What is Delivery Versus Payment (DVP)? Delivery versus payment (DVP) is a method of settlement for specifically the securities market. It basically guarantees the transfer of securities only after payment is made. It requires the buyer to fulfill their payment obligations before or immediately at the time of the delivery of the purchased security/securities. The…
What is Disclosure? Disclosure, in financial terms, basically refers to the action of making all relevant information about a business available to the public in a timely manner. What Does “Relevant Information” Mean? Relevant information about a business refers to any and every piece of information, including facts, figures, dates, procedures, innovations, and so on,…
What is a Drawing Account? A drawing account is a financial account that essentially records owners’ drawings, i.e., the assets, mainly including money, that are withdrawn from a business by its owner(s) for their personal use. What Constitutes a “Drawing” from the Business? The definition of the drawing account includes assets, and not just money/cash,…
What is Due From Account? Due from account is a receivable account in the general ledger that records funds that are owed to the business. The account is normally used when amounts are owed between related companies. Features of Due from Account Due from account is characterized by the following features: 1. Asset account Due…
What is Exercise Price? The exercise price within an option is the price at which the holder is capable of purchasing the underlying asset. If the market price of the asset is above the exercise price, the holder is capable of purchasing the asset at a discount relative to what the market is offering; thereby,…
What is a Horizontal Line? A horizontal line is a line drawn touching the support or resistance level on a price chart in technical analysis. Horizontal lines are commonly used to identify price breakouts and are deemed essential when analyzing trades. In geometry analysis, a horizontal line is a straight line with a zero slope…
What is Financial Exposure? Financial exposure is a term used to describe investment risk. It is a calculation of the amount of money that an investor might potentially lose from an investment. An investor’s financial exposure may be expressed as an absolute monetary amount – e.g., $10,000 – or as a percentage of the amount…
What is Financial Engineering? Financial engineering encompasses a broad, multidisciplinary field of study and practice that essentially applies an engineering approach and methodology to the world of finance. It integrates and utilizes information obtained from different fields, such as economics, mathematics, computer science, and financial theory. Much of financial engineering consists of converting financial theories…
What is Financial Distress? Financial distress is a term commonly used in corporate finance that describes any situation where an individual’s or company’s financial condition leaves them struggling to pay their bills, especially loan payments due to creditors. Severe, prolonged financial distress may eventually lead to bankruptcy. When a condition of financial distress occurs, it…
What is a Financial Crisis? A financial crisis is defined as any situation where one or more significant financial assets – such as stocks, real estate, or oil – suddenly (and usually unexpectedly) loses a substantial amount of their nominal value. Common examples of a financial crisis include financial market crashes – either widespread or…
