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Composition

• Voluntary arrangement to restructure a firm's debt, under which payment is reduced.

 
 Embedded terms in definition
 Debt
 
 Referenced Terms
 Arbitrator: Is a person who is selected to resolve a dispute in the financial industry. Usually there are three arbitrators on a panel. The Composition of the arbitrators is from a pool of candidates viewed either as Public or Industry.

 Securitization: Securitization occurs when a financial security is created which is a claim to the cashflows of a collection (or pool) of individual real or financial assets (typically loans originated by banks or S&Ls). Hence, securitization turns a loan (an illiquid asset) into a liquid asset or a security.Is the process of homogenizing and packaging financial instruments into a new fungible one. Acquisition, classification, collateralization, Composition, pooling and distribution are functions within this process. One common advantage of securitization is the enhancement of liquidity relative to the underlying collateral or financial instrument. Another benefit is the movement towards standardization of unit specifications.The process of creating a pass-through, such as the mortgage pass-through security, by which the pooled assets become standard securities backed by those assets. Also, refers to the replacement of non marketable loans and/or cash flows provided by financial intermediaries with negotiable securities issued in the public capital markets.

 Theory of cross hedging: Refers to a modification of the hedging process. It depends on hedging principles, practices and strategies but with a relaxation of strict standards of cash position specifications versus hedge instrument specifications. Often there can be a slight difference in grade, location, maturity, actual portfolio Composition or product relative to the optimal hedge instrument. For example, treasury bond or note futures might be used in conjunction with To Be Announced securities (TBAs) to hedge mortgage backed securities portfolios. Mortgage backed securities are not deliverable against treasury bond futures, but there are features which improve the overall hedging efficiency by using blended hedges.

 Unit investment trust: Money invested in a portfolio whose Composition is fixed for the life of the fund. Shares in a unit trust are called redeemable trust certificates, and they are sold at a premium above net asset value.Is an investment vehicle which is funded at the beginning and once investments are acquired acts like a liquidating investment. For example, corporate bonds, sovereign bonds, or mortgage backed securities would be acquired. The interest, principal repayments and accelerated payments would be passed on to the investors. These funds would not be retained by the fund for further investment. It is more nearly analogous to a closed-end fund and different from an open-ended fund.

 
 Related Terms
 Composition arrangement

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