Haircut: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (l) |
imported>Doug Williamson (Layout.) |
||
| Line 1: | Line 1: | ||
1. | '''1. ''' | ||
''Secured lending''. | ''Secured lending''. | ||
| Line 19: | Line 19: | ||
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. | ||
| Line 26: | Line 26: | ||
'''Example 2''' | '''Example 2''' | ||
Asset total value = EUR 200bn. | |||
Haircut = 50%. | Haircut = 50%. | ||
| Line 37: | Line 37: | ||
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. | ||
Revision as of 14:49, 30 October 2016
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.
Example 1
Market value of the asset = £100,000.
Haircut = 2%.
The maximum amount of the related secured loan would be:
= £100,000 LESS 2%
= £98,000
2.
The amount of a loss (or an expected loss) on asset, as a percentage of the total value of the asset.
Example 2
Asset total value = EUR 200bn.
Haircut = 50%.
Then:
Loss of EUR 100bn (= 50% ).
Recovery of EUR 100bn.
3.
A fee or commission, expressed as a percentage of the total value of the related transaction.
