Accounting earnings
Earnings of a firm as reported on its income statement.
Accounting exposure
The change in the value of a firms foreign currency denominated accounts due to a change in exchange rates.
Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.
Accounting liquidity
The ease and quickness with which assets can be converted to cash.
Audit
The examination of the accounting and financial documents of a firm by an objective professional. The audit is done to determine the records accuracy, consistency, and conformity to legal and accounting principles.
Credit
Money loaned.
Credit analysis
The process of analyzing information on companies and bond issues in order to estimate the ability of the issuer to live up to its future contractual obligations.
Credit enhancement
Purchase of the financial guarantee of a large insurance company to raise funds.
Crediting rate
The interest rate offered on an investment type insurance policy.
Creditor
Lender of money.
Credit period
The length of time for which the customer is granted credit.
Credit risk
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the payment may not be made on a negotiable instrument.
Credit scoring
A statistical technique wherein several financial characteristics are combined to form a single score to represent a customers credit worthiness.
Credit spread
Applies to derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a credit spread. Antithesis of a debit spread.
Debt
Money borrowed.
Debt/equity ratio
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.
Debt capacity
Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.
Debt displacement
The amount of borrowing that leasing displaces. Firms that do a lot of leasing will be forced to cut back on borrowing.
Investment Category
A broad class of assets with similar characteristics. The five investment categories include cash equivalents, fixed principal, equity, debt, and tangibles.
Mortgage
A lawful document promising a lender a certain property as security or guarantee towards payment of a debt.
Multicurrency loans
Gives the borrower the possibility of drawing a loan in different currencies.
Multifamily loans
Loans usually represented by conventional mortgages on multi-family rental apartments.