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GLOSSARY
Bank spread
The bank spread is the difference between the bank's cost of funds, in terms of interest paid to depositors, and the rate the bank charges to debtors on bank loans.
Bank term loan
A bank term loan is a debt facility that's offered by a banking institution to a business. The bank term loan is characterized by a fixed maturity date and a loan life that's longer than one year. Repayments, which can be monthly or quarterly, most commonly involve some level of principal amortization prior to maturity.
Bank wire
The bank wire is an electronic system that banks use to transmit and receive account information and transaction requests from one another.
Banker's acceptance
A banker's acceptance (also called bankers acceptance or BA) is an order to pay a sum of money at a certain date. The BA is created by a banking customer and provided to a third party. The third party presents the BA to the bank; when the bank "accepts" the BA, it is assuming responsibility to make the specified payment. The BA is now a bank-guaranteed obligation and can therefore be traded on the secondary market. BAs are commonly used in international trade, where parties to a transaction are unwilling to offer credit terms.
Banker's hours
Banker's hours are the hours of the week that a bank branch is open for business. The term is a remnant from the days when bank branches commonly closed early during the work week and weren't open on weekends.
Banker's year
The banker's year has 360 days, rather than 365. The 360-day year simplifies monthly interest calculations by allowing for 12 equal periods of 30 days each.
Banking
Banking is the practice of accepting deposits for safekeeping, making payments as requested by depositors and, in many cases, loaning deposited funds for profit.
Bankrupt
Bankrupt is the state of being financially insolvent. In the legal sense, an individual or business must be declared bankrupt by a court proceeding.
Bankruptcy
It is a leagally declared inability of an individual or organization to pay their creditors. Bankruptcy is filed in a Federal Court. Bankruptcies are of various types. The most common one however, is the 'Chapter 7 No Asset' bankruptcy which relieves the individual/borrower of his debts and liabilities. The borrower remains ineligible for an 'A' paper loan for a period of two years after the bankruptcy has been discharged. He is also required to re-eatablish the ability to reapy debt.
Bankruptcy code
Bankruptcy Code is another name for United States Code Title 11-Bankruptcy, the federal legislation governing bankruptcy proceedings.
Bankruptcy trustee
A bankruptcy trustee is the person who's assigned to represent creditors' interests in a Chapter 7 or Chapter 13 bankruptcy proceeding. The trustee's responsibilities include reviewing the debtor's assets, and reviewing claims of exemptions, among other things. Trustees are appointed and managed by the United States Trustee, but are not government employees.
Bargain element
The bargain element is the implied gain that an investor earns when exercising a stock option, i.e., the difference between the fair market value of a stock on the day the option is exercised, and the strike price, multiplied by the number of shares. For tax purposes, the bargain element is treated as income and not as a capital gain.
Bargain sale
The transferring or purchasing of property or an item for less than market value.
Base interest rate
The base interest rate is the lowest rate an investor will tolerate for a non-Treasury security. Because Treasury securities are considered no-risk investments, the base interest rate would be greater than the rate offered by Treasury securities of the same maturity.
Base loan amount
The initial loan amount upon which loan payments are based. Other charges, such as interest may be added to the initial amount during the lifetime of the loan.