What is Current Face? Current face – or current face value – refers to the face value of a mortgage-backed security (MBS) at a given point in time. Current face value is the same thing as current par value or current nominal value. It denotes the outstanding principal value of an MBS – the principal…
What is Currency Overlay? Currency overlay is an investment risk management strategy usually implemented by specialist firms that manage foreign currency exchange risk for client investors. The clients may be individual investors, mutual funds, or large institutional investors such as pension funds or insurance companies. Currency overlays can be an important risk hedging tool for…
What is a Currency Forward? A currency forward is a customized, written contract between parties that sets a fixed foreign currency exchange rate for a transaction that will occur on a specified future date. The future date for which the currency exchange rate is fixed is usually the date on which the two parties plan…
What Does Cross-Sell Mean? A cross-sell is the sale of an additional product or service that is related to the primary purchase that a customer or client makes. Perhaps the most well-known example of cross-selling is the fast-food sales line, “Do you want fries with that?”, encouraging the customer to purchase fries in addition to…
What is Delivered-at-Place (DAP)? The term Delivered-at-Place (DAP) is used in international trade to describe a situation wherein the seller of goods bears the responsibility and cost of transporting them to a place specified in the contract. The seller will also be liable to pay for any potential losses arising in transit. In such deals,…
What is Delivered Duty Paid (DDP)? The term Delivered Duty Paid (DDP) is used in international trade to describe a deal wherein the seller of goods agrees to bear all costs till the goods reach the destination mutually agreed upon in the contract. They include the cost of all transportation, any loss due to damage…
What is Overcollateralization? Overcollateralization is used to define the situation where an asset (or assets) value used as collateral on a loan exceeds the loan value. It is commonly used by borrowers to reduce credit risk for the creditor and enhance the loan’s credit rating. The Collateralization Ratio The collateralization ratio is outlined below: A…
What is a Grace Period? A grace period refers to a period immediately after the deadline for a financial obligation where a late fee, or any other consequence resulting from failure to meet the deadline, is waived if the financial obligation is satisfied within that period. A grace period is commonly included in mortgage loans…
What is the Icahn Lift? The “Icahn lift” refers to the effect on the share price of a company that American businessman Carl Icahn buys into. Due to Mr. Icahn’s prominent reputation of being an activist investor, when he accumulates shares in a company, the market expectation is that he will act as an activist…
What is Exchange Control? Exchange controls are government-imposed controls and restrictions on private transactions conducted in foreign currency. The government’s major aim of exchange control is to manage or prevent an adverse balance of payments position on national accounts. It involves ordering all or part of foreign exchange received by a country into a common…
