What is a Leveraged Buyout (LBO)? In corporate finance, a leveraged buyout (LBO) is a transaction where a company is acquired using debt as the main source of consideration. These transactions typically occur when a private equity (PE) firm borrows as much as they can from a variety of lenders (up to 70 or 80 percent of the…
What are Hedge Fund Strategies? In this article, we will explore the main hedge fund strategies. But first, what is a hedge fund? A hedge fund is an investment fund created by accredited investors and institutional investors for the purpose of maximizing returns and reducing or eliminating risk, regardless of market climb or decline. It…
What is Material Nonpublic Information? Material Nonpublic Information is information that would affect the market value or trading of a security and that has not been disseminated to the general public. It is considered insider information. Information is considered to be “material” if its dissemination to the public would likely affect the market value or…
What are Marketable Securities? Marketable securities are unrestricted short-term financial instruments that are issued either for equity securities or for debt securities of a publicly listed company. The issuing company creates these instruments for the express purpose of raising funds to further finance business activities and expansion. Governments also issue debt securities of this type in the form of T-bills, used for…
What are the Most Important Fixed Income Terms? Welcome to CFI’s guide to the most important fixed income terms. For a complete understanding of bonds and fixed-income securities, check out our Fixed Income Fundamentals course. Annuity: An annuity is a series of payments in equal time periods, guaranteed for a fixed number of years. Annuity…
What is a Subsidiary? A subsidiary (sub) is a business entity or corporation that is fully owned or partially controlled by another company, termed as the parent, or holding, company. Ownership is determined by the percentage of shares held by the parent company, and that ownership stake must be at least 51%. What are the…
What is Simple Interest? Simple interest is a calculation of interest that doesn’t take into account the effect of compounding. In many cases, interest compounds with each designated period of a loan, but in the case of simple interest, it does not. The calculation of simple interest is equal to the principal amount multiplied by…
What is a Vendor? A vendor refers to an individual or company that sells something to another individual or entity. Vendors can be utilized at different spots in the supply chain, and with multiple occurrences throughout. The term vendor can encompass retailers or suppliers broadly with what is often a component in a larger product….
What is the Vacancy Rate? The vacancy rate is how many available dwellings are on the market for rent within a specified geographic region. The number is presented as a percentage and is often defined within a city, town, province, or state. Vacancy rates can also apply to commercial/office space (storefronts or high-rises) and reflect…
