What is Free Cash Flow? Free Cash Flow (FCF) refers to the cash that companies or businesses generate after reducing cash flows related to capital assets maintenance from their operational cash outflows. A company’s FCF can provide various details about its performance. Most importantly, it is an indicator of a …

What is a Credit Rating? A credit rating represents a measurement of a borrower’s creditworthiness. It comes from a credit agency that shows their opinion of an entity’s ability and willingness to fulfill its financial obligations. Usually, credit rating agencies look at various factors to determine an entity’s credit rating. …

Two terms often associated with debt are credit rating and credit score. Some people may use both of these terms interchangeably. However, both have some differences and relate to different entities. What is a Credit Rating? Credit rating is an assessment of a borrower’s creditworthiness in general terms or with …

When investors build their portfolio of investments, they must take several types of risks. These risks are specific to each type of investment. Therefore, investors need to identify them on time and ensure they can manage those risks. One risk that is common to debt investments is default risk. What …

Through securitization, issuers can repackage several assets into one and offer them to investors. One common type of these securities possible through securitization is asset-backed securities. Likewise, asset-backed Securities (ABS) have several other types of securities. Collateralized debt obligations are one of the types of these ABS. What is a …

Mergers and Acquisitions are prominent terms in the world of finance and investing. They both refer to financial transactions where companies buy, sell or invest in other companies. These usually include two companies combining for various reasons. Through mergers and acquisitions, companies can increase their value or size, enter new …

What is a Mortgage? A mortgage is a debt instrument that comes with a real estate property as collateral. Mortgages are prevalent in the real estate industry where property buyers need to finance their purchases. Financial institutions or mortgage lenders provide mortgages to borrowers. In exchange, borrowers make regular interest …

What is a Mortgage? A mortgage is a type of loan that allows borrowers to purchase a house or property. These loans usually come from financial institutions, such as banks, or mortgage lenders. Home buyers can obtain mortgages to cover the total cost of their home. Usually, however, lenders may …

What is an Amortizing Loan? An amortizing loan (or amortized loan) is a type of loan that comes with periodic, scheduled payments of both the principal and interest amount. With amortized loans, borrowers need to repay the interest expense for the period. After that, they must pay an additional amount …

There are various ratios that lenders use to determine whether they should provide finance to a lender. They do so by evaluating the risk they take on providing the loan. Among these metrics, the Loan-to-Value (LTV) ratio is prevalent for mortgages. Most lenders in the home loans market use this …