Income Stock is a type of equity security, which provides regular dividends to the shareholders of the company. Moreover, these are stocks that provide investors with a steady income source and less risk appetite.
“In substance” means in essence and in business or commercial transactions. And that may not be in exact legal form. While “Defeasance” means retirement from liability i.e extinguishment of the liability. In other words, in the corporate and commercial world, it is one of the provisions in the loan. Whereby the loan obligations can be taken off or removed from the balance sheet, in substance.
Imputation tax is a system that helps to avoid double taxation in the case of a dividend. We can also call it Dividend Imputation or Franking-credit. Basically, the system ensures that the investors who get dividends are not taxed twice.
Hell or high water clause is a provision in a contract directing the buyer to continue making the payment to the seller. The buyer must make the payment irrespective of any difficulties.
Senior Debt and Junior Debt (Subordinated Debt or Mezzanine Debt), both are long term liabilities or non-current liabilities of the company. They are an important source of finance in debt financing.
Junior Debt is a source of finance issued by the company with a lower repayment priority. It is a type of debt issued by the company which gets lesser repayment priority than the senior debt at the time of default. Junior Debt can be in the form of bonds, debentures, or any other debt instrument. Since this debt gets a lower preference in repayment, they are very risky in nature.
Market risk is the risk of change or decrease in the value of investments due to changes in uncontrollable market factors. These market factors can be recession or depression, changes in government policies affecting key interest rates, natural calamities, and disasters, political unrest, terrorism, etc.
A hedge is a crucial component of the risk management process. Hedging one’s portfolio helps to mitigate risk and manage one’s exposure. Once you have hedged your portfolio, you might want to know what portion or percentage of your portfolio is risk protected. This is where we use the hedge ratio.
“Throughput” is the rate at which a corporation converts its goods, services, and other offerings into sales and makes money out of it. “Throughput Accounting” is a modern technique of management accounting and presents an alternative to conventional forms of accounting.
Nash equilibrium is a very crucial concept of game theory. It helps to determine an optimal solution in a non-cooperative game where all players do not have any incentive to deviate from their initial move. In other words, this is the situation where everyone in the game is putting in their best, assuming and understanding clearly what the other players would be supposed to be doing.
Gray Market or Grey Market is a marketplace where goods and/or financial securities are traded in an unofficial manner. It is not an illegal market place but it is just an unofficial marketplace. In the case of the goods market, this market supplies goods of the authorized brands from authorized manufacturers but through an unauthorized delivery channel. In the case of the financial securities market, all those securities which are either barred from trading on the exchange or are yet not up for even an IPO, are traded in this market. All transactions in Gray Market are in cash terms without any regulatory or governing authority.
A bankruptcy trustee is the second most important person after the debtor in the bankruptcy. This trustee manages the debtor’s property and is also responsible for distributing the proceeds of the property to the debt holders. Such appointed or assigned trustees to get complete administrative control or work as an administrator of the debtor’s property. A trustee is under a fiduciary obligation to manage the debtor’s property impartially.
