What is Junior Tranche Debt? A junior tranche is an unsecured debt that ranks lower in repayment priority than other debts in the event of default. It is also referred to as subordinated debt. When a company goes into liquidation or bankruptcy, the creditors receive payments in order of priority, with senior debt receiving payments…
What are Key Performance Indicators (KPIs)? Key Performance Indicators (KPIs) are metrics used to periodically track and evaluate the performance of a business or organization toward the achievement of specific goals. They are also used to gauge the overall performance of the company against other comparable companies within the industry. Source: CFI’s KPI Dashboard Course….
What is Alpha? Alpha is a measure of the performance of an investment as compared to a suitable benchmark index, such as the S&P 500. An alpha of one (the baseline value is zero) shows that the return on the investment during a specified time frame outperformed the overall market average by 1%. A negative…
What is Dividend Yield? The Dividend Yield is a financial ratio that measures the annual value of dividends received relative to the market value per share of a security. In other words, the dividend yield formula calculates the percentage of a company’s market price of a share that is paid to shareholders in the form…
What is Recapitalization? Recapitalization is a type of a corporate restructuring that aims to change a company’s capital structure. Usually, companies perform recapitalization to make their capital structure more stable or optimal. Recapitalization essentially involves exchanging one type of financing for another – debt for equity, or equity for debt. One example is when a company…
What is Corporate Structure? Corporate structure refers to the organization of different departments or business units within a company. Depending on a company’s goals and the industry in which it operates, corporate structure can differ significantly between companies. Each of the departments usually performs a specialized function while constantly collaborating with each other to achieve…
What is an Interest Rate? An interest rate refers to the amount charged by a lender to a borrower for any form of debt given, generally expressed as a percentage of the principal. The asset borrowed can be in the form of cash, large assets such as a vehicle or a building, or just consumer goods. In the…
What is the Secondary Market? The secondary market is where investors buy and sell securities from other investors (think of stock exchanges). For example, if you want to buy Apple stock, you would purchase the stock from investors who already own the stock rather than from Apple. Apple would not be involved in the transaction….
What is Clawback? What happens when a person promises to perform and then fails to deliver on their promises? Or what happens when it is found that a performance report is flawed? In some situations like that, clawback provisions, as stated in a signed contract, come into play. Clawback is a provision under which money…
