Make whole clause and Riba: Difference between pages

Latest revision as of 21:20, 7 February 2021

Islamic finance.

Interest.

The prohibition of interest is one of the most significant principles of Islamic finance.

Riba is the Arabic word for increase, or excess.

(Not to be confused with RiBa.)

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-''Securities''.
+<i>Islamic finance</i>.
-A strong form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.
+Interest.
-Under a make whole clause the borrower/issuer has to value the cash flows beyond the date of the early call/redemption at the government bond yield.
+The prohibition of interest is one of the most significant principles of Islamic finance.
-This potentially makes it prohibitively expensive for the issuer to take an early redemption.
+''Riba'' is the Arabic word for increase, or excess.
-The consequence of a make whole clause for the investor is that they can re-invest the redemption monies in government stock, thus preserving their originally expected cash inflows at lower risk.
+<i>(Not to be confused with RiBa.)</i>
-Make whole clauses are similar in their effect to Spens clauses.
-Sometimes known as a make whole ''provision''.
 == See also ==
-* [[Call risk]]
+* [[Interest]]
-* [[Clause]]
+* [[Islamic finance]]
-* [[Security]]
+* [[RiBa]]
-* [[Spens clause]]
-[[Category:Accounting,_tax_and_regulation]]
+[[Category:Compliance_and_audit]]
-[[Category:Corporate_financial_management]]
+[[Category:Ethics]]
+[[Category:Cash_management]]
+[[Category:Financial_products_and_markets]]
+[[Category:Liquidity_management]]