AAA
Highest
rated corporate or municipal
bond, with full payment of principal and
interest expected
at maturity.
Bonds rated AAA, AA, A, and BBB by Standard & Poor's, and Baa or better by
Moody's Investors Service, are considered investment grade bonds, eligible for
purchase by banks and savings institutions as investment securities .
Acid test ratio
Stringent
test of liquidity ;
also called quick ratio. The ratio is found by
dividing the most liquid current assets (cash, marketable securities, and
accounts receivable) by current liabilities. (Notice that some current assets
are not in the numerator: Inventory is not included because it usually takes a
long time to convert into cash; prepaid expenses are left out because they
cannot be turned into cash and thus are incapable of covering current
liabilities.) In general, the ratio should at least be equal to 1. In other
words, for every $1 in current debt there should be $1 in quick assets. Assume
cash is $100, marketable securities are $400, accounts receivable are $800,
inventory is $3000, and current liabilities are $1000. The acid test ratio
equals:
|
Quick Assets
Current Liabilities |
=
|
$1300
$1000 |
=
|
1.3
|
The acid test ratio for the current year should be compared to prior years to evaluate the trend. It should also be compared to the acid test ratio of a competing company to get a relative comparison.
Accelerated depreciation
Method recognizing higher amounts of
depreciation in the earlier years and lower amounts in the later years of a
fixed asset's life. Some machines, for example, are more efficient early on and
generate greater service potential; matching dictates higher depreciation
expense in those years. Over time, depreciation expense moves in a downward
direction and maintenance costs tend to become higher; thus the effect of
accelerated depreciation is fairly even charges to income. Greatest tax
benefits from depreciation are enjoyed in the earlier years.
Accelerated depreciation
depreciation
methods that allow faster write-offs than straight-line rates in earlier
periods of the useful life of an asset. For example, in the first few years of
recovery, MACRS allows a 200% depreciation methods that allow faster write-offs
than straight-line rates in earlier periods of the useful life of an asset. For
example, in the first few years of recovery, MACRS allows a 200% Double-Declining-Balance write-off, which is twice the rate of straight-line depreciation . Depreciable assets other than
buildings fall into 3-, 5-, 7-, 10-, 15-, or 20-year recovery periods under the
general depreciation system.
Account Agreement:
The contract
governing your open-end credit account, it provides information on changes that
may occur to the account.
Account
History:
The payment history of an account over a
specific period of time, including the number of times the account was past due
or over limit.
Account
Holder:
Any and all
persons designated and authorized to transact business on behalf of an account.
Each account holder's signature needs to be on file with the bank. The
signature authorizes that person to conduct business on behalf of the account.
Accrued
Interest:
Interest that has been earned but not yet
paid.
Acquiring
Bank:
In a merger (amalgamation/ combination),
the bank that absorbs the bank acquired.
Acquisition
One
company taking over controlling interest in another company. Investors are
always looking out for companies that are likely to be acquired, because those
who want to acquire such companies are often willing to pay more than the market price for the shares they need to complete
the acquisition.
Adjudication
Settlement of opposing
arguments by notice and trial in a court of law; also a court's ruling, such as
adjudication of bankruptcy. Contrast with arbitration .
Adjustable-Rate
Mortgages (ARMS):
Also known as
variable-rate mortgages. The initial interest rate is usually below that of
conventional fixed-rate loans. The interest rate may change over the life of
the loan as market conditions change.
There is
typically a maximum (or ceiling) and a minimum (or floor) defined in the loan
agreement. If interest rates rise, so does the loan payment. If interest rates
fall, the loan payment may as well.
Adverse
Action:
Under the Equal
Credit Opportunity Act, a creditor's refusal to grant credit on the terms
requested, termination of an existing account, or an unfavorable change in an existing
account.
Adverse Action
Notice:
The notice required by the Equal Credit
Opportunity Act advising a credit applicant or existing debtor of the denial of
their request for credit or advising of a change in terms considered
unfavorable to the account holder.
