It is senior to stock within the corporate equity structure, although probably junior to other corporate debt.
As used by lenders, character does not mean the citizenship or moral rectitude of an individual. Custodial agreement A written contract establishing the responsibilities of a custodian who holds property. Collateralized bond obligation CBO A multi-tranche security secured by a pool of corporate securities generally noninvestment-grade corporate bonds or sovereign debt.
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Contract right A defined term under the 1962 version of the UCC that means a right to payment under a contract that has not yet been earned by performance and is not evidenced by an instrument or chattel paper. Adam Smith described these loans as liquid because their purpose and their collateral were liquid.
Covariance A measurement of the relationship between two variables. Credit migration Improvement or deterioration in an obligor's credit worthiness over time. A specific COFI index may be used as a benchmark rate for a floating-rate security. More modern and sophisticated usage defines cash flow to include the net difference between all cash outflows and cash inflows.
See constant prepayment rate and single monthly mortality rate. See judicial lien and statutory lien for alternative types of liens. The CDO structure creates at least one tier of investment-grade bonds. Cram down An informal name for a settlement or terms that a debtor forces creditors to accept.
What is a Compensating Balance A compensating balance is a minimum balance that must be maintained in a bank account, used to offset the cost incurred by a bank to set up a business loan. The contractual gap is a gap mismatch measure calculated using the contractual maturity and repricing dates for all assets and liabilities. The proposed rule would apply to all customers seeking to open new accounts.
Even if rates do rise to exceed the coupon rate, the cushion bond offers a higher yield in exchange for its longer maturity since the premium paid at purchase can be amortized over a longer period.
May or may not receive distributions of corporate income in the form of dividends.
These are self-liquidating loans because the goods being financed will soon be sold. An example is the flour used to bake bread. If two call options are used, the spread may be referred to as a calendar call spread. Also note that not all true consignments are covered by UCC Article 9.
Current ratio The ratio obtained when total current assets are divided by total current liabilities. Canceled checks are not returned to the maker.