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.
1 million gain on a treasury lock agreement, while 2005 results excluded $11.
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.
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