Ad Valorem
Latin term
meaning "according to value" and referring to a way of assessing
duties or taxes on goods or property. As one example, ad valorem duty assessment
is based on the value of the imported item rather than on its weight or
quantity. As another example, the city of Englewood, New Jersey, levies an ad-valorem
property tax based on the assessed value of property rather than its size.
Affidavit:
A sworn statement in writing before a
proper official, such as a notary public.
Affiliate
In
general: two companies are affiliated when one
owns less than a majority of the voting stock of the other, or when both are
subsidiaries of a third company. A subsidiary is a company of which more than 50% of
the voting shares are owned by another corporation, termed the parent company . A subsidiary is always, by definition, an
affiliate, but subsidiary is the preferred term when majority control exists.
In everyday use, affiliate is the correct word for intercompany relationships,
however indirect, where the parent-subsidiary relationship does not apply.
Agreement
Corporation
Corporation chartered by a state to engage in international banking: so named because the corporation enters into an “agreement” with the Fed's Board of Governors that it will limit its activities to those permitted.
Alteration:
Corporation chartered by a state to engage in international banking: so named because the corporation enters into an “agreement” with the Fed's Board of Governors that it will limit its activities to those permitted.
Alteration:
Any change
involving an erasure or rewriting in the date, amount, or payee of a check or
other negotiable instrument.
Amortization:
The process of
reducing debt through regular installment payments of principal and interest
that will result in the payoff of a loan at its maturity.
Loan payments by equal periodic amounts
calculated to pay off the debt at the end of a fixed period, including accrued
interest on the outstanding balance.
Amortized
Loan:
A loan to be repaid, by a series of
regular installments of principal and interest, that are equal or nearly equal,
without any special balloon payment prior to maturity.
Anniversary
Date:
The date upon which the twelfth payment
is due. This occurs in the same calendar month and day each year thereafter on
any MOP Promissory Note.
Annual
Percentage Rate (APR):
A percentage rate that reflects the
amount of interest earned or charged.
Annual
Percentage Rate (APR):
The cost of credit on a yearly basis,
expressed as a percentage.
Annual
Percentage Yield (APY):
A percentage rate
reflecting the total amount of interest paid on a deposit account based on the
interest rate and the frequency of compounding for a 365-day year.
Annuity:
A life insurance
contract sold by insurance companies, brokers, and other financial
institutions. It is usually sold as a retirement investment. An annuity is a
long-term investment and can have steep surrender charges and penalties for
withdrawal before the annuity's maturity date. (Annuities are not FDIC
insured.)
Appraisal:
The act of evaluating and setting the
value of a specific piece of personal or real property.
Appointee:
A person who has been offered and has
accepted a full-time position with the University of California.
Appraised
Value:
The dollar value assigned to a single-family
residence by an appraiser approved by the Office of Loan Programs.
Arrears
Past
due payments or other liabilities. An example is cumulative preferred stock
dividends that have been declared but have not been paid following their
payment dates. (Common dividends cannot be paid as long as cumulative preferred
dividends are in arrears.)
At sight
Denotes
a negotiable instrument, such as a bill of exchange or draft payable when
presented to the drawee.
Authorization:
The issuance of
approval, by a credit card issuer, merchant, or other affiliate, to complete a
credit card transaction.
Automated
Clearing House (ACH):
A computerized
facility used by member depository institutions to electronically combine,
sort, and distribute inter-bank credits and debits. ACHs process electronic
transfers of government securities and provided customer services, such as
direct deposit of customers' salaries and government benefit payments (i.e.,
social security, welfare, and veterans' entitlements), and preauthorized
transfers.
Automated
Teller Machine (ATM):
A machine,
activated by a magnetically encoded card or other medium that can process a
variety of banking transactions. These include accepting deposits and loan
payments, providing withdrawals, and transferring funds between accounts.
Automatically
Protected:
As of May 1,
2011, up to two months of Federal benefits such as Social Security benefits,
Supplemental Security Income benefits, Veteran’s benefits, Railroad Retirement
benefits, and benefits from the Office of Personnel Management that are direct
deposited to an account may be protected from garnishment. The amount
automatically protected will depend upon the balance of the account on the day
of review.
