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Credit
12 guides in Finabase Learn
- Amortization Spreading the cost of an intangible asset, or the repayment of a loan, over a series of periods instead of all at once.
- Collateral An asset pledged to secure a loan, which the lender may take if the borrower fails to repay.
- Corporate Bond Debt issued by a company to raise money, paying interest and carrying more credit risk than government bonds of similar maturity.
- Credit Default Swap (CDS) A contract in which one party pays a regular fee to another for protection against a borrower defaulting on its debt.
- Credit rating A letter grade from agencies such as S&P, Moody's and Fitch that estimates a borrower's ability to repay its debt.
- Credit Risk The risk that a borrower fails to make promised interest or principal payments in full and on time.
- Credit Spread The extra yield a corporate or other risky bond pays over a Treasury of similar maturity, reflecting perceived credit risk.
- Default A borrower's failure to make a required interest or principal payment, or to meet other terms of a loan or bond.
- High-yield bond A bond rated below investment grade (below BBB- or Baa3), paying higher interest to compensate for greater default risk.
- Interest coverage ratio Operating profit (EBIT) divided by interest expense; how many times over a company can pay the interest on its debt.
- Investment grade A credit rating of BBB- (S&P/Fitch) or Baa3 (Moody's) or higher, indicating relatively low default risk.
- Junk bond The informal name for a high-yield bond: debt rated below investment grade that pays more for its higher risk of default.
Educational content, not investment advice. Finabase Learn explains how markets and tools work. It does not recommend any security or strategy, and examples are for illustration only. Investing involves risk, including the loss of principal. Rules and figures are for the United States unless stated and can change — check the cited source before you act.