Money market borrowing

Repo reduces counterparty risk in money market borrowing and lending, because of the security offered by the collateral given in the loan. 

A bond is a debt capital market instrument issued by a borrower, who is then required to repay to the lender/investor the amount borrowed plus interest, over a specified period of time. Bonds are also known as fixed income instruments, or fixed interest instruments in the sterling markets. Usually bonds are considered to be those debt securities with terms to maturity of over one year. Debt issued with a maturity of less than one year is considered to be money market debt. There are many different types of bonds that can be issued. The most common bond is the conventional (or plain vanilla or bullet) bond. This is a bond paying periodic interest pay-... 

The repo market has allowed the hedge fund to borrow in sterling at a rate below the cost of unsecured borrowing in the money market (4.95%). The repo market maker is overcollateralised by the difference between the value of the bonds (in ) and the loan proceeds (2%). A rise in USD yields or a fall in the USD exchange rate value will adversely affect the value of the bonds, cansing the market maker to be undercollateralised. 

In that case, the investors borrow at the money market rate. They... 

ESOP Stock Plan (Employees Stock Ownership Plank This type of plan is in wide use. Typically, the plan borrows money from a bank and uses those funds to purchase a large block of the corporation s stock. The corporation makes contributions to the plan over a period of time, and the stock purchase loan is eventually paid off. The value of the plan grows significantly as long as the market price of the stock holds up. Qualified employees are allocated a share of the plan based on their length of service and... 

The principal is the amount of money that you lend to the issuer of the bond, most of the time, this principal is set at a relatively simple 1,000 so that institutions can more easily market an issue (it makes it easier for us individual investors, tool). Also included in the indenture is the coupon, which is the stated interest rate that the borrower promises to pay you. To make things easier, many bond investors think of coupons as the annual rate of interest expressed as a percentage of the face value of the bond. This rate is fixed when the bond is first issued (although there are some bonds with floating coupons), most issuers make semiannual payments based on this fixed rate. 

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