Recourse vs Non Recourse Debt

The difference between recourse and non-recourse debt is that of personal liability. Under a recourse debt, the borrower is personally held liable whereas under a non-recourse debt the borrower is liable to …

Pecking Order Theory

Pecking order theory is a theory related to capital structure. It was initially suggested by Donaldson. In 1984, Myers and Majluf modified the theory and made it popular.According to …

Floating Charge

Meaning of Floating Charge A floating charge is a type of security that a creditor undertakes on entire business’s assets, in respect of a particular debt. Floating charge allows …

Comparative Advantage

Meaning of Comparative Advantage Comparative advantage refers to the ability of a country to produce particular goods or services at lower opportunity cost as compared to the others in …

First Mortgage

Meaning of First Mortgage A first mortgage is a lien on a property that secures the mortgage. It is a loan obtained for financing the purchase of a property, …

Agency Cost

What is Agency Cost? Agency cost is the cost incurred because of conflict that arises between the shareholders and the managers of a company. These conflicts arise because shareholders …

Economic Exposure

Meaning of Economic Exposure Economic exposure, also known as operating exposure refers to an effect caused on a company’s cash flows due to unexpected currency rate fluctuations. Economic exposures …

Transaction Exposure

Meaning Of Transaction Exposure Transaction exposure is the risk incurred due to the fluctuations in exchange rates before the contract is settled. The foreign exchange rate that changes in …