A customized rate agreement between investor and issuer that fixes the price or yield of a treasury security. This is used by investors to guarantee a fixed return, or to hedge their risks, and counts as a separate derivative security. For example an investor can buy a treasury lock at 4%, if interest rates rise, making the market rate rise above the lock rate, the seller will pay the difference between the lock and market rates. However if interest rates fall, and the market rate falls below the lock rate, the investor must pay the issuer the difference between the lock and market rates.
Related information about treasury lock:
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A hedging tool used to manage interest-rate risk by effectively securing the current day's interest rates on federal government securities, to cover future expenses ...
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Treasury Lock. A Treasury Lock is a customized agreement that fixes the yield or price on a specified treasury security for a specific period. The buyer of the ...
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A derivative whereby one guarantees oneself a particular yield on a Treasury security. That is, one purchases a Treasury lock for a certain price; if the actual ...
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Definition of treasury lock: A customized rate agreement between investor and ... For example an investor can buy a treasury lock at 4%, if interest rates rise, ...
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As the name implies, a Treasury lock is used to "lock-in" the forward rate of a specific or interpolated Treasury security to a specified date in the future. Treasury ...
- Treasury Lock: Definition from Answers.com
Treasury Lock A customized derivative security used by investors to lock in the yield or price of a treasury security.
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A treasury lock is type of agreement between the issuer of a security and the investor who buys that security in regard to the rates that will apply to a treasury ...
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While remaining a highly successful strategy for fixing future costs, a Treasury lock proves ineffective if permanent markets such as CMBS conduits are for some ...