What Are Toxic Assets? Toxic assets are investments that are difficult or impossible to sell at any price because the demand for them has collapsed. There are no willing buyers for toxic assets because they are widely perceived as a guaranteed way to lose money. The term toxic asset was coined during the financial crisis of 2008 to
What Is Toxic Debt? Toxic debt refers to loans and other types of debt that have a low chance of being repaid with interest. Toxic debt is toxic to the person or institution that lent the money and should be receiving the payments with interest. Toxic debt generally exhibits one of the following criteria: Default rates
What Is T+1 (T+2, T+3)? T+1 (T+2, T+3) are abbreviations that refer to the settlement date of security transactions. The “T” stands for transaction date, which is the day the transaction takes place. The numbers 1, 2, or 3 denote how many days after the transaction date the settlement—or the transfer of money and security
What Is Trade Reporting and Compliance Engine (TRACE)? Trade Reporting and Compliance Engine (TRACE) is a program developed by the National Association of Securities Dealers (NASD), which is now known as FINRA, that allows for the reporting of over-the-counter (OTC) transactions pertaining to eligible fixed-income securities. Brokers, who are FINRA members and deal with specific
What Is a Tracking Error? Tracking error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge fund, mutual fund, or exchange-traded fund (ETF) that did not work as effectively as intended, creating an unexpected profit or loss. Tracking error
What Is Trade? Trade is the voluntary exchange of goods or services between different economic actors. Since the parties are under no obligation to trade, a transaction will only occur if both parties consider it beneficial to their interests. Trade can have more specific meanings in different contexts. In financial markets, trade refers to purchasing
What Is Tit for Tat? Tit for tat is a game-theory strategy subject to a payoff matrix like that of a prisoner’s dilemma. Tit for tat was introduced by Anatol Rapoport, who developed a strategy in which each participant in an iterated prisoner’s dilemma follows a course of action consistent with his opponent’s previous turn.
What Is a Title Binder? A title binder is a temporary form of real estate insurance coverage related to the transfer of ownership. A title binder is typically used to protect both the seller and buyer of a real estate property during the transitional phase of a sale when the seller’s and buyer’s home insurance
What Is a Title Loan? A title loan is a loan that requires an asset as collateral. Title loans are popular for two key reasons. First, an applicant’s credit rating is not taken into consideration when determining qualifications for the loan. And second, thanks to looser application requirements, a title loan can be approved very
What Is a Title Search? The term title search refers to the examination of public records to determine and confirm a property’s legal ownership. Title searches are conducted through many sources, including deeds, tax liens, land records, court judgments, among others. Normally conducted by title companies, searches can be ordered by individuals and businesses at
