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GLOSSARY
Nonperforming asset
A nonperforming asset is a lending and leasing term used to describe an obligation that's not being paid as promised. While loans and leases are liabilities from the consumer's perspective, they're assets from the lender's perspective. When a debtor stops making payments as promised, the asset is no longer producing the desired results for the lender. The term can also be used more generally in reference to any asset that's not generating income.
Nonproductive loan
A nonproductive loan is a commercial debt obligation that doesn't enhance or improve the production levels of an economy. A loan that restructures a company's existing debt would be nonproductive, while a loan that finances the construction of a new manufacturing facility would be productive.
Nonrefundable credit
A nonrefundable credit reduces tax liability dollar-for-dollar, but can't reduce tax liability to less than zero. In other words, a nonrefundable tax credit might reduce one's tax liability to zero, but it would never result in the government owing money back to the taxpayer.
Nonresident alien
A nonresident alien is an individual who doesn't live in the U.S., and is not a citizen of the U.S. Nonresident aliens are taxed by the U.S. on income generated from U.S. sources.
Nontaxable distribution
A nontaxable distribution is a payment made by a company to its shareholders; this payment is not treated as income or as a regular dividend. Instead, the payment is accounted for by the shareholder as a reduction in cost basis. The tax effect of the distribution will then be realized when the share is sold.
Normal yield curve
A normal yield curve is an interest rate environment where long-term debt instruments (such as bonds) exhibit higher returns than similar short-term debt instruments. A normal yield curve is also called a positive yield curve.
Note
A legal document stating the obligation of the borrower to repay the stated sum of money at a specified interest rate at a specified date or on demand.
Note loan
A note loan is a debt facility that's not supported by collateral.
Note rate
A percentage that a borrower pays for the use of the money. Also expressed as the annual percentage rate as disclosed in the terms of the loan.
Notice of assessment - NOA
Notice of assessment, or NOA, is a yearly tax statement sent by a taxing authority to taxpayers. U.S. property owners receive notices of assessment for property taxes owed. Other taxing authorities, such as the Australian Taxation Office and Canada Revenue Agency, send notices of assessment for income taxes.
Notice of default
A documentation that is made public that states that the borrower is in default and legal action may be taken. There are many options available to borrowers to help them avoid this situation.
Notice of sale
A notice of sale is an official announcement of an upcoming sale transaction. Most often, the term is used in reference to foreclosure, where the lender is required to announce its plans to sell off the collateral. A municipal bond issuer may also issue a notice of sale as a way of requesting bids from prospective underwriters.
Notional principal amount
Notional principal amount, in an interest rate swap contract, is the hypothetical, agreed-upon amount used to calculate interest payments owed to each party to the agreement. In a swap contract, the notional principal amount is not actually transferred from one party to another.
Novation
Novation is the replacement of one agreement or obligation with another, where all parties to a contract agree to the change. Novation might be used to transfer an obligation to another party, or to replace an old debt with a new one.
NOW account
A NOW, or negotiable order of withdrawal, account is an interest-earning, bank deposit account against which the accountholder can write drafts.