Haircut: Difference between revisions
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imported>Administrator (CSV import) |
imported>Doug Williamson m (Spacing 27/8/13) |
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1. ''Secured lending''. | 1. | ||
''Secured lending''. | |||
An amount deducted from the current market value of an asset used as collateral, to calculate the maximum amount of a loan secured against that asset. | An amount deducted from the current market value of an asset used as collateral, to calculate the maximum amount of a loan secured against that asset. | ||
For example, if the market value of the asset were £100,000 and the haircut was 2%, the maximum amount of the related secured loan would be £98,000 (= £100,000 LESS 2%). | For example, if the market value of the asset were £100,000 and the haircut was 2%, the maximum amount of the related secured loan would be £98,000 (= £100,000 LESS 2%). | ||
2. | 2. | ||
The amount of a loss (or an expected loss) on asset, as a percentage of the total value of the asset. | The amount of a loss (or an expected loss) on asset, as a percentage of the total value of the asset. | ||
For example in this context a 50% haircut on Greek debt of EUR 200bn means a loss of EUR 100bn (= 50%) and a recovery of EUR 100bn. | For example in this context a 50% haircut on Greek debt of EUR 200bn means a loss of EUR 100bn (= 50%) and a recovery of EUR 100bn. | ||
3. | 3. | ||
A fee or commission, expressed as a percentage of the total value of the related transaction. | A fee or commission, expressed as a percentage of the total value of the related transaction. | ||
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* [[Collateral]] | * [[Collateral]] | ||
* [[Repurchase agreement]] | * [[Repurchase agreement]] | ||
Revision as of 11:23, 27 August 2013
1.
Secured lending.
An amount deducted from the current market value of an asset used as collateral, to calculate the maximum amount of a loan secured against that asset.
For example, if the market value of the asset were £100,000 and the haircut was 2%, the maximum amount of the related secured loan would be £98,000 (= £100,000 LESS 2%).
2.
The amount of a loss (or an expected loss) on asset, as a percentage of the total value of the asset.
For example in this context a 50% haircut on Greek debt of EUR 200bn means a loss of EUR 100bn (= 50%) and a recovery of EUR 100bn.
3.
A fee or commission, expressed as a percentage of the total value of the related transaction.
