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Definition of Restrictive covenants
Provisions that place constraints on the operations of borrowers, such as restrictions on
Provisions in a bond indenture or preferred stock agreement that require the bond or preferred
Express stipulations included in loan agreements that are designed to monitor
Loan covenants designed to limit a corporate borrower's behavior
Loan covenants expressing minimum and maximum financial measures
Promise usually made in a contract whereby a party to the contract promises to do or not to do specified things.
A promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism.
A loan in which two companies in separate countries borrow each other's currency for a
Related: Call money rate.
A mortgage loan on newly developed property that the builder subsidizes during the
A bank term loan that calls for no amortization.
Overnight, collateralized loan made to a dealer financing his position by borrowing from a
Given the after-tax stream associated with a lease, the maximum amount of conventional
The institutions that regulate and lend to savings and loan associations. The
A loan on which the rate paid by the borrower is fixed for the life of the loan.
A Congressionally chartered corporation that
loan made by one unit of a corporation to another unit of the same corporation.
A secured short-term loan to purchase inventory. The three basic forms are a blanket
loans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or
Loan amortization schedule
The schedule for repaying the interest and principal on a loan.
Group of banks sharing a loan. See: syndicate.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
Give the borrower the possibility of drawing a loan in different currencies.
loans usually represented by conventional mortgages on multi-family rental apartments.
A process whereby two companies in different countries borrow each other's currency for a
Project loan certificate (PLC)
A primary program of Ginnie Mae for securitizing FHA-insured and coinsured
Project loan securities
Securities backed by a variety of FHA-insured loan types - primarily multi-family
Usually FHA-insured and HUD-guaranteed mortgages on multiple-family housing complexes,
Savings and Loan association
National- or state-chartered institution that accepts savings deposits and
loan to finance current assets, The sale of the current assets provides the cash to repay
A bank loan, typically with a floating interest rate, for a specified amount that matures in between
A loan extended by a bank for a specific purpose. In contrast, lines of credit and revolving
Variable rate loan
loan made at an interest rate that fluctuates based on a base interest rate such as the
Amounts that have been loaned to the company and that it still owes.
Negative Loan Covenants
loan covenants designed to limit a corporate borrower's behavior
Positive Loan Covenants
loan covenants expressing minimum and maximum financial measures
A short term loan to cover the immediate cash requirements until permanent financing is received.
A loan which must be repaid in full on demand.
Farm Improvement and Marketing Cooperatives Loans Act
Fixed Rate Loan
loan for a fixed period of time with a fixed interest rate for the life of the loan.
Borrowed funds having a fixed interest rate.
A loan advanced under an operating line of credit.
A secured loan made to business concerns for a specific period (normally three to ten years). It is repaid with interest, usually with periodical payments.
A 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.
secured loan or line of credit
A lump sum of funds (loan), or a revolving source of credit with a pre-established limit (line of credit), for which the customer must provide collateral.
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.
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
Mortgage pass-through securities whose principal and interest payments are
The repayment of a loan by installments.
Adjustable rate mortgage. A mortgage that features predetermined adjustments of the loan interest rate
A security that is collateralized by loans, leases, receivables, or installment contracts
Brokerage house clerical operations that support, but do not include, the trading of stocks and
An intercompany loan channeled through a bank.
Any large principal payment due at maturity for a bond or loan with or without a a sinking
Blanket inventory lien
A secured loan that gives the lender a lien against all the borrower's inventories.
Bonds are debt and are issued for a period of more than one year. The U.S. government, local
To obtain or receive money on loan with the promise or understanding that it will be repaid.
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
Mortgages in which monthly payments consist of principal and interest, with portions of these
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
Cash and carry
Purchase of a security and simultaneous sale of a future, with the balance being financed
An excess balance that is left in a bank to provide indirect compensation for loans
A merchant banking subsidiary set up by several banks that may or may not be of the
A loan based on the credit of the borrower and on the collateral for the mortgage.
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
Reducing the principal and/or interest payments on LDC loans.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
Defined contribution plan
A pension plan in which the sponsor is responsible only for making specified
A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.
Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federal agency securities
Securities issued by corporations and agencies created by the U.S. government,
Federal funds rate
This is the interest rate that banks with excess reserves at a Federal Reserve district bank
FHA prepayment experience
The percentage of loans in a pool of mortgages outstanding at the origination
Events preceding and including bankruptcy, such as violation of loan contracts.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Forward interest rate
Interest rate fixed today on a loan to be made at some future date.
A method for hedging price risk which involves an agreement between a lender and an investor
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
GMCs (guaranteed mortgage certificates)
First issued by Freddie Mac in 1975, GMCs, like PCs, represent
Government sponsored enterprises
Privately owned, publicly chartered entities, such as the Student loan
Graduated-payment mortgages (GPMs)
A type of stepped-payment loan in which the borrower's payments
Highly leveraged transaction (HLT)
Bank loan to a highly leveraged firm.
International Bank for Reconstruction and Development - IBRD or World Bank
International Bank for Reconstruction and Development makes loans at nearly conventional terms to countries for projects of high
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Leveraged buyout (LBO)
A transaction used for taking a public corporation private financed through the use
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
With PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
Manufactured housing securities (MHSs)
loans on manufactured homes - that is, factory-built or
This allows investors to buy securities by borrowing money from a broker. The margin is the
Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of
Total demand for loans by borrowers equals total supply of loans from lenders. The market,
A bank is said to match fund a loan or other asset when it does so by buying (taking) a deposit of
A loan secured by the collateral of some specified real estate property which obliges the borrower
The period from the taking of applications from prospective mortgage borrowers to the
The interest rate on a mortgage loan.
Securities backed by a pool of mortgage loans.
The lender of a loan secured by property.
The borrower of a loan secured by property.
Such a clause on a Euro loan permits the borrower to switch from one currency to
Under the GNMA-II program, pools formed through the aggregation of individual
A loan repayment schedule in which the outstanding principal balance of the loan
The making of mortgage loans.
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