In the first IMP Briefing on the topic of securities with factors, we discussed the factor as a principal balance remaining in percentage terms. In Part Two, we’ll look at how specific securities types employ factors.
Two faced: A factored security which pays down its principal balance has both an original and a current face amount. Original face is the nominal trading amount, and absent further purchases or sales of that security, it remains fixed. Current face is the actual (principal) investment amount (i.e. what you own), equal to original face x factor. Therefore, it varies with each pay-down cycle.Read More