What is a Subordination Agreement? A Subordination Agreement is a narrow form of Intercreditor Agreement that focuses on the priority of two or more creditors’ debts and claims concerning a borrower with multiple loans and common security interest. It is also known as a Priority Agreement. The contract governs the lien position among creditors with…
What is a Stockbroker? A stockbroker is a regulated representative of the financial market who enables the buying and selling of securities on behalf of financial institutions, investor clients, and firms. A stockbroker is also called a registered representative or a broker. The trading or purchase or sale of stocks on the national stock exchanges…
What is Historical Cost? In accounting, the historical cost of an asset refers to its purchase price or its original monetary value. Based on the historical cost principle, the transactions of a business tend to be recorded at their historical costs. The concept is in conjunction with the cost principle, which emphasizes that assets, equity…
What is Historical Volatility (HV)? Historical volatility, or HV, is a statistical indicator that measures the distribution of returns for a specific security or market index over a specified period. The historical volatility of a security or other financial instrument in a given period is estimated by finding the average deviation of the instrument from…
What is a Portfolio Company? A portfolio company is a company (public or private) that a venture capital firm, buyout firm, or holding company owns equity. In other words, companies that private equity firms hold an interest in are considered portfolio companies. Investing in a portfolio company aims to increase its value and earn a…
What is Environmental Due Diligence? Environmental due diligence is a systematic procedure that evaluates a property or land for possible environmental contamination risks, such as groundwater or soil contamination. The Environmental Protection Agency (EPA) provides standards for due diligence. Environmental Professionals (EPs) shall decide the degree and form of assessment warranted, which may differ depending…
What is Entity Theory? Entity theory is a concept that advocates for the separation of business transactions and transactions of its owners. The theory states that assets of the owners should not be mixed with the business, as owners cannot be personally liable for the debts of the business. The entity theory enables one to…
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…
