July 2023 - Page 14 of 823 - Dr. Gerhard Merk

Generally, the payment of a sum of money under a contractual agreement, especially said of employment contracts: salary, earnings, salary, pay. – The remuneration for services rendered by certain professions, such as lawyers (attorneys’ fees), physicians (doctors’ fees), authors (copyright fees), or artists: honorarium, fee, royalty; also called equivalent (aequivalent) in older literature. For banks,… read more »

Principle in accounting and regulatory law according to which the same facts must be treated in the same way by all companies in order to be able to compare and assess transactions at different companies. – See mark-to-model approach. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes… read more »

In the case of a life insurance policy, the automatic lapse under the terms of the policy if the policy owner falls behind with the premium (the termination of an insurance policy because of the owner of the policy failing to pay the premium within the grace period [commonly within 30 days after the last… read more »

Generally, the conversion of non-marketable assets of any kind into tradable securities (the process of converting nontradable assets into tradable securities.). – Banks bundle receivables from loans extended into debt securities that are sold to investors. – Banks issue certificates for foreign shares not listed on the domestic stock exchange, thereby making them tradable on… read more »

In general, any type of transaction aimed at avoiding a possible trading loss altogether or at keeping it within manageable limits. – In the case of options, the taking of a short position in the futures market for the purpose of hedging a long position in the cash market. – See replacement sale, hedging. Attention:… read more »

Supply and demand for securitization instruments of all kinds. In principle, anything that promises a continuing stream of payments can be securitized, from credit card receivables to student loans to revenues in a soccer stadium or concert hall. – The catch with any securitization is the moral hazard problem. This is because the incentive for… read more »

A bank and in this context often called originator or originating bank – ties together a large number of credit relationships into a pool (portfolio), – separates the credit risk by means of credit derivatives before passing it on to investors – in larger packages (pools; bundles). Prior to this, – the originating bank transfers… read more »

Biting term for the fact that “vested interests are untouchable. Legislators find it extremely difficult to cut government spending even slightly in any field, such as social welfare, cultural promotion, education or defense. Monetary policy has to take this into account. – See Adjustment inflation, Monetary awareness, Budget pre-reconciliation, European, Semester, European, Sovereign debt, Sovereign… read more »

A market in which demand exceeds supply. Rising prices are the result due to the First Price Law (supply and demand determine the price). – See market, oversold. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor… read more »

In general, the product of the probability of default and the amount of loss in the event of default. Banks are required by regulatory law to absorb corresponding losses with equity capital. – See Imparity principle. – Cf. BaFin Annual Report 2003, p. 37 f. Attention: The financial encyclopedia is protected by copyright and may… read more »