Liability funding strategies

Similar financial terms

Unlimited liability
Full liability for the debt and other obligations of a legal entity. Generally, partners of a partnership and sole propietors have unlimited liability.

Limited-liability instrument
A security, such as a call option, in which the owner can only lose his initial investment.

Limited liability
Limitation of possible loss to what has already been invested.

Liability swap
An interest rate swap used to alter the cash flow characteristics of an institution's liabilities so as to provide a better match with its assets.

Liability
A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.

Contingent pension liability
Under ERISA, the firm is liable to the plan participants for up to 39% of the net worth of the firm.

Limited Liability Company (LLC)
Consists of member owners and a manager, at a minimum. Similar to a corporation that is taxed as a partnership or as an S-corporation. More specifically, it combines the more favorable characteristics of a corporation and a partnership. The LLC structure permits the complete pass-through of tax advantages and operational flexibility found in a partnership, operating in a corporate-style structure, with limited liability as provided by the state's laws.

Limited liability partnership (LLP)
A form of the LLC favored and used for professional associations, such as accountants and attorneys.

Limited liability limited partnership (LLLP)
Intended to protect the general partners from liability. Previously, the general partner was a corporation to protect the principals from personal liability. Under the LLLP, an individual could be a general partner and have limited personal liability.

Stopping curve refunding rate
A refunding rate that falls on the stopping curve.

Refunding
The redemption of a bond with proceeds received from issuing lower-cost debt obligations ranking equal to or superior to the debt to be redeemed.

Private Export Funding Corporation (PEFCO)
Company that mobilizes private capital for financing the export of big-ticket items by US firms by purchasing at fixed interest rates the medium- to long-term debt obligations of importers of US products.

Net advantage of refunding
The net present value of the savings from a refunding.

Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.

Yield spread strategies
Strategies that involve positioning a portfolio to capitalize on expected changes inyield spreads between sectors of the bond market.

Yield curve strategies
Positioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve.

Naked option strategies
An unhedged strategy making exclusive use of one of the following: Long call strategy (buying call options ), short call strategy (selling or writing call options), Long put strategy (buying put options ), and short put strategy (selling or writing put options). By themselves, these positions are called naked strategies because they do not involve an offsetting or risk-reducing position in another option or the underlying security.

Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.

Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in the other, including covered call writing and protective put buying.