Debt

debtsprincipalborrowingdebt financingindebtednessnet debtdebt reductionborrowindebtedborrowed money
Debt is when something, usually money, is owed by one party, the borrower or debtor, to a second party, the lender or creditor.wikipedia
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Money

monetaryspeciecash
Debt is when something, usually money, is owed by one party, the borrower or debtor, to a second party, the lender or creditor.
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.

Debtor

borrowerdebtorsborrowers
Debt is when something, usually money, is owed by one party, the borrower or debtor, to a second party, the lender or creditor.
A debtor is an entity that owes a debt to another entity.

Interest

rate of interestsimple interestinterest rates
Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest.
For example, a customer would usually pay interest to borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited.

Floating interest rate

variable ratefloatingfloating rate
Interest rates may be fixed or floating.
A floating interest rate, also known as a variable or adjustable rate, refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the instrument.

Corporate finance

financial managementbusiness financefinance
A company may use various kinds of debt to finance its operations as a part of its overall corporate finance strategy.
Capital budgeting is concerned with the setting of criteria about which value-adding projects should receive investment funding, and whether to finance that investment with equity or debt capital.

Bullet loan

balloon loanBulletbullet bond
Such loans are also colloquially called "bullet loans", particularly if there is only a single payment at the end – the "bullet" – without a "stream" of interest payments during the life of the loan.
In banking and finance, a bullet loan is a loan where a payment of the entire principal of the loan, and sometimes the principal and interest, is due at the end of the loan term.

Stock

equitiesequityshares
Companies also use debt in many ways to leverage the investment made in their assets, "leveraging" the return on their equity.
This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all senior claims such as secured and unsecured debt), or voting power, often dividing these up in proportion to the amount of money each stockholder has invested.

Private equity

private-equityequityPrivate equity investor
Lenders that provide revenue-based financing work more closely with businesses than bank lenders, but take a more hands-off approach than private equity investors.
Venture capital is most suitable for businesses with large up-front capital requirements which cannot be financed by cheaper alternatives such as debt.

Bond (finance)

bondsbondbond issue
Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Bonds are debt securities, tradeable on a bond market. A company may also issue bonds, which are debt securities.
Convertible bonds let a bondholder exchange a bond to a number of shares of the issuer's common stock. These are known as hybrid securities, because they combine equity and debt features.

Credit card

credit cardscreditcredit-card
Amortization structures are common in mortgages and credit cards.
Teenagers can only use funds that are available on the card which helps promote financial management to reduce the risk of debt problems later in life.

Credit rating agency

credit rating agenciesrating agenciesrating agency
Debts owed by governments and private corporations may be rated by rating agencies, such as Moody's, Standard & Poor's, Fitch Ratings, and A. M. Best.
An agency may rate the creditworthiness of issuers of debt obligations, of debt instruments, and in some cases, of the servicers of the underlying debt, but not of individual consumers.

Credit bureau

credit bureausconsumer credit reporting agencyconsumer reporting agencies
Credit bureaus collect information about the borrowing and repayment history of consumers.
To simplify the analytical process for their customers, the different consumer reporting agencies can apply a mathematical algorithm to provide a score the customer can use to more rapidly assess the likelihood that an individual will repay a particular debt given the frequency that other individuals in similar situations have defaulted.

Bond market

credit marketcredit marketsdebt market
Bonds are debt securities, tradeable on a bond market.
The bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.

Debt relief

debt cancellationdebt forgivenesscancel
International Third World debt has reached the scale that many economists are convinced that debt relief or debt cancellation is the only way to restore global equity in relations with the developing nations.
Debt relief or debt cancellation is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations.

Bill of lading

bills of ladingladingcargo receipts
Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and a document proving the shipment was insured against loss or damage in transit.
An order bill of lading is used when shipping merchandise prior to payment, requiring a carrier to deliver the merchandise to the importer, and at the endorsement of the exporter the carrier may transfer title to the importer. Endorsed order bills of lading can be traded as a security or serve as collateral against debt obligations.

Credit crunch

credit crisiscredit squeezecredit liquidity crisis
When expectations corrected, deflation and a credit crunch followed.
A credit crunch is often caused by a sustained period of careless and inappropriate lending which results in losses for lending institutions and investors in debt when the loans turn sour and the full extent of bad debts becomes known.

Credit theory of money

credit moneydebt-based monetary systembank credit
* Debt theory of money
Proponents of these theories, such as Alfred Mitchell-Innes, sometimes emphasize that money and credit/debt are the same thing, seen from different points of view.

Underwriting

underwriterunderwritersunderwrite
Loan syndication is a risk management tool that allows the lead banks underwriting the debt to reduce their risk and free up lending capacity.
Underwriting activity in the mergers and acquisitions, equity issuance, debt issuance, syndicated loans and U.S. municipal bond markets is reported in the Thomson Financial league tables.

Investment

investmentsinvestingcapital investment
Companies also use debt in many ways to leverage the investment made in their assets, "leveraging" the return on their equity.
A high proportion of debt, reflected in a high debt-to-equity ratio, tends to make a company's earnings, free cash flow, and ultimately the returns to its investors, more risky or volatile.

Currency

currenciesforeign currencycoinage
Debt is normally denominated in a particular currency, and so changes in the valuation of that currency can change the effective size of the debt.
Innovations introduced by Muslim economists, traders and merchants include the earliest uses of credit, cheques, promissory notes, savings accounts, transactional accounts, loaning, trusts, exchange rates, the transfer of credit and debt, and banking institutions for loans and deposits.

Debt-to-GDP ratio

% of GDPdebt to GDP ratioas a percentage of GDP
For example, before the Great Depression, the debt-to-GDP ratio was very high.
Geopolitical and economic considerations – including interest rates, war, recessions, and other variables – influence the borrowing practices of a nation and the choice to incur further debt.

Securitization

securitizedsecuritisationsecuritizing
Loans can be turned into securities through the securitization process.
The difference between BB debt and AAA debt can be multiple hundreds of basis points.

Security (finance)

securitiessecuritydebt securities
Bonds are debt securities, tradeable on a bond market. A company may also issue bonds, which are debt securities.
Equity also enjoys the right to profits and capital gain, whereas holders of debt securities receive only interest and repayment of principal regardless of how well the issuer performs financially.

Credit rating

ratingcredit ratingscredit quality
These agencies assess the ability of the debtor to honor his obligations and accordingly give him or her a credit rating.
Credit ratings can address a corporation's financial instruments i.e. debt security such as a bond, but also the corporations itself.

Developing country

developing countriesdeveloping worlddeveloping nations
International Third World debt has reached the scale that many economists are convinced that debt relief or debt cancellation is the only way to restore global equity in relations with the developing nations.
Indebtedness (see Debt of developing countries)