LETTER OF GUARANTEE
- A contract issued by the bank on behalf of a customer who entered a deal to purchase goods from a supplier. In case of default, the bank will take responsibility by meeting any financial obligations to the supplier.
- A document from the bank on behalf of a call writer, which guarantees the writer owns the underlying asset and the bank will hand over the securities should the call be applied.
An entity who assumes this responsibility is called guarantor.
POPULAR TERMS
Affirmative Covenant
A kind of contract or promise that requires a party to conduct some action. For example, a bond covenant which provides that the issuer must delive ...
Pure Risk
A risk where loss is the only potential outcome; there is no positive result. A pure risk is related to events that are out of control of the risk- ...
Efficiency
Performance level describing a process which uses the lowest amount of inputs to come up with the greatest amount of inputs. It is relative to usin ...
Tax Free
Goods and/or financial products that are not taxable. Having the tax free status allows an entity to save money and encourages additional spending ...
Reprice
A situation that is most often allowed for company executives or high-level employees. It permits them to trade in their options that out of the mo ...
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