Tag: Lending

Purchase and Resale Agreements – PRAs definition explanation

What is Purchase and Resale Agreements – PRAs?
An arrangement between the Bank of Canada and dealers whereby the Bank buys treasuries from a dealer, and the dealer agrees to repurchase the treasuries the next day. Read more for examples and further explanation including related video clips and also comments
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Loan To Value Ratio – LTV Ratio definition explanation

What is Loan To Value Ratio – LTV Ratio?
A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

Calculated as: Read more for examples and further explanation including related video clips and also comments
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Dry Loan definition explanation

What is Dry Loan?
A mortgage where the funds are supplied after all of the required sale and loan documentation has been completed and reviewed. For the buyer and seller, dry loans provide more insurance that the transaction will be completed without problems. Conditions surrounding the requirements of dry loans differ based on state laws. Read more for examples and further explanation including related video clips and also comments
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Prime definition explanation

What is Prime?
A classification of borrowers, rates or holdings in the lending market that are considered to be of high quality. This classification is placed on those borrowers that are deemed to be the most credit-worthy and the prime rate is the rate that a lender will lend to its high quality borrowers. Read more for examples and further explanation including related video clips and also comments
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Multiplier Effect definition explanation

What is Multiplier Effect?
The expansion of a country’s money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is money used to create more money and is calculated by dividing total bank deposits by the reserve requirement. Read more for examples and further explanation including related video clips and also comments
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Prime Brokerage definition explanation

What is Prime Brokerage?
A special group of services that many brokerages give to special clients. The services provided under prime brokering are securities lending, leveraged trade executions, and cash management, among other things. Prime brokerage services are provided by most of the large brokers, such as Goldman Sachs, Paine Webber, and Morgan Stanley Dean Witter. Read more for examples and further explanation including related video clips and also comments
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At Par definition explanation

What is At Par?
A term that refers to a bond, preferred stock or other debt obligation that is trading at its face value. The term “”at par”” is most commonly used with bonds.

A bond that trades at par will have a yield equal to its coupon, and investors will expect a return equal to the coupon for the risk of lending to the bond issuer. Bonds are quoted at 100 when trading at par. Read more for examples and further explanation including related video clips and also comments
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Pro-Rata Tranche definition explanation

What is Pro-Rata Tranche?
A portion of a syndicated loan that is made up of a revolving credit facility and an amortizing term loan. The pro-rata tranche is syndicated by banks, as opposed to institutional tranches, which are primarily comprised of non-bank lending institutions. Both tranches may often be found within the same syndicated loan.

Pro-rata tranches are common within the leverage loan market, or in loans to companies with existing high debt loads. Read more for examples and further explanation including related video clips and also comments
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