Automated
Clearinghouse (ACH):
An electronic funds transfer network that
enables direct money transfers between participating bank accounts and lenders.
This feature is available only to borrowers who are not currently on active
payroll status.
utomatic
Bill Payment:
A checkless
system for paying recurring bills with one authorization statement to a
financial institution. For example, the customer would only have to provide one
authorization form/letter/document to pay the cable bill each month. The
necessary debits and credits are made through an Automated Clearing House
(ACH).
Availability
Date:
Bank's policy as
to when funds deposited into an account will be available for withdrawal.
Availability
Policy:
Bank's policy as
to when funds deposited into an account will be available for withdrawal.
Available
Balance:
The balance of an
account less any hold, uncollected funds, and restrictions against the account.
Available
Credit:
The difference
between the credit limit assigned to a cardholder account and the present
balance of the account.
Bad Debt
A debt that is not collectible and is
therefore worthless to the creditor.
Bailment
Contractual transfer of dollars or personal property for a specified objective. An example
is the consignment of goods from the consignor to
consignee. Another example is a bank holding an asset of a borrower as
collateral. In a bailment, the deliverer is called the bailor and the receiver
is termed the bailee.
Balance Sheet
Financial statement presenting measures
of the assets, liabilities and owner's equity or net worth of business firm or
nonprofit organization as of a specific moment in time.
Balance Transfer:
The process of
moving an outstanding balance from one credit card to another. This is usually
done to obtain a lower interest rate on the outstanding balance. Transfers are
sometimes subjected to a Balance Transfer Fee.
Balloon
Payment:
An installment payment on a promissory
note - usually the final one for discharging the debt - which is significantly
larger than the other installment payments provided under the terms of the
promissory note.
Banking
Act of 1933:
1. Any organization that a bank owns or
controls by stock holdings, or which the bank's shareholders own, or whose
officers are also directors of the bank.
Bank
Custodian:
A bank custodian
is responsible for maintaining the safety of clients' assets held at one of the
custodian's premises, a sub-custodian facility or an outside depository.
Bank
Statement:
Periodically the
bank provides a statement of a customer's deposit account. It shows all
deposits made, all checks paid, and other debits posted during the period
(usually one month), as well as the current balance.
Banking
Day:
A business day
during which an office of a bank is open to the public for substantially all of
its banking functions.
Bankrupt:
A bankrupt
person, firm, or corporation has insufficient assets to cover their debts. The
debtor seeks relief through a court proceeding to work out a payment schedule
or erase debts. In some cases, the debtor must surrender control of all assets
to a court-appointed trustee.
Bankruptcy:
The legal
proceedings by which the affairs of a bankrupt person are turned over to a
trustee or receiver for administration under the bankruptcy laws. There are two
types of bankruptcy:
- Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt.
- Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.
Bank Holding Company
A company that owns and/or controls one or more U.S. banks or one that owns, or has controlling interest in, one or more banks. A bank holding company may also own another bank holding company, which in turn owns or controls a bank; the company at the top of the ownership chain is called the top holder. The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (OCC or FDIC)
A company that owns and/or controls one or more U.S. banks or one that owns, or has controlling interest in, one or more banks. A bank holding company may also own another bank holding company, which in turn owns or controls a bank; the company at the top of the ownership chain is called the top holder. The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (OCC or FDIC)
Basel II
A new set
of regulations designed by the Basel Committee on Banking Supervision to cover
operational risk as well as financial risk for the global financial
institutions. Set up in 1974, the Basel Committee on Banking Supervision is an
international regulatory body for the world's financial institutions. In 1988,
it introduced capital adequacy rules for banks in member countries, which
required them to implement a financial risk measurement framework. The
Committee is currently creating a new set of regulations to replace the
original rules that would cover operational risk as well as financial risk. The
new framework, usually called Basell II, is based around three
"pillars": the first determines minimum capital requirements, the
second stipulates an effective supervisory review process, and the third sets
out to strengthen market discipline by greater disclosure of banks' financial status.
