Abatement refers to the reduction, lessening, or termination of something. Specifically, in legal and tax contexts, it typically pertains to the suspension or reduction of lawsuits or taxes.
A strategy where an investor executes a short sale on a stock in which they already maintain a long position. This effectively 'locks in' their financial gains or losses, regardless of the current stock price.
Amortization term refers to the time it takes to retire a debt through periodic payments. It is usually associated with loans and mortgages, indicating the full duration over which regular payments are made to fully repay the debt.
The term 'appreciate' carries dual meanings in various contexts. Firstly, it refers to an increase in value over time. Secondly, it describes understanding or recognizing the significance of something.
Assimilation in finance refers to the absorption of a new issue of stock by the investing public after all shares have been sold by the issue's underwriters.
The term 'at sight' is commonly used on a bill of exchange to indicate that payment is due upon presentation. It is an immediate payment term contrary to 'after date' or 'after sight' terms.
A standardized time measurement convention used in financial computations, where each month is assumed to have 30 days and the year 360 days.
COD is a versatile acronym used in finance and business, referring either to 'Cash on Delivery' or 'Cancellation of Debt.' Cash on Delivery is a transaction method where the buyer pays for goods upon receipt, while Cancellation of Debt involves forgiveness of a borrower's obligation to repay a loan. This article will explore both definitions in detail.
Collateralize refers to the action of pledging assets to secure a debt in the USA. If the borrower defaults on the terms and conditions of the agreement, the pledged assets will be forfeited.
An interest in a company that gives a person or another company control of it, usually through ownership of more than half the voting shares. Controlling interest can also be achieved with fewer shares if they are widely dispersed.
A conventional mortgage is a residential mortgage loan that is not insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA). It often refers to a mortgage with a fixed term and a fixed rate.
A deposit account is a bank account that allows a person to deposit money and earn interest while keeping the funds accessible for withdrawals and transactions.
A dividend in specie refers to a type of dividend that is paid out in forms other than cash. Typically, this can include the distribution of assets, shares, property, or any other physical items that represent the value payable to shareholders.
An Early Repayment Tax Clause is a provision in a loan agreement that allows the borrower to repay the loan early if changes in relevant tax legislation increase the amount of interest payable.
An emolument refers to the income or compensation received from employment, office, or labor, including salary, fees, and other forms of compensation.
An exit fee, also known as a back-end load, is a fee charged when an investor sells or withdraws from an investment, typically within a specific period.
Expiration refers to the date on which a contract, agreement, license, magazine subscription, or similar arrangement ceases to be effective. In the context of financial options, it is the last day on which an option can be exercised.
A period of time provided in most loan contracts and insurance policies during which default or cancellation will not occur even though payment is past due.
The term 'gross' can refer to the highest amount of sales or income before deductions, or to a quantity in merchandise, specifically 12 dozen or 144 items.
To pledge something as security without turning over possession of it. Hypothecation creates a right in the creditor to have the pledge sold to satisfy the claim out of the sale proceeds.
The term 'in arrears' refers to the status of payments that are overdue. In financial terms, it commonly indicates that the last payment was made at the end of a period rather than in advance. It can also mean that payments are in default, indicating non-compliance with the agreed payment schedule.
An interest-only loan is a type of loan where the borrower is required to pay only the interest for some period of the term, usually until the loan reaches maturity. At the end of that period, the principal is due in full. Unlike traditional loans, it does not require regular principal amortization during the term.
The London Inter Bank Bid Rate (LIBID) represents the interest rate banks are willing to pay for interbank deposits in the London interbank market.
The Lombard Rate refers to the interest rate at which the German central bank, the Bundesbank, lends to German commercial banks, typically ½% above the discount rate. It can also refer to the interest rate charged by a European commercial bank on loans secured by marketable assets.
The lowest price paid for a security over a specified period, often a year, or since trading in the security began.
The base interest rate defined in the loan agreement, to which the spread is added in order to establish the interest rate payable on a variable-rate loan.
Negative amortization is an increase in the outstanding balance of a loan resulting from the failure of periodic debt service payments to cover the required interest charged on the loan.
A non-divisive reorganization is a corporate restructuring process that involves changes to the structure, operations, or ownership of a company without a divisive impact, typically executed to enhance organizational efficiency and shareholder value.
An obligation is a commitment undertaken by a person or entity to adhere to the conditions defined in a contract or to repay a specified debt.
An obligor is a person or entity that has a legal or contractual obligation to another party. This term is often used in legal and financial contexts, particularly in relation to bonds, loans, and other forms of debt.
The term 'On Demand' signifies an obligation that must be fulfilled upon request, often used in financial settings such as notes payable and demand notes.
A covenant in a loan agreement where the borrower promises that the loan in question will rank equally with its other defined debts, ensuring no preferential treatment among creditors.
A banking loan on which the interest is more than 90 days overdue. After this grace period has elapsed, the borrower becomes liable for late charges.
Payment in advance, also known as prepayment, is a transaction in which a payment for goods or services is made before the actual delivery. It is often used to mitigate credit risk or secure services and goods ahead of time.
Relating to or consisting of money; that which can be valued or assessed in monetary terms. A pecuniary loss is a financial loss, or one that can be quantified in terms of money.
Prepaid interest is the interest paid in advance before it is earned, often seen in loan agreements and mortgage practices. Generally, prepaid interest is not tax deductible, except for the customary points paid by a borrower on the initial mortgage to purchase a principal residence.
The term 'principal' in accounting can refer to either the initial sum of money on which interest is paid or to a person who has authorized another to act on their behalf, especially in the context of an agency relationship.
Realized profit or loss refers to the profit or loss that has arisen from a completed transaction, typically the sale of goods, services, or other assets. It is recognized legally once the transaction is finalized, regardless of whether cash has been received.
A bank nominated under the terms of a loan agreement to provide the marker rates for the purposes of fixing interest charges on a variable-rate loan.
The net amount received by a former owner upon selling an asset after covering transaction costs, settling any remaining debt, and potentially paying income taxes.
The spot rate is the current market price at which a particular currency can be bought or sold for immediate delivery, typically within two business days.
A standby fee is a sum required by a lender to provide a standby commitment within a certain period. This fee is forfeited by the borrower if the loan is not closed within the specified timeframe.
Street name refers to the practice of holding securities in the name of a broker or another nominee instead of the customer's own name. This facilitates easier and faster transfer of shares.
The term refers to suffering a large loss on a product, speculation, or investment.
Topping out is a term used in finance to denote the point at which a market or security is at the end of a period of rising prices and is expected to either remain stable or decline. This term is often associated with market peaks and potential future downturns.
In financial and legal contexts, 'vest' generally refers to granting an individual full ownership of certain assets or benefits after meeting specific conditions, such as a period of service in a company.
A term used to describe individuals or entities that possess a significant amount of wealth and financial stability.
