A unit is a measure of housing equivalent to the living quarters of one household. In common speech in Australia and New Zealand, the word “unit”, when referring to housing, usually means either: an apartment, (where a group of apartments is contained in one or more multi-storied buildings);or a villa unit or home unit, where...

Strategy (Greek “στρατηγία” – stratēgia, “art of troop leader; office of general, command, generalship”) is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy becomes ever necessary when it is known or suspected there are insufficient resources to achieve these goals.

Chapter 11 is a chapter of the United StatesBankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.

A legal case is a dispute between opposing parties resolved by a court, or by some equivalent legal process. A legal case may be either civil or criminal. There is a defendant and an accuser.

A shareholder or stockholder is an individual or institution that legally owns a share of stock in a public or private corporation. Stockholders are granted special privileges depending on the class of stock.

A debtor in possession in United States bankruptcy law is a person or corporation who has filed a bankruptcy petition, but remains in possession of property upon which a creditor has a lien or similar security interest. A corporation which continues to operate its business under Chapter 11 bankruptcy proceedings is a debtor in possession.

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of...

Purchasing power (sometimes retroactively called adjusted for inflation) is the amount of goods or services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating...

In finance, unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment.

This article deals with the general concept of the term credit history. For detailed information about the same topic in the United States, see Credit score (United States). Credit history or credit report is, in many countries, a negative record of an individual’s or company’s past borrowing and repaying, including information about late payments and...

A fixed interest rate loan is a loan where the interest rate doesn’t fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. Variable rate loans, by contrast, are anchored to the prevailing discount rate. A fixed interest rate is based on the lender’s assumptions about...

A business entity is a commercial, corporate and/or other institution that is formed and administered as per commercial law in order to engage in business activities, usually the sale of a product or a service. There are many types of business entities defined in the legal systems of various countries. These include corporations, cooperatives, partnerships,...

In the United States, a conforming loan is a mortgage loan that conforms to GSE guidelines. In general, any loan which does not meet guidelines is a non-conforming loan. A loan which does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan.

A lump sum is a single payment of money, as opposed to a series of payments made over time (such as an annuity). The United States Department of Housing and Urban Development distinguishes between “price analysis” and “cost analysis” by whether the decision maker compares lump sum amounts, or subjects contract prices to an itemized...

Arrears (also sometimes known as an arrearage) is a legal term for the part of a debt that is overdue after missing one or more required payments. The amount of the arrears is the amount accrued from the date on which the first missed payment was due. The term is usually used in relation with...

Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate is an asset form with limited liquidity relative to other...

The loan-to-value (LTV) ratio is a financial term used by commercial lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real...

A company is an association or collection of individuals people or “warm-bodies” or else contrived “legal persons” (or a mixture of both). Company members share a common purpose and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared goals.

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...

A project in business and science is typically defined as a collaborative enterprise, frequently involving research or design, that is carefully planned to achieve a particular aim. Projects can be further defined as temporary rather than permanent social systems that are constituted by teams within or across organizations to accomplish particular tasks under time constraints.

A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup. Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account. Under the feudal system, a Knight’s fee...

In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are regulated by the government.

Financial independence is a term generally used to describe the state of having sufficient personal wealth to live indefinitely without having to work actively for basic necessities. In the case of many individuals whose financial circumstances fit this description, their assets generate income that is greater than their expenses. To illustrate, a person’s quarterly expenses...

A plan is typically any diagram or list of steps with timing and resources, used to achieve an objective. See also strategy. It is commonly understood as a temporal set of intended actions through which one expects to achieve a goal. For spatial or planar topologic or topographic sets see map.

Commerce is the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural and technological systems that are in operation in any country. Thus, commerce is a system or an environment that affects the business prospects of an economy or a nation-state. It can also be...

A loan agreement or ‘facilities agreement’ is a contract which regulates the terms of a loan. Loan agreements usually relate to loans of cash, but market specific contracts are also used to regulate securities lending. Loan agreements are usually in written form, but there is no legal reason why a loan agreement cannot be a...

In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienor and the person who has the benefit of the lien is...

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor...

The term document has multiple meanings in ordinary language and in scholarship. WordNet 3.1. lists four meanings (October 2011): document, written document, papers (writing that provides information) document (anything serving as a representation of a person’s thinking by means of symbolic marks) document (a written account of ownership or obligation) text file, document (a computer...

A payment is the transfer of money from one party (such as a person or company) to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation. The simplest and oldest form of payment is barter, the exchange of one good or service...

A business (also known as enterprise or firm) is an organization involved in the trade of goods, services, or both to consumers. Business plan and Business model determine the outcome of an active business operation. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase...

Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type of loan and the terms negotiated between the firm and the investor seeking their services. Mortgage servicing became “far more profitable during the...

In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists. In an accounting context, Shareholders’ equity (or stockholders’ equity, shareholders’ funds, shareholders’ capital or similar terms) represents the remaining interest in assets of...

