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General Questions

This is a summary of how NVC Platform begin processing the requests for a registered user.

After the New User completes the Register ID section and becomes a Register New User the data that the registered user provides will help determine where the NVC Platform can begin to help the user The registered user file will be set up capture the general application into a usable form for origination and processing.

Origination and management will be able to inform the registered user of requirements and establish a regular pattern of communication.

Next, the administrator needs to gather user data to get a clear picture of the user application data into the form fields per each file created and introduced by the user. Some fields will auto populate as the user uses the system more frequently.

 

Please refer to this FAQ section to see updates that outline some of what registered users will need answers as the settings for the registration may change from time to time.  More services and benefits can be expected as the NVC Platform network continues to expand. User suggestions and comments are encouraged to help with us service you better.

How to register as a new user:

Visit the Register Page on this website, the Reference ID section appears at the top of the registration section. This section is used to Register a new User>

New User selects the type of Reference ID.

New User makes a selection from the drop down menu to select type of Reference ID # to use for the new registration.

Registration Reference ID will be one of the selections as follows:

  • TAX / EIN#
  • VAT#
  • Dunn# 
  • EDI#
  • Merchant ID# 
  • Local Registration#
  • Custodial Registration#
  • Other#
  • This other identifiction number can be a drivers license number or passport number of the responsible person registering and using this NVC Platform services.

Please refer to this FAQ section to see updates that outline some of what registered users will need answers as the settings for the registration may change from time to time.  More services and benefits can be expected as the NVC Platform network continues to expand. User suggestions and comments are encouraged to help with us service you better.

Here are some of the Registered User Types of Accounts or Accounting Categories that will be enabled on the User Dashboard:

  • Travel & Expense 
  • (HR)-Human Resources
  • Payroll
  • Invoice
  • Purchase Order 
  • Logistics & Freight
  • Partners
  • Vendors
  • Settlement 
  • Project
  • Industry Search 

More services and benefits can be expected as the NVC Platform network continues to expand.

NVC Platform provides a registered member user account within the registered user section on nvcplatform.net .

The updated user dashboard will reflect reflect links to industries for a registered member to search industrial classification using 1 or 2 words to look up vendors to their industries.

As the network grows and accumulate more networking resources registered user will be able to connect to more registered user dashboard services as NVC advances in its networking objectives for the registered users benefit.

Recent Top Ranking Account Classifications in the NVC Platform:

        Fiat Currency Accounts

  • Member Account EUR    

  • Member Account GBP

  • Member Account FOREX

  • Member Account USD   

        

    Cryptocurrency Accounts

  • Member Account BTC    

  • Member Account NGN    

  • Member Account SPU

  •  

    Member Mega SPURT Account 

  • Member Account ZCASH     

  • Member account NVC-Coin 

  • Member account Other

     

    Transaction Accounts

  • Member Account TU            

  • Member Credit Account    

  • Member Debit Account     

  • Member Reserve Account         

  • Member Linked Account     

  • Member Community Account    

  • Member EDI Account  

  • Member EDI Invoice Account    

  • Member EDI Purchase Order Account      

  • Member Benefits Account         

  • Member Emergency Account    

  • Member ESOP Account

  • Member Human Resources/Payroll

Here are some of the Recent Top Ranking SIC-Standard Industrial Classifications in the NVC Platform:

  • Automotive
  • Distribution
  • Energy
  • Government
  • Grocery
  • Retail
  • Healthcare
  • Home Furnishings
  • Home Improvement
  • Industrial
  • Office Supplies
  • Pharmacy
  • Publishing
  • Specialty
  • Sporting Goods
  • 3rd Party Logistics
  • Transportation

