Interest rate risk hedging can arise due to fluctuation in interest rates. Macroeconomic factors affect the interest rates. Central Banks change interest rates from time to time that can directly affect the borrowers and investors. Individuals and corporate customers are prone to interest rate risks alike. Also, interest rates can occur for investors as well […]
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An ocean bill of lading is a legal document or contract between the shipper and a carrier through waters. The document can be used as a legally binding instrument. It is also a useful document for the exporter that can be presented to the bank for clearance of payment such as through a letter of
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Mezzanine funds are a form of financing that comes with hybrid features of equity and debt. These are unsecured forms of financing and are considered risky. Hence, lenders often demand higher returns on these funds than normal debt instruments. Mezzanine funds can come as convertible financing instruments that are initially issued as a debt and
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Companies can use either debt financing or equity financing to fund their financial needs. Normally, the cost of equity is lower than the cost of debt financing. However, if a company has a significantly larger equity portion without debt, its total cost of capital will go higher. Similarly, if a company has a too high
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Debt financing is one of the two primary sources of funding for any business, the other is equity financing. It is the process of borrowing money from a lender in return for a premium paid in the form of interest. Debt financing comes with greater covenants and strict approval criteria. However, its interest cost is
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Companies have two sources of financing; equity and debt. Equity financing is the primary source of funds for any business. It refers to investment against ownership stakes in a company. Private and public companies can use equity financing. However, the methods used to raise funds for both types of companies will vary considerably. The funding
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A bullet loan is a type of loan that requires a large lump sum repayment at maturity. It is also called the interest-only or a balloon loan. Bullet loans offer several advantages to borrowers. These loans are often used in the real estate sector. Companies use these loans to fund specific projects or equipment leasing.
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Straddle and strangle are two options trading strategies. These are volatility strategies. Traders can make profits with these strategies regardless of the market price movement direction. However, both strategies involve significant risks and sophisticated skills to implement correctly. Straddle A straddle is a trading strategy in which a trader holds both put and call options.
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Straddle is a trading strategy that involves buying two options contracts simultaneously; a call option and a buy option. Both contracts should have the same strike price and the same expiration date. It is neutral options trading strategy. Traders use it to earn profits in a volatile market. The profits with a straddle strategy can
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A spread is a trading strategy in options trading that involves two long or short options together. Spreads can be arranged in several ways by adjusting their strike prices for long or short positions, volatility, and expiration dates. In that sense, Options spreads give you more control and choice over options trading. However, these strategies
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