A financial security backed by a loan, lease or receivables.

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

Obligations such as bonds, notes, loans, leases and other forms of indebtedness, except for cash and cash equivalents, issued by obligors other than the U.S. Government and its agencies, totaled at the level of the ultimate obligor or guarantor of the Obligation.

A valuation model sometimes used by investors where the analyst discounts his/her estimates of future annual dividends to the present using a risk-adjusted discount rate to arrive at an estimate of intrinsic value.

The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.

BBH's estimate of the present value of the cash that a business can generate and distribute to shareholders over its remaining life.

With respect to equity investments, a margin of safety exists when we believe there is a significant discount to intrinsic value at the time of purchase.  

With respect to fixed income investments, a margin of safety exists when the additional yield offers, in BBH's view, compensation for the potential credit, liquidity and inherent price volatility of that type of security and it is therefore more likely to outperform an equivalent maturity credit risk-free instrument over a 3-5 year horizon.

A type of asset-backed security that is secured by a mortgage or collection of mortgages.

A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. A lower price/book ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company.

A measure of the market's expectations of a firm's future financial health. Because this ratio uses cash flow, the effects of depreciation and other non-cash factors are removed. The ratio is calculated by dividing the share price by the cash flow per share.

A type of short-term borrowing for dealers in government securities. The dealer sells the government security to investors, usually on an overnight basis, and buys them back the following day.

Bonds issued by a foreign country in that country's currency to finance to country's growth.

The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.