NIC)'

A mathematical formula that an issuer of bonds uses to compute the overall interest expense that is associated with their bonds, which they will have to pay. The formula for net interest cost (NIC) is based on the average coupon rate weighted to years of maturity, and is adjusted for any associated discounts or premiums.
Investopedia Says

Investopedia explains 'Net Interest Cost (NIC)'

Debt issuers sometimes use NIC to evaluate the bids from various underwriters and usually award the contract to the syndicate offering the lowest net interest. However, it may be an incorrect method of selecting underwriters who could present a low NIC, but have a higher TIC (total interest cost) over the lifetime of the bond.

The NIC formula was created before the widespread use of computers and is a simple, straightforward calculation based on available bond information.

Articles Of Interest

  1. The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  2. Corporate Bonds: An Introduction To Credit Risk

    Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy.
  3. Callable Bonds: Leading A Double Life

    Find out more about these dangerous and exciting cousins to regular bonds.
  4. Evaluating Bond Funds: Keeping It Simple

    Discover some of the key factors for determining a fund's risk-return profile.
  5. Why Bad Bonds Get Good Ratings

    Credit ratings are not the only tool to rely on when assessing bonds. Find out why they sometimes fall short.
  6. Convertible Bonds: An Introduction

    Find out about the nuts and bolts, pros and cons of investing in bonds.
  7. Boost Bond Returns With Laddering

    If you want a diversified portfolio and steady cash flow, check out this fixed-income strategy.
  8. Retail Notes: A Simpler Alternative To Bond Funds

    These securities are meant to be held until maturity, removing the burden of complex pricing that sometimes plagues bonds.
  9. The Bear On Bonds

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  10. Investing In IPO ETFs

    Learn the history, rules and risks of investing in IPO exchange-traded funds.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Xenocurrency

    A currency that trades in markets outside of its domestic borders.
  2. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.
  3. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.
  4. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.
  5. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
  6. Chartalism

    A non-mainstream theory of money that emphasizes the impact of government policies and activities on the value of money.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=eab2d6df7a103c91e5c57273f9df9b6c