Beneficiary:
A person who is
entitled to receive the benefits or proceeds of a will, trust, insurance
policy, retirement plan, annuity, or other contract.
Billing
Cycle:
The time interval
between the dates on which regular periodic statements are issued.
Billing
Date:
The month, date,
and year when a periodic or monthly statement is generated. Calculations have
been performed for appropriate finance charges, minimum payment due, and new
balance.
Billing
Error:
A charge that
appears on a periodic statement associated with an extension of credit (e.g.,
credit card) that
- was not authorized by the cardholder or the cardholders' designee,
- is not properly identified, and
- was not accepted by the cardholder or the cardholder's designee.
A billing error
can also be caused by a creditor's failure to credit a payment or other credit
to an account as well as accounting and clerical errors.
An itemized list of documentation that
the borrower and the campus need to provide to the Office of Loan Programs for
either pre-approval or loan approval. Also known as form OLP-09.
Borrower:
An eligible person as specified in an
executed Certification of Eligibility, prepared by the appropriate campus
representative, who will be primarily responsible for the repayment of a
Program loan.
Bounced Check
A check that a
bank has refused to cash or pay because you have no funds to cover it in your
account.
Bridge Loan:
A
temporary loan, usually less than 12 months, provided to a borrower when the
net proceeds from a sale of a prior residence are not available for the
purchase of a new home. It is intended that a bridge loan will be paid off with
the net proceeds from the prior residence's sale.
Bridge Loan
Short-term loan to provide temporary
financing until more permanent financing is available.
Business
Day:
Any day on which
offices of a bank are open to the public for carrying on substantially all of
the bank's business.
Business Plan
A document that describes an
organization's current status and plans for several years into the future. It
generally projects future opportunities for the organization and maps the
financial, operations, marketing and organizational strategies that will enable
the organization to achieve its goals.
Camels rating
measure of
the relative soundness of a bank. CAMELS ratings-the term stands for capital , asset , management, earnings, liquidity and sensitivity to market risk-are calculated on a 1-5
scale, and are used by bank supervisory agencies to evaluate bank condition. A
rating of 1 is given to banks with the strongest performance ratings; banks
given a CAMELS rating of 4 or 5 are placed on the watch list of banks in need
of supervisory attention. Individual CAMELS ratings are disclosed to bank
management, though not to the general public.
Canceled Check:
A check that a
bank has paid, charged to the account holder's account, and then endorsed. Once
canceled, a check is no longer negotiable.
Cashier's
Check:
A check drawn on
the funds of the bank, not against the funds in a depositor's account. However,
the depositor paid for the cashier's check with funds from their account. The
primary benefit of a cashier's check is that the recipient of the check is
assured that the funds are available.
Capital
Broadly, all the money and other property
of a corporation or other enterprise used in transacting its business.
Capitalization
Long-term debt, preferred stock and net
worth. The loan capital of a community development loan fund; includes that
which has been borrowed from and is repayable to third parties as well as that
which is earned or owned by the loan fund (i.e. "permanent capital").
Capital Markets
Those financial markets, including
institutions and individuals, that exchange securities, especially long-term
debt instruments.
Cash Flow Financing
Short-term loan
providing additional cash to cover cash shortfalls in anticipation of revenue,
such as the payment(s) of receivables.
Cease
and Desist Letter:
A letter
requesting that a company stops the activity mentioned in the letter.
Cease and desist
order
order
issued by a bank regulatory agency, after notice and opportunity for hearing,
requiring a depository institution or a bank officer to suspend any unlawful,
unsafe, or unsound practices, such as excessive lending to an insider.
These orders are issued by the appropriate regulatory agencies under the Financial Institutions
Regulatory Act of 1978
and are enforceable in the courts.
Certificate
of Deposit:
A negotiable
instrument issued by a bank in exchange for funds, usually bearing interest,
deposited with the bank.
Certificate of
Release:
A certificate signed by a lender
indicating that a mortgage has been fully paid and all debts satisfied.
