Principal Exchange Rate Linked Security - PERL

AAA

DEFINITION of 'Principal Exchange Rate Linked Security - PERL'

A type of debt security that pays interest semiannually and has a yield that is linked to foreign exchange rates. PERLs are denominated in U.S. dollars, but their repayment is determined by the exchange rate between the dollar and a specific foreign currency within a certain time frame. Many companies will purchase PERLs as a means of hedging against foreign exchange risk.

INVESTOPEDIA EXPLAINS 'Principal Exchange Rate Linked Security - PERL'

A company wishing to expand into a foreign currency can safely do so via the purchase of PERLs. The PERLs allow for the currency to retain a link to the dollar. Reverse PERLs are denominated in one currency, but pay interest in another.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Translation Risk

    The exchange rate risk associated with companies that deal in ...
  3. Municipal Inflation-Linked Securities

    Investment vehicles issued by various levels of governments containing ...
  4. Paid Syndication

    Web syndication is the promotion or inclusion of content on a ...
  5. Controlled Insurance Program (CIP)

    An insurance policy which consolidates coverage for contractors ...
  6. Chain Ladder Method (CLM)

    A method for calculating the claims reserve requirement in an ...
RELATED FAQS
  1. How much of the profitability in the Internet sector is concentrated in the few major ...

    Outside of any limiting, narrow interpretations concerning what constitutes the Internet sector, there is very little industry ... Read Full Answer >>
  2. What is the difference between consumer surplus and economic surplus?

    The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual market price ... Read Full Answer >>
  3. How important are seasonal trends in the automotive sector?

    The automotive industry has some definite seasonal trends, with peak demand occurring in the spring and fall, and lowest ... Read Full Answer >>
  4. What techniques are most useful for hedging exposure to the banking sector?

    The banking sector moves in the same direction as the broader market, but its volatility is much lower. The sector's stability ... Read Full Answer >>
  5. How is accounting in the United States different from international accounting?

    Despite major efforts by the Financial Accounting Standards Board, or FASB, and the International Accounting Standards Board, ... Read Full Answer >>
  6. What does the Dividend Discount Model (DDM) show an investor about a company?

    The dividend discount model, or DDM, is not designed to be used in forecasting any possible capital gains from increases ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Hedge Against Exchange Rate Risk With Currency ETFs

    Currency moves are unpredictable and can have an adverse effect on portfolio returns. Find out how to protect yourself.
  2. Bonds & Fixed Income

    6 Factors That Influence Exchange Rates

    Find out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  3. Forex Education

    The Ins And Outs Of Corporate Eurobonds

    Corporate eurobonds simplify expansion for MNCs, though there are a few more hoops to jump through.
  4. Investing

    Three Portfolio Moves To Consider Now

    What portfolio moves should you consider making as the 2nd quarter kicks off? Before we focus on the future, let’s first reflect on the 1st Q surprises.
  5. Investing Basics

    Manage Investments And Modern Portfolio Theory

    Modern Portfolio Theory suggests a static allocation which could be detrimental in declining markets, making it necessary for continuous risk assessment. Downside risk protection may not be the ...
  6. Options & Futures

    Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.
  7. Investing

    The Labor Market Recovery’s Missing Ingredient

    Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly.
  8. Credit & Loans

    Top Credit Cards For The Ultra Rich

    Only a few people qualify for these elite cards. The question is, are the lush perks big bucks can buy you worth the cost?
  9. Professionals

    How Advisors Can Help Clients Spot Elder Scams

    Financial crimes against the elderly are on the upswing. Here's what financial advisors can do to help protect their most vulnerable clients.
  10. Professionals

    Tips for Retiring Without Long Term Care Insurance

    Long term care insurance is as pricey as it is important. Here are tips for how to manage retirement and meet healthcare costs without a policy.

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center