What Is a Counteroffer? A counteroffer is a response given to an initial offer. A counteroffer means the original offer was rejected and replaced with another one. The counteroffer gives the original offeror three options: accept the counteroffer, reject it, or make another offer. Counteroffers are prevalent in many types of business negotiations, transactions, contracts, and
What Is a Counterparty? A counterparty is the other party that participates in a financial transaction. Every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller who is willing to sell and vice versa. For example, the
What Is a Counterpurchase? A counterpurchase is a particular type of countertrade transaction in which two parties agree to both buy goods from and sell goods to each other but under separate sales contracts. How a Counterpurchase Agreement Works One form of counterpurchase is an international trading deal wherein an exporter agrees to purchase a
What Is Country Club Billing? Country club billing was a former billing system used by credit card companies until the 1970s that involved including copies of original sales drafts to cardholders in their monthly statements. This was done to provide proof of each purchase that was recorded on the card. Rising paper, mailing, and labor costs put an end
What Is a Country Fund? A country fund is a mutual fund that invests only in the securities of companies in one country. Though able to invest in a variety of sectors, country funds are considered to be greatly exposed to political risk without being able to diversify that risk away. Key Takeaways A country
What Is Country Risk Premium (CRP)? Country Risk Premium (CRP) is the additional return or premium demanded by investors to compensate them for the higher risk associated with investing in a foreign country, compared with investing in the domestic market. Overseas investment opportunities are accompanied by higher risk because of the plethora of geopolitical and
What Is a Coupon? A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a year divided by the
What Is a Coupon Bond? A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments. With coupon bonds, there are no records of the purchaser kept by the issuer; the purchaser’s name is also not printed on any kind of
What Is Coupon Stripping? Coupon stripping is the separation of a straight bond’s periodic interest payments from its principal repayment obligation to create a series of individual securities. In coupon stripping, the underlying bond becomes a zero-coupon bond known as a strip bond and each interest payment becomes its own separate zero-coupon bond. Key Takeaways
What Is Covariance? Covariance measures the directional relationship between the returns on two assets. A positive covariance means asset returns move together, while a negative covariance means they move inversely. Covariance is calculated by analyzing at-return surprises (standard deviations from the expected return) or multiplying the correlation between the two random variables by the standard deviation of each
