Loan pricing means determining the interest rate for granting loan to creditors, be it individuals or business firms. It is one of the most important, however difficult task in lending funds to business firms & other customers. Because it is always very difficult to exactly know what the actual loan risk a particular loan application is. Generally the lender wants to charge a high enough rate to make sure that the loan will be profitable as well as it will covers enough compensation against the default risk. On the other hand loan price must be set low enough that helps the customers to find it easy for successful repayment of loan.
More from this Section
Futures Contracts to buy something in the future at a price agreed upon in advance. First developed in the agriculture commodity markets but
- Inflation targeting
Inflation targeting is a monetary policy strategy to achieve price stability.
- Exchange ratio
Exchange ratio is the number of shares of stock in the acquiring firm that stockholders of the acquired firm will receive for each share they hold.
- Weakening, deterioration, or depreciation of currency
Weakening, deterioration, or depreciation of a currency refers to a drop in the foreign exchange value of a floating currency. The opposite of weakening is strengthening ...
- Note issuance facility (NIF)
Note issuance facility (NIF) is an agreement by which a syndicate of banks indicates a willingness to accept short-term notes from borrowers and resell ...
- Advance Clause Credit
Advance Clause Credits are documentary credits incorporate a clause which authorises the advising bank to make an immediate payment to
- Indirect quote
Indirect quote is the price of a unit of a home country’s currency expressed in terms of a foreign country’s currency.