NVC FUND 100 ANNEX


NVC 100 FUND TRADEMARKS

NVC SOVEREIGN ENTITIES 


1. NVC CAPITAL MARKET FUND
2. NVC LIFE IS WEALTH
3. NVC MLM FUND
4. NVC MULTIPLE STREAM OF INCOME
5. NVC PEOPLE MANAGEMENT SYSTEM
6. NVC PEOPLE NETWORK FUND
7. NVC PEOPLE TO PEOPLE SYSTEM
8. NVC PEOPLE FUSION FUND
9. NVC MANAGEMENT SOLUTION FUND
10. NVC PARTNERS FOR PROFIT FUND
11. NVC GP MANAGEMENT FUND
12. NVC LP MANAGEMENT FUND
13. NVC MEMBERSHIP MANAGEMENT FUND
14. NVC BENEFIT DISTRIBUTION FUND
15. NVC RETIREMENT PLAN FUND
16. NVC EXECUTIVES COMPENSATION FUND
17. NVC WEALTH CREATION FUND
18. NVC PERMANENT NETWORK FUND
19. NVC PERMANENT BUSINESS NETWORK
20. NVC RHODIUM FUND
21. NVC PLATINUM FUND
22. NVC SILVER FUND
23. NVC GOLD FUND
24. NVC ZCASH AND CHIPS FUND
25. NVC EMPLOYEEGOLD PROGRAM
26. NVC PERMANENT INCOME FUND
27. NVC PEOPLE TO PEOPLE FUND
28. NVC FINANCIAL FREEDOM PLAN
29. NVC HUMAN CAPITAL NETWORK FUND
30. NVC INTELLECTUAL CAPITAL FUND
31. NVC PERPETUAL EARNING FUND
32. NVC FINANCIAL FREEDOM FUND
33. NVC FREEDOM FUND
34. NVC FINANCIAL REDEMPTION PLAN
35. NVC ECOLOGICAL FUND
36. NVC WATER FUND
37. NVC NATURAL RESOURCES FUND
38. NVC ANALYTICS FUND
39. NVC GOOGLE FUND
40. NVC INTERNET FUND
41. NVC S&P 100 FUND
42. NVC DIGITAL CURRENCY FUND
43. NVC FORTUNE 500 FUND
44. NVC CHINA FUND
45. NVC OKPE FUND
46. NVC EKEJIJA FAMILY FUND
47. NVC LEDGER SETTLEMENT FUND
48. NVC US TREASURY FUND
49. NVC EURO FUND
50. NVC DOLLER FUND

51. NVC TNT FUND
52. NVC FREEDOM NETWORK FUND
53. NVC HUMAN ASSET CAPITAL
54. NVC HUMAN VALUE CAPITAL
55. NVC HUMAN VALUE FUND
56. NVC BUSINESS MANAGEMENT SERVICES.
57. NVC BUSINESS MANAGEMENT FUND
58. NVC PEOPLE CAPITAL FUND
59. NVC DELTA REGION FUND
60. NVC FINANCIAL TRAINING FUND
61. NVC LIFETIME INCOME FUND
62. NVC FINANCIAL ENGINEERS.
63. NVC FINANCIAL CONTRACTORS.
64. NVC FINANCIAL FREEDOM ENGINEER
65. NVC FINANCIAL MALL FUND
66. NVC FINANCIAL SUPER MARKET.
67. NVC FINANCIAL SUPER HIGHWAY
68. NVC CAPITAL REDEMPTION FUND
69. NVC DONE FOR YOU FUND
70. NVC FINANCIAL GIVE AWAY FUND
71. NVC GIFT TO THE WORLD PLAN.
72. NVC UNLIMITED WEALTH FUND
73. NVC HUMANITY HELPER PLAN.
74. NVC HUMANITY UPLIFTMENT.
75. NVC INCOME REDISTRIBUTION FUND
76. NVC INFINITY RESOURCES FUND
77. NVC PHILANTHROPIC FOOT SOLDIERS
78. NVC WEALTH UNFOLD
79. NVC PETER TO PAY PAUL
80. NVC SIGNATURE LOAN FUND
81. NVC STRUCTURE FINANCE FUND
82. NVC STRUCTURED FINANCIAL NOTES
83. NVC FINANCIAL LEVERAGE FUND
84. NVC WEALTH MANAGEMENT FUND
85. NVC POVERTY ALLEVIATION FUND
86. NVC WORLD CHANGERS PLAN
87. NVC GLOBAL CAPITAL MANAGERS
88. NVC US CAPITAL FUND
89. NVC HUMAN MANAGEMENT FUND
90. NVC GLOBAL WEALTH ADJUSTERS
91. NVC GLOBAL WEALTH ENGINEERS
92. NVC AFFILIATES MANAGEMENTFUND
93. NVC CLICKBANK FUNDS
94. NVC ORACLE MANAGEMENT FUND
95. NVC NIGERIA FUND
96. NVC AFRICA FUND
97. NVC OPPORTUNITY FUND
98. NVC ASIA PACIFIC FUND
99. NVC CHARITY FUND
100. NVC TECHNOLOGY FUND