Certified
Check:
A personal check drawn by an individual
that is certified (guaranteed) to be good. The face of the check bears the
words "certified" or "accepted," and is signed by an
official of the bank or thrift institution issuing the check. The signature
signifies that
- the signature of the drawer is genuine, and
- sufficient funds are on deposit and earmarked for payment of the check.
Charge-off:
The balance on a credit obligation that a
lender no longer expects to be repaid and writes off as a bad debt.
Check
Truncation:
The conversion of data on a check into an
electronic image after a check enters the processing system. Check truncation
eliminates the need to return canceled checks to customers.
Checking
Account:
A demand deposit
account subject to withdrawal of funds by check.
ChexSystems:
The ChexSystems,
Inc. network is comprised of member financial institutions that regularly
contribute information on mishandled checking and savings accounts to a central
location. ChexSystems shares this information among member institutions to help
them assess the risk of opening new accounts.
ChexSystems only
shares information with the member institutions; it does not decide on new
account openings. Generally, information remains on ChexSystems for five years.
Closed-End
Credit :
Generally, any
credit sale agreement in which the amount advanced, plus any finance charges,
is expected to be repaid in full by a specified date. Most real estate and
automobile loans are closed-end agreements.
Closed-End
Loan:
Generally, any
loan in which the amount advanced, plus any finance charges, is expected to be
repaid in full by a specified date. Most real estate and automobile loans are
closed-end agreements.
Closing
a Mortgage Loan:
The consummation
of a contractual real estate transaction in which all appropriate documents are
signed and the proceeds of the mortgage loan are then disbursed by the lender.
Closing
Costs:
The expenses
incurred by sellers and buyers in transferring ownership in real property. The
costs of closing may include the origination fee, discount points, attorneys'
fees, loan fees, title search and insurance, survey charge, recordation fees,
and the credit report charge.
Collateral
Assets pledged to secure the repayment of
a loan.
Collateral:
Assets that are
offered to secure a loan or other credit. For example, if you get a real estate
mortgage, the bank's collateral is typically your house. Collateral becomes
subject to seizure on default
Collected
Funds:
Cash deposits or
checks that have been presented for payment and for which payment has been
received.
Collection
Agency:
A company hired
by a creditor to collect a debt that is owed. Creditors typically hire a
collection agency only after they have made efforts to collect the debt
themselves, usually through letters and telephone calls.
Collection
Items:
Items-such as
drafts, notes, and acceptances-received for collection and credited to a depositor's
account after payment has been received. Collection items are usually subject
to special instructions and may involve additional fees. Most banks impose a
special fee, called a collection charge, for handling collection items.
Collective
Investment Funds (CIFs):
A Collective
Investment Fund (CIF) is a trust created and administered by a bank or trust
company that commingles assets from multiple clients. The Federal securities
laws generally require entities that pool securities to register those pooled
vehicles (such as mutual funds) with the SEC. However, Congress created
exemptions from these registration requirements for CIFs so long as the entity
offering these funds is a bank or other authorized entity and so long as
participation in the fund is restricted to only those customers covered by the
exemption. If these limitations are met, CIFs are exempt from SEC registration
and reporting requirements.
Co-Maker:
A person who
signs a note to guarantee a loan made to another person and is jointly liable
with the maker for repayment of the loan. (Also known as a Co-signer.)
Community
Reinvestment Act:
The Act is
intended to encourage depository institutions to help meet the credit needs of
the communities in which they operate, including low- and moderate-income
neighborhoods. It was enacted by the Congress in 1977.
Commercial Bank
A financial institution that is owned by stockholders, operates for a profit, and engages in various lending activities.
A financial institution that is owned by stockholders, operates for a profit, and engages in various lending activities.
Consumer
Credit Counseling Service:
A service which
specializes in working with consumers who are overextended with debts and need
to make arrangements with creditors.
Consumer
Reporting Agency:
An agency that
regularly collects or evaluates individual consumer credit information or other
information about consumers and sells consumer reports for a fee to creditors
or others. Typical clients include banks, mortgage lenders, credit card
companies, and other financing companies.