Inherent risk, in a financial audit, is the risk that the account, disclosure or financial statement note being attested to by an independent CPA firm is materially misstated without considering internal controls due to error or fraud Detection Risk

In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is...

A security or financial instrument is a tradable asset of any kind. Securities are broadly categorized into: debt securities, equity securities, e.g. , common stocks; and, derivative contracts, such as forwards, futures, options and swaps. The company or other entity issuing the security is called the issuer. A country’s regulatory structure determines what qualifies as...

Recourse debt is a debt that is not backed by collateral from the borrower. Also known as a recourse loan, this type of debt allows the lender to collect from the debtor and the debtor’s assets in the case of default as opposed to foreclosing on a particular property or asset as with a home...

A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. The availability of a deficiency judgment depends on whether the lender has a recourse or nonrecourse loan, which is largely a matter of state law.

A contractual term is “Any provision forming part of a contract” Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract.

The debt service coverage ratio (DSCR), also known as “debt coverage ratio,” (DCR) is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity’s (person or corporation) ability to produce enough cash to cover its debt (including lease) payments....

In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees.

A lawsuit or (very rarely) “suit in law” is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant’s actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff’s complaint.

In the common law, legal advice is the giving of a formal opinion regarding the substance or procedure of the law, usually received from a solicitor, barrister or lawyer, ordinarily in exchange for financial or other tangible compensation. Advice given without remuneration is normally referred to as being pro bono publico (in the public good),...

A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk...

Legal liability is the legal bound obligation to pay debts. In law, a person is legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. Legal liability can arise from various areas of law, such as contracts, tort judgments or settlements, taxes, or fines assed...

Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract. The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the “closing”. It is common for a variety of costs associated with...

In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an...

A dilemma is a problem offering two possibilities, neither of which is practically acceptable. One in this position has been traditionally described as “being on the horns of a dilemma”, neither horn being comfortable. This is sometimes more colorfully described as “Finding oneself impaled upon the horns of a dilemma”, referring to the sharp points...

An investor is someone who allocates capital with the expectation of a financial return. The types of investments include, — gambling and speculation, equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc. This definition makes no distinction between those in the primary and secondary markets. That is, someone who...

Economic value is a measure of the benefit that an economic actor can gain from either a good or service. It is generally measured relative to units of currency, and the interpretation is therefore “what is the maximum amount of money a specific actor is willing and able to pay for the good or service”?...

The loan-to-value (LTV) ratio is a financial term used by commercial lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real...

A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate. A balloon...

A broker is an individual or party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Distinguish agent: one who acts on behalf of a principal. In...

Structure is a fundamental, tangible or intangible notion referring to the recognition, observation, nature, and permanence of patterns and relationships of entities. This notion may itself be an object, such as a built structure, or an attribute, such as the structure of society.

A construction loan (also called a home construction loan in the United States and self-build mortgage in the United Kingdom) is any value added loan where the proceeds are used to finance construction of some kind.

Cash out refinancing (in the case of real property) occurs when a loan is taken out on property already owned, and the loan amount is above and beyond the cost of transaction, payoff of existing liens, and related expenses.

Commercial mortgage-backed securities (CMBS) are a type of mortgage-backed security backed by mortgages on commercial rather than residential real estate. CMBS issues are usually structured as multiple tranches, similar to collateralized mortgage obligations, rather than typical residential “passthroughs.

In finance, maturity or maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid. The term fixed maturity is applicable to any form of financial instrument under which the loan is due to be repaid on...

Non-recourse debt or a non-recourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. Thus, non-recourse debt is typically...

Pre-qualification is a process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.

A financial transaction is an agreement, communication, or movement carried out between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals. The buyer and seller are separate entities or objects, often involving the exchange of items...

In business, net income – also referred to as the bottom line, net profit, or net earnings – is an entity’s income minus expenses for an accounting period. It is computed as the residual of all revenues and gains over all expenses and losses for the period, and has also been defined as the net...

An estate is the net worth of a person at any point in time. It is the sum of a person’s assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time. The issue is of special legal significance on a question of bankruptcy and death of...

An appraiser (from Latin appretiare, to value), is one who sets a value upon property, real or personal. In England the business of an appraiser is usually combined with that of an auctioneer, while the word itself has a similar meaning to that of “valuer. ” In the United States, the most common usage relates...

A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The narrower term rental agreement can be used to describe a lease in which the asset is tangible property. Language used is that the user rents the land or goods let or rented out...

In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are bought as raw materials and sold as finished goods. Commodities are usually raw materials such as metals and agricultural products, but a commodity can also...

Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company’s value and situation. Cash flow can be used, for example,...

A creditor is a party (e.g. person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract)...

A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a leasehold estate is typically considered personal property. Leasehold...

A term is a period of duration, time or occurrence, in relation to an event. To differentiate an interval or duration, common phrases are used to distinguish the observance of length are near-term or short-term, medium-term or mid-term and long-term. It is also used as part of a calendar year, especially one of the three...