 

 

NVC FUND EDI TRANSACTION PLATFORM FEE SCHEDULE


The NVC Transaction Platform is established to provide project funding and transaction facilitation services for admitted participants. 


To better serve our participants that choose to use the platform to accomplish their business idea, it is necessary to institute a user charge and fee structure. 


A Registered Member can carry out ledger to ledger-transfer of fund from their accounts to any  other account holder as many with funds in their account are already doing. 


There are many that have no funds in their accounts at this point yet, so perhaps they may not understand the joy and freedom of being able to log into your account and be able to transfer funds from your account to another accepting participants account to settle payment as agreed. 


There is an administrative cost to maintain the transaction platform such as this and that cost has to be shared by the platform users and beneficiaries.

Activated Accounts
Ledger to ledger balance transfer

1% (one percent) of the amount


Trade Finance :

Proof of Fund Letter, Financial Instrument, Standby Letter of Credit, (SBLC),  or any type of customized delivery requested by a registered user for performances to be done by email or by hard copy, or delivery by Telex or SWIFT message, each are to be negotiated on a case by case basis.

SELECTED FINANCIAL TERMS DEFINED AND APPLIED The purpose for the correlation of the Financial Terms and Definition is to crystallize the meaning of the words and define the terms we use in finance/commerce the definitions, application and context. NVCFUND can partner with Institutional Capital Market Participants to strengthen their balance sheet. It is our hope that those in the position will take advantage of our solutions. Finance The science that describes the management of money, banking, credit, investments, and assets. Basically, finance looks at anything that has to do with money and the market. Financing

The act of providing funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals.

Banks and Financial Institutions need strong balance sheets, assets base to lend, and Structure Project Financing.

NVCFUND can provide needed assets to both borrowers and lending institution. There is a large variety of financing techniques that businesses and consumers can use to receive financing; these techniques range from IPOs to bank loans. 

The use of financing is vital in any economic system as it allows consumers to purchase products out of their immediate reach, like houses, and businesses to finance large investment projects.

Money

1. A commodity or asset, such as gold, an officially issued currency, coin or paper note, that can be legally exchanged for something equivalent, such as goods or services. 2. As defined by common law: a medium of exchange that is authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

Also known as moola, Dinero, bread or cash.

1. Financial assets or the financial value of assets, such as cash. 2. The factories, machinery and equipment owned by a business. Capital is an extremely vague term and its specific definition depends on the context in which it is used. In general, it refers to financing.

Asset

1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. 2. A balance sheet item representing what a firm owns. Real Asset Physical or identifiable assets such as gold, land, equipment, patents, etc. They are the opposite of a financial asset. Real assets tend to be most desirable during periods of high inflation. (Banks and other liquidity lenders need.

Tangible Asset

An asset that has a physical form such as machinery, buildings and land.

This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible, or intangible isn't inherently good or bad. For example, a well-known brand name can be very valuable to a company.

On the other hand, if you produce a product solely for a trademark, at some point you need to have "real" physical assets to produce it. (You cannot produce gold, platinum, silver, or rhodium without the reserve deposit, which is the real physical tangible asset beside that, our cash assets are further backed by real tangible assets.)

