A modification or restructuring in a troubled debt occurs if a debtor is facing financial issues or the creditor grants concession. The debtor must evaluate the financial circumstances carefully. The creditor’s concession terms should also be evaluated to determine whether the restructuring of troubled debt falls under the accounting standards of ASC 470. Let us […]
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A put warrant is a company-issued contract to sell back stocks at a specified price and on or before a specific date. Put warrants can be issued independently but are often issued as a sweetener with a debt or equity instrument. Let us discuss what is a put warrant and how does it work. What
What is a Put Warrant and How Does it Work? Read More »
Accelerated share repurchase (ASR) contracts allow a company to repurchase a large number of treasury stocks quickly. A company seeks help from an investment bank that first borrows these shares from stock lenders and then purchases the same number of shares from the stock markets. Let us discuss what is an accelerated share repurchase program,
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ASC 470-30 defines the accounting treatment for participating mortgage loans. These loans involve a sharing arrangement between the lender and the borrower usually. Both parties agree on the sharing proportion, interest rate, and other loan terms. Let us discuss what is a participating mortgage loan and what is the accounting guidance for it. What is
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Bear call spreads, or bear call credit spreads, are options strategies employed by options traders who expect the underlying assets price to decline in the future. So, it’s a bearish approach because the expectation is about a decrease in the price for underlying assets. Further, it’s a credit spread because the net premium received is
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Bull put spread is an options strategy; it’s suitable for the traders that want to limit their loss. However, it comes with restricted profitability. In this article, we shall discuss detailed characteristics of the strategy, including opening the position. An investor uses a bull put spread when they believe the underlying asset will rise moderately
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Credit spreads and debit spreads are the strategies to trade-in options. In the title context, the spread is a difference between receipt and payment of the premium on writing/purchasing options. So, if the receipt is higher than payment on exchange of options, it’s called credit spread. On the other hand, if payment is higher than
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Options are a derivate instrument, and their value is dependent on the underlying assets. It’s used to realize speculation on the movement of an underlying asset. If the price of the underlying asset moves in expectation of the buyer of the options, it generates a financial return for them. The other side movement can lead
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Definition Credit spread refers to the yield differences between two bonds of the same maturity and different credit quality. One of the bonds is typically set as a benchmark. For instance, one bond can be a US Treasury bond (benchmark), and the other can be a corporate bond; there is an expected yield difference between
What is Credit Spread? Definition, Formula, Example, Interpretation, and More Read More »
Companies issue convertible debt that may come with embedded conversion features. These debt instruments are useful for issuing entities to raise capital. Investors can enjoy additional benefits of embedded conversion features as well as convertible debt features. Let us discuss the extinguishment of debt with an embedded conversion feature and its accounting treatment. Debt with
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