Author: John

Import Quotas: Definition, Examples, Meaning, Usage

To maintain a sustainable economy, many countries have implemented quotas that limit the volume of goods imported into their country. These import quotas generally serve three main purposes: to protect domestic industries from foreign competition, to safeguard public health and safety, and to preserve scarce resources. Without these quotas, a …

Subordinated Debt: Definition, Examples, Types, Meaning, vs. Senior Debt

Each debt comes with a seniority ranking that dictates the priority of its repayment when the borrower defaults. This priority occurs on the borrower’s side. However, the lender also gets impacted by it. Usually, seniority rankings are crucial when a company accumulates debt finance from several sources. If the company …

Interest Rate Floor Tax Treatment, Accounting Entries

Debt instruments may come with a fixed or variable interest rate. With the former, the lender charges a fixed interest rate on the loaned amount. However, variable interest instruments may involve complex calculations. With these instruments, the lender adds a margin to a benchmark interest rate or index to calculate …

Interest Rate Cap Premium

An interest rate cap is a derivative instrument that involves an agreement between two parties. In this agreement, one party assumes the responsibility to pay the other if the interest rate on a variable loan exceeds an agreed limit. The initial contract between both parties sets the timeframe, interest rate …