Capital Asset A type of asset that is not easily sold in the regular course of a business's operations for cash and is generally owned for its role in contributing to the business's ability to generate profit. Furthermore, it is expected that the benefits gained from the asset will extend beyond a time span of one year.

On a business's balance sheet, capital assets are represented by the property, plant and equipment figure. Examples include land, buildings, machinery, etc.

Generally, these are assets that cannot quickly be turned into cash and are often only liquidated in a worst-case scenario. For example, a company might look at selling a capital asset if it was looking at restructuring or the business was engaged in bankruptcy proceedings. 

Depending on the business involved, capital assets may represent the majority of assets that are owned. For example, in equipment heavy operations such as oil exploration, it is not surprising to find the majority of a business's assets to be capital assets.

Net Tangible Assets Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. 

Also known as "net asset value" or "book value".  To calculate a company’s net asset value on a per bond, or per share of preferred or common stock, divide the net tangible assets figure by the number of bonds, shares of preferred stock, or shares of common stock.

Tangible Net Worth

A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, patents and intellectual property.

Tangible net worth is calculated by taking a firm's total assets and subtracting the value of all liabilities and intangible assets. In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc) less any liabilities you may have. In the financial markets, tangible net worth represents the amount of physical assets a company has net of its liabilities.

Thus, it represents the supposed liquidation proceeds a company would fetch if its operations were to cease immediately and the firm was sold of Valuation The process of determining the current worth of an asset or company.

There are many techniques that can be used to determine value, some are subjective, and others are objective. 

For example, an analyst valuing a company may look at the company's management, the composition of its capital structure, prospect of future earnings, and market value of assets. Judging the contributions of a company's management would be more of a subjective valuation technique, while calculating intrinsic value based on future earnings would be an objective technique.

Asset Valuation The process of determining the current worth of a portfolio, company, investment, or balance sheet item.

Liquidity

1. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.

2. The ability to convert an asset to cash quickly. Also known as "marketability". Core Liquidity Provider An underwriter or a market maker that is a sizable holder of a given security or that facilitates the trading of the security.

Core liquidity providers ideally bring greater price stability and distribute securities to both retail and institutional investors. Firms that underwrite or provide the financing for equity or debt transactions and then make a market or assist in the trading of these securities are said to be core liquidity providers.

Without their assistance, the number of transactions in the security would decrease and the ability of buy- and sell-side firms to accumulate or dispose of stock would be diminished. Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities.

A financial intermediary that performs a variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients. An investment banker may not accept deposits or make commercial loans. Investment bankers are the people who do the grunt work for IPOs and bond issues.

Bond A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.

Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

Clean Balance Sheet Refers to a company whose balance sheet has very little or no debt.

A company is told to "clean up" its balance sheet if they are exposed to large amounts of debt.

Total Debt to Total Assets

A metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt.

Calculated by adding short-term and long-term debt and then dividing by the company's total assets.

This is a very broad ratio as it includes short- and long-term debt as well as all types of both tangible and intangible assets.

Tangible Book Value Per Share

TBVPS A method of valuing a company on a per-share basis by measuring its equity after removing any intangible assets. The tangible book value per share is calculated as follows:

Tangible Net Worth A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, patents and intellectual property.

Tangible net worth is calculated by taking a firm's total assets and subtracting the value of all liabilities and intangible assets. In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc) less any liabilities you may have.

In the financial markets, tangible net worth represents the amount of physical assets a company has net of its liabilities.

Thus, it represents the supposed liquidation proceeds a company would fetch if its operations were to cease immediately and the firm was sold off.

Wealth A measure of the value of all of the assets of worth owned by a person, community, company or country. Wealth is the found by taking the total market value of all the physical and intangible assets of the entity and then subtracting all debts.

Essentially, wealth is the accumulation of resources. People are said to be wealthy when they are able to accumulate many valuable resources or goods.

Wealth is expressed in a variety of ways. For individuals, net worth is the most common expression of wealth, while countries measure by gross domestic product (GDP) or GDP per capita.

