A subprime loan is a type of loan offered at a rate above prime to individuals who do not qualify for prime-rate loans. Quite often subprime borrowers have been turned down by traditional lenders because of their low credit ratings or other factors that suggest they have a reasonable chance of defaulting on the debt repayment.
In statistics, a two-tailed test is a method in which the critical area of a distribution is two-sided and tests whether a sample is greater than or less than a certain range of values. It is used in null-hypothesis testing and testing for statistical significance. If the sample being tested falls into either of the critical areas, the alternative hypothesis is accepted instead of the null hypothesis. The two-tailed test gets its name from testing the area under both tails of a normal distribution, although the test can be used in other non-normal distributions.
Lucrative means to produce wealth. To be lucrative means that an item or idea can create a large volume of income. The term lucrative is generally used to describe something with the potential to make money. The potential revenue source can include anything from collecting coins, creating a new invention or idea, or a person. Lucrative can be used in both past and present tenses. If used in present terms there is no guarantee that a particular idea with be a profitable venture, but if used in the past tense it signifies that the idea has been proven to produce wealth.
A leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.
An exempt transaction is a type of securities transaction where a business does not need to file registrations with any regulatory bodies, provided the number of securities involved is relatively minor compared to the scope of the issuer’s operations and that no new securities are being issued. Exempt securities are the instruments used that the government backs, which have tax-exempt status.
USDA streamlined refinancing refers to a mortgage-refinancing option offered by the United States Department of Agriculture (USDA). The USDA streamlined refinancing is for homeowners who purchased their home using a USDA loan. A Section 502 loan, which is a loan available to low-income individuals and households in rural areas, would be an example of this type of loan.
Net-net is a value investing technique developed by Benjamin Graham in which a company is valued based solely on its net current assets. Net net focuses on current assets, taking cash and cash equivalents at full value, then reducing accounts receivable for doubtful accounts, and reducing inventories to liquidation values. Net-net value is calculated by deducting total liabilities from the adjusted current assets.
Financial engineering is the use of mathematical techniques to solve financial problems. Financial engineering uses tools and knowledge from the fields of computer science, statistics, economics, and applied mathematics to address current financial issues as well as to devise new and innovative financial products.
A Treasury note (T-note for short) is a marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years.
A price ceiling is the mandated maximum amount a seller is allowed to charge for a product or service. Usually set by law, price ceilings are typically applied only to staples such as food and energy products when such goods become unaffordable to regular consumers. Some areas have rent ceilings to protect renters from rapidly climbing rates on residences.