A business can obtain finance from different sources. The two main types of finance are equity finance and debt finance. Both of these types of finance come with their costs to the business and their advantages and disadvantages. There’s also a third type of finance, not as common as these two. It is called hybrid …
Mezzanine Finance / Fund: Why do companies need Mezzanine Finance? Read More »
Step-up bonds are variable rate bonds that have a coupon rate that keeps increasing over time. The reason why they are called step-up bonds is due to the interest rate on the bond stepping up over time. Step-up bonds are advantageous to lenders as it allows them to benefit from increasing interest rates but maybe …
What are Step-up Bonds? Example, Types, Advantages, and Disadvantages Read More »
A business relies on finance to support its operations. This finance may come in different forms such as equity, debt or even hybrid finance, which is a combination of debt and equity. Each type of finance comes with its costs. Therefore, the business must determine the reason it needs finance and the best way to …
Long Term Finance: Sources, Advantages, And Disadvantages Read More »
Leasing is a beneficial way for businesses to obtain different assets without having to pay an upfront purchase price, or without acquiring it at all. Lease agreements usually involve a deal between two parties, the lessor and the lessee. A lessor is a party that owns the asset and gives it to the lessee, the …
Combination Lease: What Is It? And How Does It Work? Read More »
Introduction A letter of credit is the instrument in which a bank guarantees the payment to the alternative party in case of default by the account holder to the issuing bank. In other words, it provides a guarantee to the other bank involved in the transaction as well as its client that it assures the …
Letter of Credit Vs. A Standby Letter of Credit (SBLC): What Are the Main Different? Read More »
Definition: International trade in such a diversified world is very difficult to manage because one cannot easily trust the party located on the opposite side of the globe. A commercial letter of credit like other instruments facilitates international trade between two geographically distant countries of the world because this instrument ensures both parties that the …
What is a Commercial Letter of Credit? Definition, Purpose, Types, and More Read More »
Introduction A standby letter of credit is the guarantee provided by the issuer bank or financial institution that the responsibility of payment will be transferred upon the non-payment of the party to the contract. In this type of instrument, the issuing bank will have to follow all the banking protocols followed by the bank. However, …
A standby letter of credit (SBLC) vs Bank guarantee (BG): Detail Explanation Read More »
Definition: A confirmed letter of credit is an instrument that facilitates the international transactions between the willing buyer and willing seller, who live in geographically distanced places and in almost all cases in two different countries of the globe. Both the parties to the transactions are in fear that they will not be able to …
What is a Confirmed Letter of Credit? Purpose, Types, Explanation, and More Read More »
Large companies and financial institutes often need to hedge currency exchange risks, invest in foreign markets, and settle payments abroad. One way of entering an overseas market is to issue bonds in that country’s local market. Samurai bonds are Japanese Yen denominated bonds that are issued in Tokyo by foreign entities. Samurai bonds are regulated …
What Are Samurai Bonds? And How do Samurai Bonds Work? Read More »
It is a type of Letter of Credit that includes a special clause of facilitating the seller with advance payment. Historically, the special clause remained part of the full trade agreement, and the clause used to be inked in red, hence the name. The sellers or exporters require cash to procure raw materials and inventory. …
Red Clause Letter of Credit: All you need to know Read More »
