What Is a Retract? To retract means to withdraw a bid, offer, or statement before any relevant party acts on the information provided. For example, it’s common practice in real estate transactions to provide a deposit showing the buyer’s intention to complete the transaction. This deposit is sometimes referred to as earnest money. If the buyer
What is Retractable Bond? Retractable bond, also known as variable-rate demand note, is a debt security that features a put option which allows the holder to force the issuer to redeem the bond before maturity at its face value. Key Takeaways Retractable bond, also known as variable-rate demand note, is a debt security that features
What Is Retrocession? Retrocession refers to kickbacks, trailer fees or finders fees that asset managers pay to advisers or distributors. These payments are often done discreetly and are not disclosed to clients, although they use client funds to pay the fees. Retrocession commission is a heavily criticized fee-sharing arrangement in the financial industry because money flows
What Is a Reserve Currency? A reserve currency is a large quantity of currency maintained by central banks and other major financial institutions to prepare for investments, transactions, and international debt obligations, or to influence their domestic exchange rate. A large percentage of commodities, such as gold and oil, are priced in the reserve currency, causing other
What Is a Reserve Fund? A reserve fund is a savings account or other highly liquid asset set aside by an individual or business to meet any future costs or financial obligations, especially those arising unexpectedly. If the fund is set up to meet the costs of scheduled upgrades, less liquid assets may be used. For
What Is a Reserve Price? Common to auctions, a reserve price or a reservation price is the minimum amount that a seller will accept as the winning bid. Alternatively, it is less commonly known as the highest price a buyer is willing to pay for a good or service. The reserve price prevents a bidder
What Is the Reserves-to-Production Ratio? The reserves-to-production ratio is an estimate of the number of years that the site of a natural resource will continue to be productive based on current production rates. The ratio is used to forecast many business factors such as the total income that can be expected to be earned from the source
What Is a Reset Date? A reset date is a point in time when the initial fixed interest rate on an adjustable-rate mortgage (ARM) changes to an adjustable rate. This date is commonly one to five years from the start date of the mortgage. After the initial reset date, the interest rate becomes variable and
What Is the Reset Margin? The reset margin is the difference between the actual interest rate of a loan or debt security and the index upon which its interest rate is based. The reset margin will always be positive, as it is added to the underlying index or reference rate. For instance, the reset margin
What Is a Reset Rate? A reset rate is the new interest rate that a borrower must pay on the principal of a variable interest rate loan when a scheduled reset date occurs. The lender will provide details on a loan’s reset terms and interest rate calculations in the borrower’s credit agreement. Key Takeaways A