Net Worth The amount by which assets exceed liabilities. This term can be applied to companies and individuals.  For a company, this is known as shareholders' (or owners') equity and is determined by subtracting liabilities on the balance sheet from assets. 

For example, if a company has $45 million worth of liabilities and $65 million in assets, the company's net worth (shareholders' equity) is $20 million ($65 million - $45 million).

Book Value

1. The value at which an asset is carried on a balance sheet. In other words, the cost of an asset minus accumulated depreciation. 2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities. 3. The initial outlay for an investment.

This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on. In the U.K., book value is known as "net asset value".

Authorized Stock The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet.

Market Capitalization The total dollar market value of all of a company's outstanding shares. 

Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share.

The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.

Frequently referred to as "market cap". If a company has 35 million shares outstanding, each with a market value of $100, the company's market capitalization is $3.5 billion (35,000,000 x $100 per share). (1,000,000,000 x $5,000) = $5 Trillion Shareholders' Equity

The portion of the balance sheet that represents the capital received from investors in exchange for stock (paid-in capital), donated capital and retained earnings.

Stockholders' equity represents the equity stake currently held on the books by a firm's equity investors. A firm's total assets minus its total liabilities.

Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity represents the amount by which a company is financed through common and preferred shares.

Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time.

These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

The balance sheet must follow the following formula:        

Assets = Liabilities + Shareholders' Equity Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt.

The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses. It's called a balance sheet because the two sides balance out.

This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity). 

The balance sheet is one of the most important pieces of financial information issued by a company.

It is a snapshot of what a company owns and owes at that point in time. The income statement, on the other hand, shows how much revenue and profit a company has generated over a certain period. 

Neither statement is better than the other - rather, the financial statements are built to be used together to present a complete picture of a company's finances.

Debt/Equity Ratio A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

It indicates what proportion of equity and debt the company is using to finance its assets. Note:

Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the calculation.

Default Risk The risk that companies or individuals will be unable to pay the contractual interest or principal on their debt obligations. In other words, this is the risk that you will not get paid.

Structured Finance

A service offered by many large financial institutions for companies with very unique financing needs. These financing needs usually don't match conventional financial products such as a loan. Structured finance generally involves highly complex financial transactions.

Collateral Properties or assets that are offered to secure a loan or other credit.

Collateral becomes subject to seizure on default. Collateral is a form of security to the lender in case the borrower fails to pay back the loan.

Overcollateralization - OC The process of posting more collateral than is needed to obtain or secure financing.

Overcollateralization is often used as a method of credit enhancement by lowering the creditor's exposure to default risk.

Overcollateralization is often done in order to get a better debt rating from a credit rating agency. The principal underlying a pool of assets is often greater than the principal amount of the issued security by approximately 10-20%. For example,

in the case of a Trust Certificate backed security, the principal amount of an issue may be $100 million while the principal value of the collateral underlying the issue may be equal to $200 million.

Credit Risk The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation.

Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt.

Investors are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation.

Credit risk is closely tied to the potential return of an investment, the most notable being that the yields on bonds correlate strongly to their perceived credit risk.

The higher the perceived credit risk, the higher the rate of interest that investors will demand for lending their capital.

Credit risks are calculated based on the borrowers' overall ability to repay.

This calculation includes the borrowers' collateral assets, revenue-generating ability and taxing authority (such as for government and municipal bonds).

Credit risks are a vital component of fixed-income investing, which is why ratings agencies such as S&P, Moody's and Fitch evaluate the credit risks of thousands of corporate issuers and municipalities on an ongoing basis. 

Insurance A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

The company pools clients' risks to make payments more affordable for the insured. The practice of insurers transferring portions of risk portfolios to other parties by some form of agreement in order to reduce the likelihood of having to pay a large obligation resulting from an insurance claim.

Credit Quality One of the principal criteria for judging the investment quality of a bond or bond mutual fund. As the term implies, credit quality informs investors of a bond or bond portfolio's credit worthiness, or risk of default

An individual bond or bond mutual fund's credit quality is determined by private independent rating agencies such as Standard & Poor's, Moody's and Fitch.

