What is a Knock-Out Option? A knock-out option is an options contract that will become worthless if the investment reaches a specific price. In such a case, the options contract is “knocked out,” and the investor will not receive a payoff. An options contract refers to an agreement between a buyer and a seller to…
What is a Knock-In Option? A knock-in option is a latent options contract that comes into effect once the underlying asset reaches a certain price before the expiration date of the contract. An options contract is an agreement between a buyer and a seller to execute a transaction to buy or sell an asset at…
What is Dual Listing? Dual listing is when a particular security is listed on more than one exchange. DLC is a commonly used abbreviation for dual-listed companies. A dual-listed company is made up of more than one legally registered corporation that operates as a single business. Barrick Gold is an example of a…
What are Euro Medium-Term Notes (EMTNs)? Euro medium-term notes, or EMTNs, are unsecured debt instruments that mature in five to 10 years. They are usually issued in countries that deal with euro currencies. Euro currency is a type of currency that is held outside of the country of origin. EMTNs provide investors with an opportunity…
What is Estate Planning? Estate planning is a type of agreement where a person decides who will own and manage their assets once the person is deceased or incapacitated. Estate planning is important, as it eliminates the burden of legal heirs having to bear the taxes of transferring the assets had the estate not been…
What are Escrowed Shares? Escrowed shares are securities that are maintained in a special type of account until a specific business transaction is completed. The special type of account is called an escrow account. What is an Escrow Account? An escrow account is a type of account where assets/funds are maintained when transactions like mergers…
What is an Esoteric Debt? An esoteric debt is a complex investment vehicle that is offered to a unique group of investors, as they are difficult to value because of their distinctive pricing and structure. The best example that can be given is that of a credit default swap derivative that resulted in the 2008…
What is an Equity-Linked Note (ELN)? An equity-linked note (ELN) refers to a debt instrument that does not pay a fixed interest rate. Instead, it is a type of structured product whose return is linked to the performance of its underlying equity. The equity tied to an equity-linked note can be a security, a basket…
What is an Escrow Agreement? An escrow agreement refers to a contract that outlines the terms and conditions of a transaction for something of value – such as a bond, deed, or asset – which is held by a third party until all conditions have been met. The terms and conditions outlined in the agreement…
