What is the cash register lock?

The cash register lock is a type of agreement between the security issuer and the investor who buys this security in terms of rates that will apply to the security of the treasury. In essence, the contract stipulates or locks the price or revenue associated with this security. This approach allows the investor to use some guaranteed yield from the purchase of the asset when the Treasury Chateau has to deal with the price. In the case of the yield lock, this means that the investor is able to create a security situation that can also be used for its best advantage.

The Structure of the Treasury Chateau requires one of the two parties in the agreement to pay the difference between the prevailing market rate and the rate determined in the terms of the agreement. If the chateau of the Ministry of Finance is set at 6%, the benchmark, which both parties agree to use within the investment agreement. If the market interest rate, which the percentage during the life of the agreement, must pay the investor to the seller the difference between the degreeCastle and market rate. At the same time, if the market interest rate is below the percentage as a castle rate, the seller must pay the difference between the two rates to the buyer or investor.

The establishment of the Treasury Chateau is able to project the type of revenue it receives, based on what is expected to happen with the market interest rate. This strategy requires the consideration of all relevant events that may occur and cause this rate to move above or below the Treasury Chateau, and set the rate at a level that is likely to require the seller to pay the difference to the investor. The inability to accurately reflect what happens to the market interest rate when the investor still receives a return on the basis of the cash register rate.

While the Ministry of Finance's chateau leads a relatively low risk for the investor, there is always a chance that the market interest rate will increase above the confusesKU, which will to be needed to offer the difference between the two rates for sellers. This is a place where it precisely predicts the movement of the market interest rate for the success of the strategy. Although rare, there is a chance that the market rate increases sufficiently to compensate for the castle level, leaving the investor without returning, at least until the rate begins to decrease again.