Clawback
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...
Haircut
What is a Haircut (in Finance)? In finance, a haircut refers to the reduction applied to the value of an asset for the purpose of calculating the capital requirement, margin, and collateral level. In other words, it is the difference between the amount of a loan given and the market value of the asset to...
Quick Ratio
What is the Quick Ratio? The Quick Ratio, also known as the Acid-test or Liquidity ratio, measures a business’s ability to pay its short-term liabilities by using assets that are readily convertible into cash. These assets are, namely, cash, marketable securities, and accounts receivable. These assets are known as “quick” assets because they can be...
Market Risk Premium
What is the Market Risk Premium? The market risk premium is the additional return an investor will receive (or expects to receive) from holding a risky market portfolio instead of risk-free assets. The market risk premium is part of the Capital Asset Pricing Model (CAPM) which analysts and investors use to calculate the acceptable rate...
Coupon Rate
What is the Coupon Rate? The coupon rate is the amount of annual interest income paid to a bondholder, based on the face value of the bond. Government and non-government entities issue bonds to raise money to finance their operations. When a person buys a bond, the bond issuer promises to make periodic payments to...
