What is Foreign Debt? Foreign debt refers to the money that a government, an organization, or a household borrows from the government or private lenders of another country. The obligations to organizations such as the World Bank and the Asian Development Bank (ADB) are also categorized as foreign debt. The short-term debt can be used…
What is the Clientele Effect? The clientele effect is a theory which states that different policies attract different types of investors, and changes to the policies will cause a shift in demand for the company’s stock by investors, impacting its share price. In other words, the clientele effect is the existence of groups of investors…
What is Sovereign Debt? Sovereign debt is the government debt of a country, a sovereign nation. It is also referred to as government debt, national debt, public debt, or country debt. The sovereign debt of a country consists of all its debt liabilities to both domestic and foreign creditors. Technically, the sovereign debt of a…
What is a Trading Halt? A trading halt refers to a temporary stoppage of equity trading in accord with regulatory authority or stock exchange rules. The stoppage may occur for a single stock, an exchange, or a group of exchanges. Significant news about a company – whether it be good news or bad news –…
What is Securities Lending? Securities lending is the act of lending or loaning a financial security, a stock, bond, or derivative, to a firm or an investor. It involves the borrower to provide collateral for the security that they are borrowing. The collateral can be in the form of either cash, bonds, shares or letter…
What is Trading Below Cash? Trading below cash takes place when the market capitalization of a company is lower than its cash holdings net of liabilities. It is a term often used in the investment industry. Such a situation usually happens to companies with uncertain or pessimistic outlooks. Understanding Trading Below Cash The market value…
What is a High-Ratio Loan? A high-ratio loan is a type of loan with a high loan value relative to the value of the property used as collateral. High-ratio loans usually carry higher interest rates than loans with lower ratios. There is no certain standard for high-ratio loans, but loans with LTV exceeding 80% are…
What is a High-Yield Bond? A high-yield bond is a bond that carries a relatively higher interest rate as a result of its lower credit rating, compared to investment-grade bonds. It is a corporate bond with a credit rating below Baa3 from Moody’s or BBB- from Standard and Poor’s (S&P) and Fitch. High-Yield Bonds and…
What is a High-Water Mark? High-water mark is the highest level of value reached by an investment account or portfolio. It is often used as a threshold to determine whether a fund manager can gain a performance fee. Investors benefit from a high-water mark by avoiding paying performance-based bonuses for poor performance or for the…
What is Technical Bankruptcy? Technical bankruptcy refers to a situation where an individual or entity (such as a corporation) is financially insolvent – has defaulted on debt payments – but neither they nor their creditor(s) has yet moved to file formal bankruptcy. In other words, they are effectively bankrupt, from a practical point of view,…
