Definition: The Insider Trading means, buying and selling off public company’s stock shares by a person who have an access to the material non-public information. The insider trading might be legal or illegal depending on the trading being done as a result of publicly disclosed information or on the basis of non-disclosure of material information to the public. In insider … [Read more...] about Insider Trading
Moratorium Period
Definition: The Moratorium Period is the time during the loan term in which the borrower in not required to repay the loan. It is the relaxation time given to the borrowers before beginning with the loan repayment in the form of EMIs. The education loan is a very good example that features the moratorium period scheme, where the loan repayment begins after the student … [Read more...] about Moratorium Period
Balloon Payment
Definition: The Balloon payment is the final amount paid against the loan and is much higher than the regular monthly installments. Simply, the lump sum amount attached to a loan which has to be paid (generally at the end of the loan period) to extinguish the loan is called as a balloon payment. The need for a balloon payment may arise due to the inadequacy of the previous … [Read more...] about Balloon Payment
Foreign Draft
Definition: The Foreign Draft is a type of bank draft, which is used to send money to the foreign countries. The foreign draft can be purchased from the commercial banks, which is prepared in the local currency and then is forwarded to the intended institution in any country, where the currency is converted on the basis of the current exchange rate. The individual or a firm … [Read more...] about Foreign Draft
Leveraged Buyout
Definition: Leveraged Buyout or LBO is the transaction wherein the acquisition of another company or a single asset is financed through the combination of equity and the significant amount of debt or borrowed funds. In other words, Leveraged buyout is the acquisition of another company by using the debt as the major or primary source of financing. Usually, the ratio used in … [Read more...] about Leveraged Buyout
Closed-End Fund
Definition: The Closed-End Fund or CEFs is essentially the publicly traded investment company that issue the fixed number of shares through the initial public offerings (IPO). In other words, the investment companies that raise their fixed amount of capital by trading their shares on an exchange, just like stock, is called as a closed-end fund. The unit capital of a … [Read more...] about Closed-End Fund
Open-End Fund
Definition: The Open-End Fund is the type of mutual fund, that has no restriction on the number of units the fund issues. In other words, an investor can issue and redeem its shares continuously, as there is no limit on the number of units the open-end fund will issue. The Open-End Fund is convenient for the investors since it issues as many shares as required by them and … [Read more...] about Open-End Fund
Line of Credit
Definition: The Line of Credit is the agreement between the financial institution (bank) and the individual (company or government) with respect to the maximum loan amount that an individual can borrow from a bank any time he wants, provided the loan amount does not exceed the set limit in the agreement. In other words, Line of credit is the credit limit of customer, i.e. … [Read more...] about Line of Credit
Amortization Schedule
Definition: The Amortization Schedule is the tabular representation of the periodic payments (principal + interest) made against the loan or mortgage. This schedule clearly differentiates the portion of payment that belongs to the interest amount and the portion that relates to the principal amount and helps to know the principal balance left after each payment. The term … [Read more...] about Amortization Schedule
Co-Branded Credit Cards
Definition: The Co-Branded Credit Cards are the credit cards issued by the banks in joint sponsorship with the retail merchants. In other words, a card issued jointly by two parties, wherein one is the lending institution (bank), and the other is a non-financial group (retail merchant). Co-Branded Credit Cards are often used by hotels, airlines, big retail chains with the … [Read more...] about Co-Branded Credit Cards