An arrears swap is a type of interest rate swap. In an interest rate swap, two people or companies agree to exchange, or “swap,” interest payments. Usually, one side pays a fixed interest rate while the other pays a floating interest rate that can go up and down. The critical aspect of arrears swaps is…

An arbitration clause is a part of a contract that states how disagreements will be handled. It is often used in insurance policies and investment accounts. The clause states that if the two sides can’t agree, they will use arbitration instead of going to court. Why Arbitration Clauses are Used Companies like arbitration clauses for…

Arbitrage Pricing Theory, or APT for short, is how intelligent people try to figure out how much money they can make from buying stuff like stocks and bonds. It’s like the grown-up version of looking for the best deals at the store. APT says many things can affect how much cash you receive from your…

A collateralized debt obligation, or CDO for short, is an investment bank that uses loans and other kinds of debt. The bank takes many loans, like house mortgages, car loans, student loans, and credit card debt, and puts hundreds or thousands of these loans together into one big group. How CDOs are Structured The bank…

Anti-dumping refers to rules and actions that countries take to stop other countries from selling things at prices that are seen as unfairly low. The goal of anti-dumping is to protect the economy and businesses in the home country. Understanding Dumping Dumping happens when a country or company exports a product to another country at…

An any-and-all bid takeover is when one company wants to buy another company. The buying company says it will pay the same price for every share of the company it wants to buy. This is different from a two-tier bid, in which people who sell their shares early get more money. With an any-and-all bid,…

Antitakeover defenses are things companies do to stop other companies from buying them. A company might use antitakeover defenses if it doesn’t want to be taken over. Companies can use different kinds of antitakeover defenses. Why do companies use antitakeover defenses? There are a few reasons why a company might not want to be taken…

The Ansoff Matrix was made by a guy named Igor Ansoff in 1957. He wanted to help companies figure out how to grow their business. The matrix looks like a square cut into four parts. Each part tells a different way a company can grow. The Four Strategies The four parts are: How Companies Use…

Anticipatory hedging allows companies and investors to protect themselves from possible future losses by making financial arrangements today before a risky situation arises. The goal is to reduce the amount by which the value of something can change in the future. That “something” could be an asset (something valuable that is owned), a liability (a…