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Tag: risk

Credit Letter

See Also: Letter of Credit Credit Memorandum (memo) Debit Memorandum Trade Credit Proforma Invoice 5 C’s of Credit (5 C’s of Banking) Credit Letter Definition A credit letter, defined as a letter written by a bank which declares that the account holder has enough funds to pay for something, is most commonly used during importation. Credit

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Collateralized Debt Obligations

See Also: Letter of Credit Investment Banks Double Entry Bookkeeping Current Expenditures Accounts Payable Collateralized Debt Obligations Definition A collateralized debt obligation derivative, or CDO, is an investment grade debt instrument backed by collateral consisting of loans or other debt instruments. The collateral typically consists of bonds with varying degrees of credit quality and risk.

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Bankruptcy Information

See Also: Chapter 7 Bankruptcy Chapter 11 Bankruptcy Bankruptcy Code Chapter 13 Bankruptcy Bankruptcy Costs Chapter 12 Bankruptcy Courts – Bankruptcy Bankruptcy Information Bankruptcy is the legal condition of being unable to repay debts. It can apply to individuals or organizations. There are two types of bankruptcy: voluntary and involuntary. Voluntary bankruptcy occurs when the debtor,

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Bankruptcy Costs

See Also: Chapter 7 Bankruptcy Chapter 13 Bankruptcy Bankruptcy Courts Chapter 11 Bankruptcy Bankruptcy Code Bankruptcy Information Chapter 12 Bankruptcy Bankruptcy Costs The more debt a company takes on, the more it risks being unable to meet its financial obligations to creditors. A highly leveraged firm is more vulnerable to a decrease in profitability. Therefore

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Backwardation Definition

See Also: Contango Interest Rate Efficient Market Theory Market Dynamics Arbitrage Backwardation Definition Backwardation is a term used to describe a commodities market when the spot rates are higher than the future price of that certain commodity. In other words there is a downward sloping forward curve relative to the spot rate set for maturity

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Call Option

See Also: Put Option Synthetic Stock Future Value Warrants Intrinsic Value – Stock Options Call Option Definition The call option definition is a right by an investor to buy an asset at a pre-determined price on or before a certain date known as the call option expiration. Call Option Explained The call option gives an

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Business Risk

See Also: Hedging Risk Controller Definition Risk Premium Commercial Risk Transfer Risk Moral Hazard Business Risk Definition The business risk definition is the various risks a company copes with while doing business. It is a very broad concept. It generally includes the entire spectrum of risks which a company encounters. Business Risk Explanation Explained as the risk

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Arbitrage Pricing Theory

See Also: Cost of Capital Cost of Capital Funding Capital Asset Pricing Model APV Valuation Capital Budgeting Methods Discount Rates NPV Required Rate of Return Arbitrage Pricing Theory Definition The arbitrage pricing theory (APT) is a multifactor mathematical model used to describe the relation between the risk and expected return of securities in financial markets. It computes

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Economic Reset

I just returned from the Microsoft Worldwide Partner Conference 2009 in New Orleans. At the conference I heard Steve Ballmer discuss the direction of the economy over the next several years. He believes that the world economy is going through an “economic reset”. Economic Reset According to Ballmer ,the world economy becomes overheated every twenty-five

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If They Will Buy, Then I Will Sell!

If they will buy, then I will sell! Or stated another way, if I can sell it then buyer beware! That seems to have been the motto for the sub prime mortgage industry. Over the past five years a looming crisis has been in the making. Mortgage brokers would originate the loan then immediately pass

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