ADJUSTMENT DATE Meaning and
Definition
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Adjustment date refers to a specific date that marks the beginning of a new accounting period for a financial transaction or contract. It is commonly used in the context of bonds, mortgages, and other types of loan agreements. The adjustment date is crucial as it determines when interest and principal payments, as well as other financial obligations, will be made or adjusted.
In the case of bonds, the adjustment date is the date on which the accrued interest is calculated and paid to the bondholder. This interest is calculated from the last interest payment date, usually referred to as the interest adjustment start date, up to the adjustment date. The adjustment date is typically set a certain number of days or months before the interest payment date, giving ample time for the calculations to be made.
Similarly, in mortgage agreements, the adjustment date is the date on which the mortgage interest rate is adjusted based on the prevailing market rates. This adjustment allows the mortgage payments to be recalculated to reflect the new interest rate, ensuring that the borrower pays the correct amount.
Overall, the adjustment date plays a crucial role in financial transactions by providing a reference point for calculating and adjusting financial obligations, such as interest payments or mortgage rates, in line with the agreed-upon terms and conditions.
Etymology of ADJUSTMENT DATE
The etymology of the word "adjustment date" is as follows:
1. Adjustment: The word "adjustment" originates from the late Middle English word "adjusten", which means to bring into proper order or alignment. It comes from the Old French word "ajustement", meaning an arrangement or settlement. This ultimately derives from the Latin word "ad" (to) and "juxta" (near), implying bringing close or aligning something properly.
2. Date: The word "date" comes from the Middle English word "date", which signifies a fixed time or period. It can be traced back to the Latin word "data", meaning "the giving or assigning of something". The Latin word has its roots in the Latin verb "dare", meaning to give.
When combined, the term "adjustment date" refers to a specific time or day set for making alterations or modifications to something.
