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A security that is collateralized by loans, leases, receivables, or installment contracts on personal property,
not real estate.
Asset-based financing
Methods of financing in which lenders and equity investors look principally to the cash flow from a particular
asset or set of assets for a return on, and the return of, their financing.
Asset classes
Categories of assets, such as stocks, bonds, real estate and foreign securities.
Asset-coverage test
A bond indenture restriction that permits additional borrowing on if the ratio of assets to debt does not fall
below a specified minimum.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another defaulting borrower.
Asset pricing model
A model for determining the required or expected rate of return on an asset. Related: Capital asset pricing
model and arbitrage pricing theory.
Assets
A firms productive resources.
Assets requirements
A common element of a financial plan that describes projected capital spending and the proposed uses of
net working capital.
Asset substitution
Occurs when a firm invests in assets that are riskier than those that the debtholders expected.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firms existing assets and expropriate value
from the debtholders.
Asset swap
An interest rate swap used to alter the cash flow characteristics of an institutions assets in order to provide a
better match with its liabilities.
Asset turnover
The ratio of net sales to total assets.
Assignment
The receipt of an exercise notice by an options writer that requires the writer to sell (in the case of a call) or
purchase (in the case of a put) the underlying security at the specified strike price.
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