What is a Crush Spread A crush spread is an options trading strategy used in the soybean futures market. The general term for this is a gross processing margin. A soybean crush spread is often used by traders to manage risk by combining separate soybean, soybean oil and soybean meal futures positions into a single
What Is Credit Risk? Credit risk is the possibility of a loss resulting from a borrower’s failure to repay a loan or meet contractual obligations. Traditionally, it refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection.
What Is Credit Risk Certification? Credit risk certification, or CRC, is a professional certification awarded by the Risk Management Association (RMA). The credit risk certification is awarded to individuals who have worked in commercial credit and lending or loan review for at least three years and who pass the five-hour, 120-question credit risk certification exam
What Is a Credit Shelter Trust (CST)? A Credit Shelter Trust (CST) is designed to allow affluent couples to reduce or completely avoid estate taxes when passing assets on to heirs, typically, the couple’s children. This type of irrevocable trust is structured so that upon the death of the trust’s creator or settler, the assets specified in the
What Is a Credit Sleeve? A credit sleeve is a form of credit agreement backed by physical assets, where the sleeve providing party, known as the “sleeve provider,” will offer working capital and collateral on behalf of another company, known as the “sleeve recipient.” The sleeve provider will essentially co-guarantee certain outstanding credit arrangements that the sleeve
What Is a Credit Spread? A credit spread, also known as a yield spread, is the difference in yield between two debt securities of the same maturity but different credit quality. Credit spreads are measured in basis points, with a 1% difference in yield equal to a spread of 100 basis points. As an example, a
What Is a Credit Spread Option? In the financial world, a credit spread option (also known as a “credit spread”) is an options contract that includes the purchase of one option and the sale of a second similar option with a different strike price. Effectively, by exchanging two options of the same class and expiration
What Is a Credit Sweep? A credit sweep is also known as an automated credit sweep. This term refers to an arrangement between a bank and a customer (usually a corporation) whereby all idle or excess funds in a deposit account are used to pay down short-term debt under a line of credit. The client
What Is a Credit Union? A credit union is a type of financial cooperative that provides traditional banking services. Ranging in size from small, volunteer-only operations to large entities with thousands of participants spanning the country, credit unions can be formed by large corporations, organizations, and other entities for their employees and members. Credit unions are
What Is Creditworthiness? Creditworthiness is how a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit. Your creditworthiness is what creditors look at before they approve any new credit to you. Creditworthiness is determined by several factors including your repayment history and credit score. Some