Conventional
Fixed Rate Mortgage:
A fixed-rate
mortgage offers you a set interest rate and payments that do not change
throughout the life, or "term," of the loan.
A conventional
fixed-rate loan is fully paid off over a given number of years-usually 15, 20,
or 30. A portion of each monthly payment goes towards paying back the money
borrowed, the "principal"; the rest is "interest."
Cooperative Bank
State-chartered savings associations located in Massachusetts, New Hampshire, Rhode Island and Vermont.
State-chartered savings associations located in Massachusetts, New Hampshire, Rhode Island and Vermont.
Co-Signer:
An individual who
signs the note of another person as support for the credit of the primary
signer and who becomes responsible for the obligation. (Also known as a
Co-maker.)
Covenant
An agreement or promise to do or not to
do a particular thing; to enter into a formal agreement; a promise incidental
to a deed or contract. The following are functional objectives guiding most
covenants: full disclosure of information, preservation of net worth,
maintenance of asset quality, maintenance of adequate cash flow, control of
growth, control of management, assurance of legal existence and concept of
going concern, provision for lender profit or program goals.
Credit
Application:
A form to be
completed by an applicant for a credit account, giving sufficient details
(residence, employment, income, and existing debt) to allow the seller to
establish the applicant's creditworthiness. Sometimes, an application fee is
charged to cover the cost of loan processing.
Credit Union
Financial cooperative organization of individuals with a common affiliation. Credit unions can have federal, state, or corporate affiliations.
Financial cooperative organization of individuals with a common affiliation. Credit unions can have federal, state, or corporate affiliations.
Credit
Bureau:
An agency that
collects individual credit information and sells it for a fee to creditors so
they can make a decision on granting loans. Typical clients include banks,
mortgage lenders, credit card companies, and other financing companies. Also
commonly referred to as a consumer reporting agency or a credit reporting
agency.
Credit
Disability Insurance:
A type of
insurance, also known as accident and health insurance, that makes payments on
the loan if you become ill or injured and cannot work.
Credit
Life Insurance:
A type of life
insurance that helps repay a loan if you should die before the loan is fully
repaid. This is optional coverage.
Credit
Report:
A detailed report
of an individual's credit history prepared by a credit bureau and used by a
lender in determining a loan applicant's creditworthiness.
Credit
Score:
A number, roughly
between 300 and 800, that measures an individual's credit worthiness. The most
well-known type of credit score is the FICO® score. This score represents the
answer from a mathematical formula that assigns numerical values to various
pieces of information in your credit report.
Banks use a
credit score to help determine whether you qualify for a particular credit
card, loan, or service.
Current Asset
Assets that will normally be turned into
cash within a year.
Current Liability
Liability that will normally be repaid
within a year.
Current Ratio
Current assets divided by current
liabilities -- a measure of liquidity. Generally, the higher the ratio, the
greater the "cushion" between current obligations and a firm's
ability to meet them.
Currency Code:
A three letter code representing the currency of a particular country. Currency Code List
A three letter code representing the currency of a particular country. Currency Code List
Custodial Fund:
A designated sum of money granted to an individual or a department for purposes that cannot be achieved through normal procedures. Common custodial funds are petty cash funds, change funds, and revolving funds.
A designated sum of money granted to an individual or a department for purposes that cannot be achieved through normal procedures. Common custodial funds are petty cash funds, change funds, and revolving funds.
Cut-Off
Time:
A time of day
established by a bank for receipt of deposits. After the cut-off time, deposits
are considered received on the next banking day.
Data Processing Servicer
Entities primarily engaged in providing infrastructure for hosting or data processing services. These establishments may provide specialized hosting activities, such as web hosting, streaming services or application hosting, provide application service provisioning, or may provide general time-share mainframe facilities to clients. Data processing establishments provide complete processing and specialized reports from data supplied by clients or provide automated data processing and data entry services.
