Treasury Lock

Treasury Lock

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 price of the designated Treasury security is higher than the price of the lock, the buyer must pay the difference. On the other hand, if price is lower than the price of the lock, the buyer receives the difference. One buys a Treasury lock when a certain yield is important to his/her investment strategy but there is uncertainty on the future direction of Treasury yields. Treasury locks are settled in cash.
References in periodicals archive ?
Additionally, the company signed two Treasury lock agreements to fix the yield on the US Treasury issue used to decide the redemption price on notional amounts totalling USD700.0m on 29 November 2010 and it expects to pay about USD2.1m cash on 9 December 2010 to settle, under these agreements.
In addition to the aforementioned fourth quarter items, the full-year 2006 adjusted results exclude a $10.6 million gain from a settlement with a former client and a $17.1 million gain on a treasury lock agreement, while 2005 results excluded $11.1 million in AdvancePCS integration expenses.
Earnings per share are expected to rise about 22% to a range of $2.40 to $2.41, excluding a 1-cent-per-share after-tax gain from a legal settlement and a 2-cent-per-share after-tax gain from a treasury lock agreement.
class="MsoNormalThe letter means that Mr Ayugi's firms and Mr Wachira's Goldrock had a 50-50 split of the funds paid by government for each transaction, before Treasury locked the latter out.
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