Their credit quality designations range from high ('AAA' to 'AA') to medium ('A' to 'BBB') to low ('BB', 'B', 'CCC', 'CC' to 'C’. Investors interested in the safety of their bond investments should stick to investment grade bonds ('AAA', 'AA', 'A', and 'BBB'), while other investors willing and able to accept a higher level of risk could consider lower credit-quality bonds.

Credit Analysis A type of analysis an investor or bond portfolio manager performs on companies or other debt issuing entities encompassing the entity's ability to meet its debt obligations.

The credit analysis seeks to identify the appropriate level of default risk associated with investing in that particular entity.

By identifying companies that are about to experience a change in debt rating, an investor or manager can speculate on that change and possibly make a profit.

For example, assume a manager is considering buying junk bonds in a company, if the manager believes that the company's debt rating is about to improve, which is a signal of relatively lower default risk, then the manager can purchase the bond before the rating change takes place, and then sell the bond after the change in rating at a higher price.

Bank Guarantee A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

A bank guarantee enables the customer (debtor) to acquire goods, buy equipment, or draw down loans, and thereby expand business activity.

Bank Confirmation Letter - BCL A letter confirming that a line of credit has been secured from a financial institution or bank.

The bank confirms that a person is eligible for a specified amount of borrowed funds to be used for a predetermined purpose.

A bank confirmation letter may be used in a variety of situations or transactions. Its primary purpose is to provide proof to another party that you have attained financing.

For example, when looking to buy a house, you may be required to supply a bank confirmation letter to the seller.

The letter indicates that you have been approved for a mortgage and have the necessary funds to complete the purchase.

Credit Facility A type of loan made in a business or corporate finance context. Specific types of credit facilities are: revolving credit, term loans, committed facilities, letters of credit and most retail credit accounts. 

Line of Credit - LOC

An arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain.

The borrower can draw down on the line of credit at any time, as long as he or she does not exceed the maximum set in the agreement.

Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Credit enhancements take many different forms.

An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing interest rate.

Credit Agreement A legal contract in which a bank arranges to loan a customer a certain amount of money for a specified amount of time. The credit agreement outlines all the rules and regulations associated with the contract.

This includes the interest that must be paid on the loan.

A credit agreement can be a lengthy and detailed document that explains all the terms of the contract.

For the most part, all types of loans (ranging from credit cards to mortgages) have some sort of credit agreement, which must be signed and agreed upon by both the bank or lender and the customer - the contract does not come into effect until the document has been signed by both parties.

Promissory Note A written, dated and signed two-party instrument containing an unconditional promise by the maker to pay a definite sum of money to a payee on demand or at a specified future date.

The only difference between a promissory note and a bill of exchange is that the maker of a note pays the payee personally, rather than ordering a third party to do so.

When a bank is the maker promising to repay money, it has received plus interest, the promissory note is called a certificate of deposit (CD).

Debt Security A security representing a loan given by an investor to an issuer. In return for the loan, the issuer promises to pay interest and to repay the debt on a specified date. Rule 144A

A Securities & Exchange Commission rule modifying a two-year holding period requirement on privately placed securities to permit qualified institutional buyers to trade these positions among themselves.

This has substantially increased the liquidity of the securities affected because institutions can trade these securities amongst themselves, side-stepping limitations that are imposed to protect the public.

Qualified Institutional Buyer - QIB Primarily referring to institutions that manage at least $100 million in securities including banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors.

Also included are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.

QIBs are eligible to participate in the Rule 144A market.

Money Manager A business or bank responsible for managing the securities portfolio of an individual or institutional investor.

Typically, a money manager employs people with various expertise ranging from research and selection of investment options to monitoring the assets and deciding when to sell them. In return for a fee, the money manager has the fiduciary duty to choose and manage investments prudently for his or her clients, including developing an appropriate investment strategy, and buying and selling securities to meet those goals. Also known as "portfolio manager" or "investment manager".