Entities primarily engaged in providing infrastructure for hosting or data processing services. These establishments may provide specialized hosting activities, such as web hosting, streaming services or application hosting, provide application service provisioning, or may provide general time-share mainframe facilities to clients. Data processing establishments provide complete processing and specialized reports from data supplied by clients or provide automated data processing and data entry services.
Debit
Card:
A debit card
allows the account owner to access their funds electronically. Debit cards may
be used to obtain cash from automated teller machines or purchase goods or
services using point-of-sale systems. The use of a debit card involves
immediate debiting and crediting of consumers' accounts.
Debt
Collector:
Any person who
regularly collects debts owed/Payable to others.
Debt
Elimination Scheme:
A debt
elimination scheme is a plan that is advertised as a way for an individual to
eliminate various types of debt simply by paying someone a small fee compared
to the amount of debt to be eliminated. These schemes are fraudulent.
As a result of
using a fraudulent scheme, individuals will lose money, could lose property,
will damage their credit rating, and possibly incur additional debt. In
addition, a creditor may take legal action against an individual to resolve a
fraudulent attempt to eliminate debt. It is also possible for the victim to
have identify theft occur by participating in such a fraudulent scheme.
Debtor:
Someone who owes
monies to another party.
Debt-to-Income
Ratio (DTI):
The percentage of
a consumer's monthly gross income that goes toward paying debts. Generally, the
higher the ratio, the higher the perceived risk. Loans with higher risk are
generally priced at a higher interest rate.
Decedent:
A deceased person,
ordinarily used with respect to one who has died recently.
DD-on interest
Finance charges computed by adding the
interest payable to the full amount of loan principal. The add-on interest is
added to the original principal amount, and becomes a part of the face amount
of the promissory note.
Computing
interest due under the add-on interest method is fairly simple. The loan principal is divided into a number of fixed
payments, and each payment is multiplied by the finance charge, to calculate
the interest cost to the borrower: Add-On Interest = Principal × Rate × Number
of Months in the loan/12.
Depository Bank:
The bank that accepts incoming paper or electronic funds and credits it to a beneficiary bank account.
The bank that accepts incoming paper or electronic funds and credits it to a beneficiary bank account.
Debenture
long-term
debt instrument that is not secured by a mortgage or other lien on specific
property. Because it is unsecured debt, it is issued usually by large,
financially strong companies with excellent bond ratings . There are two kinds of debentures: a
senior issue and asubordinated(junior)
issue, which has a subordinate lien. The order of a prior claim is set forth in
the bond indenture . Typically, in the event of
liquidation, subordinated debentures come after senior debt.
Deferred interest
Bond paying interest at a later date, at
maturity in the case of a zero-coupon security . Interest payments accumulate during
the holding period but no interest is actually paid until the redemption date.
Depreciation
- Spreading out of the original cost over the estimated life of the fixed assets such as plant and equipment. Depreciation reduces taxable income. Among the most commonly used depreciation methods are straight-line depreciation and accelerated depreciation such as the sum-of-the-years'-digits (SYD) method anddouble declining balance method .
- Decline in economic potential of limited life assets originating from wear and tear, natural deterioration through interaction of the elements, and technical obsolescence. To some extent, maintenance (lubrication, adjustments, parts replacement, and cleaning) may partially arrest or offset wear and deterioration.
Disbursement Voucher:
A type of FIS document used solely to request a transfer of funds to a recipient outside the University. These documents can be used to generate either a check or an electronic funds transfer.
A type of FIS document used solely to request a transfer of funds to a recipient outside the University. These documents can be used to generate either a check or an electronic funds transfer.
Dormant account
Savings
account showing no activity, other than posting of interest for a specified
period. These are generally low balance accounts. If unclaimed for a certain
number of years, ownership reverts to the state under escheat laws.
Double leverage
Use of holding company debt to finance
bank equity. Double leveraging occurs when a bank holding company borrows in
the debt market, and transfers the proceeds to a subsidiary bank. The practice
is discouraged by bank regulators if an excessive proportion of net income is
used to retire holding company debt.