What Is Overleveraged? A business is said to be overleveraged when it is carrying too much debt when compared to its operating cash flows and equity. An overleveraged company has difficulty in paying its interest and principal payments and is often unable to pay its operating expenses because of excessive costs due to its debt
What Is an Over-Line? In the insurance industry, the term “over-line” refers to the portion of an insurance company’s coverage that exceeds the normal amount of coverage that they provide. Over-line coverage can occur when an insurer underwrites more policies than normal, or when a reinsurer accepts a larger amount of liabilities through a reinsurance
What Is an Overnight Position? Overnight positions are open trades that have not been closed or liquidated by the end of the normal trading day. Overnight positions are not held by day traders but are quite common in foreign exchange and futures markets. Long-term investors naturally hold overnight positions on an ongoing basis. Key Takeaways
What Is the Overnight Rate? The overnight rate is the interest rate at which a depository institution (generally banks) lends or borrows funds from another depository institution in the overnight market. In many countries, the overnight rate is the interest rate the central bank sets to target monetary policy. In most circumstances, the overnight rate is
What Is Over-Selling? Over-selling occurs when a salesperson continues their sales pitch after the customer has already decided to make a purchase. This mistake can sometimes annoy the customer and could potentially cause the customer to change their mind, resulting in the deal falling through. Over-selling also means trying to upsell a customer on more
What Is Oversold? The term oversold refers to a condition where an asset has traded lower in price and has the potential for a price bounce. An oversold condition can last for a long time, and therefore being oversold doesn’t mean a price rally will come soon, or at all. Many technical indicators identify oversold
What Is Oversubscribed? Oversubscribed is a term used when the demand for a new issue of stock is greater than the number of shares available. When a new issue is oversubscribed, underwriters or other financial entities offering the security can adjust the price upward or offer more securities to reflect the higher-than-anticipated demand. An oversubscribed issue
What is an Oversubscription Privilege An oversubscription privilege gets extended to a company’s shareholders on the issuance of a rights or warrants offering. The privilege allows shareholders to purchase any shares remaining after other shareholders have had an opportunity to purchase them. BREAKING DOWN Oversubscription Privilege Oversubscription privileges apply to existing shareholders. In a rights
What Is an Over-the-Counter Market? An over-the-counter (OTC) market is a decentralized market in which market participants trade stocks, commodities, currencies, or other instruments directly between two parties and without a central exchange or broker. Over-the-counter markets do not have physical locations; instead, trading is conducted electronically. This is very different from an auction market
What Is “Overvalued”? An overvalued stock has a current price that is not justified by its earnings outlook, known as profit projections, or its price-earnings (P/E) ratio. Consequently, analysts and other economic experts expect the price to drop eventually. Key Takeaways: An overvalued stock has a current price that is not justified by its earnings outlook