Financial Institution - FI An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions in composed of organizations such as banks, trust companies, insurance companies and investment dealers. Almost everyone has deal with a financial institution on a regular basis.

Everything from depositing money to taking out loans and exchange currencies must be done through financial institutions.

Lending Facility A mechanism that central banks use when lending funds to primary dealers. Lending facilities provide financial institutions with access to funds in order to satisfy reserve requirements using the overnight lending market.

Lending facilities are also used to increase liquidity over longer periods such as by using term auction facilities. Lending facilities were developed to enhance efficiency when depository institutions require capital. Central banks often accept a variety of assets as collateral from financial institutions in exchange for supplying the loan.

These lending facilities can take the form of term auction facilities, term securities lending facilities, treasury automated auction processing systems (TAAPS) or the overnight lending market.

Term Auction Facility - TAF A monetary policy program used by the Federal Reserve to help increase liquidity in the U.S. credit markets.

TAF allows the Federal Reserve to auction set amounts of collateral-backed short-term loans to depository institutions that are judged to be in sound financial condition by their local reserve banks.

Participants bid through the reserve banks, with a minimum bid set at an overnight indexed swap rate relating to the maturity of the loans.

These auctions allow financial institutions to borrow funds at a rate that is below the discount rate. The TAF was first used by the Fed on December 17, 2007, in response to the 2007 subprime crisis, which caused liquidity problems in the market.

After the Fed's attempt to spur liquidity by decreasing its discount rate failed to achieve the desired result, the Fed teamed up with other central banks around the world to create this monetary policy instrument in an attempt to prevent the situation from growing worse. 

Fedwire A real-time gross settlement system (RTGS) of central bank money used in the United States by its Federal Reserve Banks to settle final payments in U.S. dollars electronically between its member institutions.

Owned and operated by the 12 Federal Reserve Banks, the Fedwire is a networked system for payment processing between the member banks themselves, or other Fedwire member participants.

Members can consist of depository financial institutions in the United States, as well as U.S. branches of certain foreign banks or government groups, provided that they maintain an account with a Federal Reserve Bank.

While the Fedwire is not managed for a profit, law does mandate the Fedwire charge fees for use of the service in order to recoup costs.

Both participants in a given transaction will pay a small fee. The Fedwire system processes trillions of dollars daily, and it includes an overdraft system covers participants with existing and approved accounts. It has been in operation in some format for nearly 100 years, and as such, the Fedwire system is designed to be highly reliable.

It often processes high dollar values, and critical recurring payments domestically and abroad.

Discount Window Credit facilities in which financial institutions go to borrow funds from the Federal Reserve. These loans, which are priced at the discount rate, are often structured as secured loans to alleviate pressure in reserve markets. It helps to reduce liquidity problems for banks and assists in assuring the basic stability of financial markets.

The Federal Reserve has 3 rates that it charges financial institutions for using the discount window. The primary credit rate is a short-term rate charged for the most financially secure financial institutions. The secondary credit rate is a short rate that is charged for financial institutions that do not qualify for the primary rate.

The seasonal credit rate is charged for debt obligations that last up to 9 months. The Federal Reserve may lower the discount rate and/or make temporary changes to the terms of the loans in order to make the discount window a more attractive source for financial institutions to borrow from in times of financial distress.

Repurchase Agreement - Repo A form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day.

For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction, (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement. Repos are classified as a money-market instrument. They are usually used to raise short-term capital.

Reverse Repurchase Agreement The purchase of securities with the agreement to sell them at a higher price at a specific future date. For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement.

Implied Repo Rate

The rate of return that can be earned by simultaneously selling a bond futures or forward contract and then buying an actual bond of equal amount in the cash market using borrowed money. 

The bond is held until it is delivered into the futures or forward contract and the loan is repaid.

The implied repo rate comes from the reverse repo market, which has similar gain/loss variables as the implied repo rate. 

All types of futures and forward contracts have an implied repo rate, not just bond contracts.

For example, the price at which wheat can be simultaneous purchased in the cash market and sold in the futures market (minus storage, delivery and borrowing costs) is an implied repo rate. In the mortgage-backed securities TBA market, the implied repo rate is known as the dollar roll arbitrage.

