Private equity refers to a range of financial firms that restructure companies privately before selling them. While private equity firms may or may not buy and sell public companies, the companies are private entities during the restructuring process. Private Equity, Buyouts and Leverage Private equity firms have developed a somewhat notorious reputation for buying vulnerable […]
A debt in financial terms is a legal arrangement that outlines a specific lending and repayment procedure for a given amount of some asset, most often cash. Most debts will carry a fixed or variable interest rate or payment to compensate the lender for the absence of their asset and the counterparty risk from putting […]
UST is the colloquial trading acronym used for United States Treasury Bills, or ‘T-Bills’. UST are short-term debt securities (less than one year) issued by the federal government to finance their operations and existing obligations, and come in a range of maturities and discount prices sold in denominations of $1,000 each. Discounts Vs Interest UST […]
Allocation in finance is the process where an individual or entity assigns portions of it portfolio across the major asset classes according to its appetite for risk, its investment goals and its relevant time horizons. Since different asset classes have different general performance features, the allocation process can theoretically create quite nuanced and sophisticated portfolios […]
Money market is the term for the various markets where short term debt instruments are traded. Money market instruments have maturity dates ranging from overnight to just under 1 year. Shape of the Money Market The money market is intended for institutional investors that need to make wholesale trades to cover inflows and outflows of […]
Duration is a complex measure of a bond’s price sensitivity to interest rate changes. Investors who simply intend to hold a bond until maturity will have little concern for its duration, but investors who may wish to resell the bond before maturity or whose decision-making is affected by their current portfolio value will be interested […]
A credit swap is the colloquial term for a credit default swap or CDS, which is a credit derivative where the buyer pays a premium to the seller in exchange for the seller’s promise to pay out a given amount to the buyer if the underlying credit instrument fails to meet one or more outlined […]
Muni bonds is the colloquial term for municipal bonds, which are credit instruments offered by cities, states, counties and other government entities smaller than the federal level for use in capital expenditure projects, such as the building of roads, schools and hospitals. Muni bonds stand out for their federal tax exemption, and their exemption from […]
CDO is the acronym used for a collateralized debt obligation, which is a synthetic investment product made up of a range of income-generating assets that is divided into tranches with different risk profiles and repayment priorities. Breaking Down CDO While CDOs may seem complex at first glance, they are actually reasonably simple to understand, even […]
ICE is the acronym used for the Intercontinental Exchange, which is an electronic exchange platform designed originally for the trading of energy related products, but which has expanded to offer trading in other commodities, foreign exchange and interest rate products and equity index futures. ICE is now the parent company of a wide range of […]
