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Financial Terms Related to Agreement

Financial Terms Related to Agreement

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    Agreement Agreement Document Transcript

    • Financial Terms related to Agreement This document is part of the valuable contents available at www.ftpall.com, a free onlineglossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor.AGREEMENTBest efforts agreement • An underwriting agreement where the syndicate agrees to try to sell the issue, but the sale is not guaranteed.Bond agreement • A contract for privately placed debt.Bretton woods agreement • An agreement signed by the original United Nations members in 1944 that established the International Monetary Fund (IMF) and the post-World War II international monetary system of fixed exchange rates.Cash deficiency agreement • An agreement to invest cash in a project to the extent required to cover any cash deficiency the project may experience.Concession agreement
    • www.ftpall.com 2|Page • An understanding between a company and the host government that specifies the rules under which the company can operate locally.Double tax agreement • Agreement between two countries that taxes paid abroad can be offset against domestic taxes levied on foreign dividends.Equity contribution agreement • An agreement to contribute equity to a project under certain specified conditions. Find thousands of financial terms at www.ftpall.comFirm agreement • An underwriting agreement where the syndicate agrees to buy all of the securities at the stated price, guaranteeing the issuing firm receives the required amount of money.Fiscal agency agreement • An alternative to a bond trust deed. Unlike the trustee, the fiscal agent acts as an agent of the borrower.Forward rate agreement • Abbreviated FRA. Agreement to borrow or lend at a specified future date at an interest rate that is fixed today.General agreement on tariffs and trade gatt • A treaty that has governed world trade throughout most of the postwar era; it extends free trading rules to broad areas of economic activity and is policed by the World Trade Organization (WTO).Hypothetication agreements • Are legal documents which define the pledging of collateral. A mortgage defines the collateral for a real estate loan or Note and a securities hypothecation agreement permits margin accounts and futures accounts by stating what is being pledged to
    • www.ftpall.com 3|Page cover positions, debit balances, or even deficit balances. Generally, this document allows the owner to enjoy the usage of the property provided that no default occurs. In the event of a default the property can go to the creditor to satisfy the claim. The residual value, if any, would then go to the owner.Interest rate agreement • An agreement whereby one party, for an upfront premium, agrees to compensate the other at specific time periods if a designated interest rate (the reference rate) is different from a predetermined level (the strike rate). Find thousands of financial terms at www.ftpall.comMaster repurchase agreement • A written contract covering all future transactions between the parties to repurchase reverse repurchase agreements that establishes each partys rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower.North american free trade agreement nafta • The treaty establishing free trade and open markets between Canada, Mexico, and the United States.Note agreement • A contract for privately placed debt.Partnership agreement • The written contract used to formally establish a business partnership.Preferred stock agreement • A contract for preferred stock.Purchase agreement • As used in connection with project financing, an agreement to purchase a specific
    • www.ftpall.com 4|Page amount of project output per period.Raw material supply agreement • As used in connection with project financing, an agreement to furnish a specified amount per period of a specified raw material.Repurchase agreement repo or rp • Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the sellers point of view, the same Find thousands of financial terms at www.ftpall.com transaction is a reverse repurchase agreement. • An agreement whereby a bank of securities dealers sells a firm specific securities and agrees to repurchase them at a specific price and time. • A holder of securities (dealer) sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use repo extensively to finance their positions. Exception: When the Fed is said to be doing repo, it is lending money, that is, increasing bank reserves. Usually done early in the day (before 2PM) to give time for agreement on collateral. Less costly and less volatile than the federal funds. Repo rate is an add-on rate. Annualized interest on repo transactions are computed as follows: Annualized interest rate = ( 1 + Quoted repo rate* M /360 )^(365/ M) -1 where M is the maturity of the repo transaction. For overnight repos, M =1. • An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan, where the collateral may be a Treasury security, money market instrument, federal agency security, or mortgage- backed security. From the purchaser (customer) perspective, the deal is reported as
    • www.ftpall.com 5|Page a reverse Repo.Reverse repurchase agreement • Most typically, a repurchase agreement initiated by the lender of funds. Reverses are used by dealers to borrow securities they have shorted. Exception: When the Fed is said to be doing reverses, it is borrowing money, that is, absorbing reserves. Also known as matched sales.Revolving credit agreement Find thousands of financial terms at www.ftpall.com • A line of credit guaranteed to a borrower by a chartered bank regardless of the scarcity of money. • A legal commitment wherein a bank promises to lend a customer up to a specified maximum amount during a specified period.Sale repurchase agreement • See Repurchase Agreement.Security agreement • The agreement between the borrower and the lender that specifies the collateral held against a secured loan.Smithsonian agreement • A revision to the Bretton Woods international monetary system which was signed at the Smithsonian Institution in Washington, D.C., U.S.A., in December 1971. Included were a new set of par values, widened bands to +/- 2.25% of par, and an increase in the official value of gold to US$38.00 per ounce.Standby agreement • In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.Standstill agreements
    • www.ftpall.com 6|Page • Contracts where the bidding firm in a takeover attempt agrees to limit its holdings another firm.Tax clawback agreement • An agreement to contribute as equity to a project the value of all previously realized project-related tax benefits not already clawed back to the extent required to cover any cash deficiency of the project.Term loan agreement Find thousands of financial terms at www.ftpall.com • A formal contract, ranging from a few to a few hundred pages, specifying the conditions under which a financial institution has made a long-term loan.Throughput agreement • An agreement to put a specified amount of product per period through a particular facility. For example, an agreement to ship a specified amount of crude oil per period through a particular pipeline.Tolling agreement • An agreement to put a specified amount of raw material per period through a particular processing facility. For example, an agreement to process a specified amount of alumina into aluminum at a particular aluminum plant.