Money Market A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded.

The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year.

Money market securities consist of negotiable certificates of deposit (CDs), bankers’ acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).

The money market is used by a wide array of participants, from a company raising money by selling commercial paper into the market to an investor purchasing CDs as a safe place to park money in the short term.

The money market is typically seen as a safe place to put money due the highly liquid nature of the securities and short maturities, but there are risks in the market that any investor needs to be aware of including the risk of default on securities such as commercial paper.

Prime Bank Term used to describe the top 50 banks (or thereabouts) in the world. Prime banks trade instruments such as world paper, International Monetary Fund bonds and Federal Reserve notes.

Multiplier Effect The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. 

In other words, it is money used to create more money and is calculated by dividing total bank deposits by the reserve requirement. 

The multiplier effect depends on the set reserve requirement.

So, to calculate the impact of the multiplier effect on the money supply, we start with the amount banks initially take in through deposits and divide this by the reserve ratio.

If, for example, the reserve requirement is 20%, for every $100 a customer deposits into a bank, $20 must be kept in reserve.

However, the remaining $80 can be loaned out to other bank customers. This $80 is then deposited by these customers into another bank, which in turn must also keep 20%, or $16, in reserve but can lend out the remaining $64.

This cycle continues - as more people deposit money and more banks continue lending it - until finally the $100 initially deposited creates a total of $500 ($100 / 0.2) in deposits. This creation of deposits is the multiplier effect.

Elephants Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants deal in, any investment decisions that they make will have a large influence on the price of the underlying financial asset. 

Think of a swimming pool: if an elephant steps into the pool (buys into a position), the water level (stock price) increases; if the elephant gets out of the pool (sells a position), the water level (stock price) decreases. In comparison to the elephant's influence on stock prices, the effect of an individual investor is more like that of a mouse. Examples of elephants are professionally managed entities like mutual funds, pension plans, banks and insurance companies. 

 

Due Diligence - DD

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regard to a sale. 2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. 1. Offers to purchase an asset are usually dependent on the results of due diligence analysis.

This includes reviewing all financial records plus anything else deemed material to the sale. Sellers could also perform a due diligence analysis on the buyer.

Items that may be considered are the buyer's ability to purchase, as well as other items that would affect the purchased entity or the seller after the sale has been completed. 2. Due diligence is a way of preventing unnecessary harm to either party involved in a transaction.

Store of Value

Any form of commodity, asset, or money that has value and can be stored and retrieved over time. Possessing a store of value is an underlying basis for any economic system, as some medium is necessary for a store of value in order for individuals to engage in the exchange of goods and services.

As long as a currency is relatively stable in its value, money (such as a dollar bill) is the most common and efficient store of value found in an economy.  

What is considered a store of value can be markedly different from one region of the world to another.  In truth, any physical asset can be considered a store of value under the right circumstances, or when a base level of demand is believed to exist.   

In most of the world's advanced economies, the local currency can be counted on as a store of value in all but the worst-case scenarios.

However, currency can sometimes come under attack as a store of value (such as in hyperinflation). In those instances, other stores of value have proved their consistency over time, such as gold, silver, real estate and art. 

The price of gold, in particular, will often skyrocket during times of national peril or when a financial shock hits the broad markets, as demand grows for other widely recognized stores of value. 

While the relative value of these items will fluctuate over time, they can be counted on to retain some value in almost any scenario, especially in those cases where the store of value has a finite supply (like gold). 

Private Placement Raising of capital via private rather than public placement.

The result is the sale of securities to a relatively small number of investors. Investors involved in private placements are usually large banks, mutual funds, insurance companies, and pension funds. Since a private placement is offered to a few, select individuals, the placement does not have to be registered with the Securities and Exchange Commission.

In many cases detailed financial information is not disclosed and the need for a prospectus is waived. Finally, since the placements are private rather than public, the average investor is only made aware of the placement usually after it has occurred.

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