Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

A1 MS > LF > Flashcards

LF Flashcards

1
Q

364-day Facility

A

A revolving credit facility that has a term of a year or less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Administrative Agent Fee

A

Annual fee typically paid to administer the loan (including to distribute interest payments to the syndication group)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Amendment Fee

A

Compensation paid to lenders if the borrower asks for a change in terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Arranger Fee

A

Fee earned by the arrangers for working on the deal. (A new
leveraged loan can carry an arranger fee of 1–5% of the total loan commitment, depending on the complexity of the transaction, market conditions, and whether the loan is underwritten)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Assignment Sale

A
  • Secondary sale
  • The assignee becomes a direct signatory to the loan and receives interest and principal payments directly from the administrative agent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Average Retail New Issue Fee

A

The average fee paid by the arranger to lenders joining the syndicate (tiered so that larger commitments earn larger
fees)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Average Break Price

A

The average price at which loans or bonds are initially traded in the secondary market after they close and allocate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Base Rates

A
  • Minimum rate that the loan will pay
  • LIBOR/Euribor are the
    most common base rates, but these can include Prime, CD, and an array of other formats
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Borrowing Base

A
  • The specific assets that secure asset-based loans. - - The size of the attached credit line is limited by a margin formula tied
    to the valuation of the underlying collateral
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Bridge Loan

A

Loan that is intended to provide short-term financing to
provide a bridge to an asset sale, bond offering, stock offering, divestiture, etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Build-Out Financing

A

Financing that supports a particular project, such as a utility plant, a land development deal, a casino, or an
energy pipeline

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Buy Back

A

When an issuer or its private equity sponsor/owner buys
back its senior debt below par in the secondary market in an attempt to reduce total debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

CAGR

A
  • Compunded Annual Growth Rate
  • Annualized measure of an investment’s growth rate over a multiyear time period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

CapEx

A
  • Capital Expenditure
  • Investments in physical assets, such as a plant, property, or equipment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Cash-Flow Loan

A

Form of asset-based lending. A loan that may be secured by collateral but is repaid by cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Circled

A
  • When a loan or bond is fully subscribed at a given price
  • After that, the loan or bond moves to
    allocation and funding.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Clearing Yield

A

Yield at which an instrument first breaks into the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

CLO

A
  • Collateralized Loan Obligation
  • Pools a group of loans which are separated into tranches (with varying levels of risk)
  • tiered with ratings ranging from AAA
    to equity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Securitization

A
  • Practice of pooling various types of assets (loans, mortgages etc) into tradeable securities
  • Newly created securities called asset-backed securities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Bond Pricing

A
  • Present Value of Future Cash Flows
    (Discounting expected future cash flows back to present value using discount rate)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Discount Rate

A

Rate used to discount future cash flows
reflects required return considering
1. Credit risk
2. Term to Maturity
3. Market Liquidity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Yield to Maturity (YTM)

A

Internal Rate of Return an investor would earn if they hold the bond to maturity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Bond Issues At Discount

A
  • Less than face value
  • Quotes as %
  • Offer higher yields than premium bonds
  • ## Lower credit ratings, loonger maturities, carrying higher risk
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Bond Issues at Premium

A
  • High than Face Value
  • Quotes as %
  • Strong credit
  • Lower effective yield
25
Q

Credit Risk
(risk of default)

A

Potential loss due to borrower’s failure to repay a loan or meet financial obligation

26
Q

Commercial Bank

A

Financial institution that provides services such as accepting deposits and issuing loans.

27
Q

Commercial Paper

A

Unsecured short-term corporate debt

28
Q

Committment Fee

A

Fee paid to lenders on undrawn amounts under a revolving credit or a term loan prior to draw-down

29
Q

Evergreen

A

The option for the borrower—with consent of the syndicate group—to extend the facility each year for an additional year

30
Q

First-Lien Debt

A
  • Senior debt that holds the first priority on security
  • Secured by collateral
  • Lower Interest rates (less expensive for borowers)
31
Q

Four-B loans

A

Loans rated BB+ to BB– by S&P Global and Ba1 to Ba3 by Moody’s

32
Q

Hurdle Rate

A

The minimum required rate of return

33
Q

Jumbo Loan

A

Transaction that is greater than $1 billion

34
Q

LIBOR floor

A

An interest rate floor for a loan’s base rate

35
Q

Mezzanine

A

A subordinated instrument that carries second-ranking
security or, if the capital structure also includes second-lien, third-ranking security.

36
Q

Price Talk

A

The original target spread or spread range launched to the market

37
Q

Tranche

A

A layer of debt in a structured vehicle such as a CLO or syndicated loan. Tranches within a single structure may have
different risk and reward profiles

38
Q

Unsecured

A

Loans that are not backed by collateral

39
Q

Project Objective

A

The goal is to create a system that values loans at facility level, allows for derivative trading and automates downsteam processes without removing loanIQ as golden source and its current process, by having an external system read loans at each point in time

40
Q

Project Challenges

A
  • Does not account for undrawn committed part of facility
  • Does not support loans being an underlying for market products
  • Does not allow to input buys and sells for trading desk (done manually in LoanIQ)
41
Q

Discount Factor

A

1/(1+Discount Rate)^Period

42
Q

Delayed Settlement Compensation

A
  • Will apply unless stated otherwise
  • Par Trade: will accrue from (and including) the date 10 Business Days after the Trade Date
  • Distressed Trade: 20 Business Days after the Trade Date until (but excluding) the
    Settlement Date
43
Q

Credit Adjustment Spread

A

Bridges the gap between LIBOR and risk-free rates by adding a spread that reflects creditworthiness of the borrower

44
Q

Zero Floor Applies

A

A zero floor will apply to the Cost of Carry Rate
whether calculated on the basis of an RFR or on the basis of an IBOR rate. Users should note that if zero floor applies to the Cost of Carry Rate when calculated on the basis of an RFR, the zero floor does not apply to the Credit Adjustment Spread.

45
Q

Sensitivities needed to calculate Taylor PnL

A
  • Mortgage Spread
  • Key Rate Duration
  • OAS Duration
  • OAS Convexity
  • Volatility Duration
46
Q

Key Rate Duration
(Match in MARS)

A

IR Delta Par

47
Q

Mortgage Spread
(Match in MARS)

A

CR Delta

48
Q

OAS Duration
(Match in MARS)

A

CR Delta

49
Q

OAS Convexity
(Match in MARS)

A

IR Gamma

50
Q

Volatility Duration
(Match in MARS)

A

IR Vega

51
Q

Agency Pass-Through

A

Type of security where principal and interest payments made by homeowners are passed through to investors

52
Q

Key Partial rate Duration

A
  • First order interest rate
  • Sensitivity of a bond’s price to changes in interest rates at specific points along the yield curve
53
Q

Option Adjusted Convexity
(OAS Convexity)

A
  • Second order interest rate sensitivity
  • measures variation in duration of the position when there is a change in interest rate
54
Q

Mortage Spread Sensitivity

A
  • First order mortgage spread sensitivity
  • measure of how sensitive the MBS market value is to changes in the current coupon spread
55
Q

Volatility Duration
(Vega)

A
  • First order volatility sensitivity
  • Measure sensitivity to parallel shifts in the volatility term structure
56
Q

Option-Adjusted Duration

A
  • First order volatility sensitivity
  • Measures sensitivity of shifts in the OAS
57
Q

Drawdown

A
  • decline in the value of an investment from a peak to a subsequent trough
58
Q

LoanIQ

A
  • Helps financial institutions manage entire loan lifecycle
  • Loan origination
  • Loan servicing
  • Collections
59
Q
A

A1 MS (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions