Mortgage Bank
What is a Mortgage Bank? A mortgage bank is a bank specializing in mortgage loans. It can be involved in originating or servicing mortgage loans, or both. The banks loan their own capital to borrowers and either collect payments in installments along with a certain rate of interest or sell their loans in the secondary...
Bridge Financing
What is Bridge Financing? Bridge financing is a form of temporary financing intended to cover a company’s short-term costs until the moment when regular long-term financing is secured. Thus, it is named bridge financing since it is like a bridge that connects a company to debt capital through short-term borrowings. An institution that urgently needs...
Eurobond
What is a Eurobond? A Eurobond is a fixed-income debt instrument (security) denominated in a different currency than the local one of the country where the bond’s been issued. Hence, it is a unique type of bond. Eurobonds allow corporations to raise funds by issuing bonds in a foreign currency. The bonds are also called...
Capital Adequacy Ratio (CAR)
What is the Capital Adequacy Ratio (CAR)? The Capital Adequacy Ratio sets standards for banks by looking at a bank’s ability to pay liabilities and respond to credit risks and operational risks. A bank with a good CAR has sufficient capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositors’...
Automatic Conversion Clause
What is an Automatic Conversion Clause? An automatic conversion clause is a provision that allows for the automatic exchange of preferred stock or convertible debt for common stock in a company. The conversion is considered automatic or mandatory because it does not require a vote of the board of directors for the conversion to take...
