Month: August 2020

Regulation Z is the Federal Reserve Board regulation that implemented the Truth in Lending Act of 1968, which was part of the Consumer Credit Protection Act of that same year. The act’s major goals were to provide consumers with better information about the true costs of credit and to protect them from certain misleading practices by the lending industry. Under these rules, lenders must disclose interest rates in writing, give borrowers the chance to cancel certain types of loans within a specified period, use clear language about loan and credit terms, and respond to complaints, among other provisions. The terms Regulation Z and Truth in Lending Act (TILA) are often used synonymously. read more

A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier.

Layaway is a purchasing method in which a consumer places a deposit on an item to lay it away for later pick-up when they are financially positioned to pay off the balance. Layaway also lets customers make smaller payments on the product until the purchase is paid in full. A layaway plan ensures the consumer will get their chosen merchandise once it’s fully paid.

A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier.

Layaway is a purchasing method in which a consumer places a deposit on an item to lay it away for later pick-up when they are financially positioned to pay off the balance. Layaway also lets customers make smaller payments on the product until the purchase is paid in full. A layaway plan ensures the consumer will get their chosen merchandise once it’s fully paid.

Key rate duration measures how the value of a security or portfolio changes at a specific maturity point along the entirety of the yield curve. When keeping other maturities constant, the key rate duration can be used to measure the sensitivity in a security’s price to a 1% change in yield for a specific maturity.

The provision for credit losses (PCL) is an estimation of potential losses that a company might experience due to credit risk. The provision for credit losses is treated as an expense on the company’s financial statements. They are expected losses from delinquent and bad debt or other credit that is likely to default or become unrecoverable. If, for example, the company calculates that accounts over 90 days past due have a recovery rate of 40%, it will make a provision for credit losses based on 40% of the balance of these accounts. read more

The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The federal funds overnight rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.

An outright futures position is a long or short trade that is not hedged from market risk. Both the potential gain and the potential risk are greater for outright positions than for positions that are covered or hedged in some way. An outright position is one which stands on its own, and is not part of a larger or more complex trade.

Rationalization is the reorganization of a company in order to increase its operating efficiency. This sort of reorganization may lead to an expansion or reduction in company size, a change of policy, or alteration of strategy pertaining to particular products offered. Similar to a reorganization, a rationalization is more widespread, encompassing strategy as well as structural changes. Rationalization is necessary for a company to increase revenue, decrease costs and improve its bottom line.