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Financial Terms | |
Hypothecation |
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Definition of HypothecationHypothecationThe pledge of property and assets to secure a loan. hypothecation does not transfer title, but it does provide the right to sell the hypothecated property in the event of default.
Related Terms:Absolute Right of ReturnGoods may be returned to the seller by the purchaser without restrictions. Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. Adjusted Cash Flow Provided by Continuing OperationsCash flow provided by operating Appraisal rightsA right of shareholders in a merger to demand the payment of a fair price for their shares, as AssetsA firm's productive resources. ASSETSAnything of value that a company owns. AssetsThings that the business owns. ![]() AssetsItems owned by the company or expenses that have been paid for but have not been used up. Assets requirementsA common element of a financial plan that describes projected capital spending and the Back-to-back loanA loan in which two companies in separate countries borrow each other's currency for a benefits-provided rankinga listing of service departments in an order that begins with the one providing the most service Bin transferA transaction to move inventory from one storage bin to another. Bridge LoanA short term loan to cover the immediate cash requirements until permanent financing is received. Broker loan rateRelated: Call money rate. Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Bullet loanA bank term loan that calls for no amortization. ![]() Buy/Sell AgreementThis is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement. Cash Flow Provided by Operating ActivitiesWith some exceptions, the cash effects of transactions Cash Flow Provided or Used from Financing ActivitiesCash receipts and payments involving Cash Flow Provided or Used from Investing ActivitiesCash receipts and payments involving Commercial Business Loan (Credit Insurance)An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes. Conditional SellerOne of two parties to a conditional sale agreement, the other being the conditional buyer. Conversion RightTerm life insurance products are offered as non-convertible or convertible to a certain time in the future. The coversion right has a time limit, usually to the policy holder's age 60 or possibly even age 70. This right means that the policy holder has the right to convert their existing policy to another specific different plan of permanent insurance within the specified time period, without providing evidence of insurability. There is a slightly higher cost for a term policy with the conversion priviledge but it is a valuable feature should a policy holder's health change for the worst and continued insurance coverage becomes a necessity. Cross defaultA provision under which default on one debt obligation triggers default on another debt Cum rightsWith rights. Current assetsValue of cash, accounts receivable, inventories, marketable securities and other assets that Current assetsCash, things that will be converted into cash within a year (such as accounts receivable), and inventory. ![]() Current assetsAmounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments. current assetsCurrent refers to cash and those assets that will be turned Current AssetsCash and other company assets that can be readily turned into cash within one year. Dealer loanOvernight, collateralized loan made to a dealer financing his position by borrowing from a DefaultFailure to make timely payment of interest or principal on a debt security or to otherwise comply DefaultThe failure by a debtor to make a principal or interest payment in a timely DefaultFailure of a debtor to make timely payments of principal and interest as they become due. Default premiumA differential in promised yield that compensates the investor for the risk inherent in default premiumDifference in promised yields between a default-free bond and a riskier bond. Default riskAlso referred to as credit risk (as gauged by commercial rating companies), the risk that an Demand LoanA loan which must be repaid in full on demand. Depository transfer check (DTC)Check made out directly by a local bank to a particular firm or person. Dividend rightsA shareholders' rights to receive per-share dividends identical to those other shareholders receive. EFT (electronic funds transfer)Funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT. Electronic depository transfersThe transfer of funds between bank accounts through the Automated Entitlement ProgramA program, such as social security, under which everyone meeting the eligibility requirements is entitled to receive benefits from the program, so that costs are not known in advance. Equivalent loanGiven the after-tax stream associated with a lease, the maximum amount of conventional Event riskThe risk that the ability of an issuer to make interest and principal payments will change because Event studyA statistical study that examines how the release of information affects prices at a particular time. Events of defaultContractually specified events that allow lenders to demand immediate repayment of a debt. Ex-rightsIn connection with a rights offering, shares of stock that are trading without the rights attached. Ex-rights dateThe date on which a share of common stock begins trading ex-rights. Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Farm Improvement and Marketing Cooperatives Loans ActSee here Federal Home Loan BanksThe institutions that regulate and lend to savings and loan associations. The Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. Fixed assetsThings that the business owns and are part of the business infrastructure – fixed assets may be fixed assetsAn informal term that refers to the variety of long-term operating Fixed AssetsLand, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation. Fixed Assets Turnover RatioA measure of the utilization of a company's fixed assets to Fixed-rate loanA loan on which the rate paid by the borrower is fixed for the life of the loan. Fixed Rate Loanloan for a fixed period of time with a fixed interest rate for the life of the loan. Freddie Mac (Federal Home Loan Mortgage Corporation)A Congressionally chartered corporation that Intangible assetsassets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises. Intangible fixed assetsNon-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks). Intercompany loanloan made by one unit of a corporation to another unit of the same corporation. Interplant transferThe movement of inventory from one company location to Inventory loanA secured short-term loan to purchase inventory. The three basic forms are a blanket Jumbo loanloans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or Liquidation rightsThe rights of a firm's securityholders in the event the firm liquidates. Loan amortization scheduleThe schedule for repaying the interest and principal on a loan. Loan CapitalBorrowed funds having a fixed interest rate. Loan CovenantsExpress stipulations included in loan agreements that are designed to monitor Loan syndicationGroup of banks sharing a loan. See: syndicate. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Loans payableAmounts that have been loaned to the company and that it still owes. Long-term assetsValue of property, equipment and other capital assets minus the depreciation. This is an Longer-Term Fixed Assetsassets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied. Multicurrency loansGive the borrower the possibility of drawing a loan in different currencies. Multifamily loansloans usually represented by conventional mortgages on multi-family rental apartments. Negative Loan Covenantsloan covenants designed to limit a corporate borrower's behavior Negative pledge clauseA bond covenant that requires the borrower to grant lenders a lien equivalent to any negotiated transfer pricean intracompany charge for goods Net assetsThe difference between total assets on the one hand and current liabilities and noncapitalized longterm Non-reproducible assetsA tangible asset with unique physical properties, like a parcel of land, a mine, or a Official unrequited transfersInclude a variety of subsidies, military aid, voluntary cancellation of debt, Operating LoanA loan advanced under an operating line of credit. Optimum selling priceThe price at which profit is maximized, which takes into account the cost behaviour of fixed and variable costs and the relationship between price and demand for a product/service. Option sellerAlso called the option writer , the party who grants a right to trade a security at a given price in Other assetsA cluster of accounts that are listed after fixed assets on the balance sheet, Other current assetsValue of non-cash assets, including prepaid expenses and accounts receivable, due Outright rateActual forward rate expressed in dollars per currency unit, or vice versa. Parallel loanA process whereby two companies in different countries borrow each other's currency for a Personal Assetsassets, the title of which are held personally rather than in the name of some other legal entity. personal loanA lump sum that you borrow from a financial institution for a specified period of time. To repay the loan, you pay interest on the entire lump sum, and make payments on a scheduled basis. Positive Loan Covenantsloan covenants expressing minimum and maximum financial measures Preemptive rightCommon stockholder's right to anything of value distributed by the company. Preferred Stock Stock that has a claim on assets and dividends of a corporation that are priorto that of common stock. Preferred stock typically does not carry the right to vote. prevention costa cost incurred to improve quality by preventing Private unrequited transfersRefers to resident immigrant workers' remittances to their country of origin as Project loan certificate (PLC)A primary program of Ginnie Mae for securitizing FHA-insured and coinsured Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |