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Finance & Banking vocabulary · Risk Management

Haircut

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, haircut means: A reduction applied to an asset's market value when calculating its value as collateral.

In Turkish: teminat değer kesintisi

How it is used

State the valuation basis; haircut can also describe a debt reduction in restructuring discussions.

Example sentences

  1. A ten-percent haircut gave the bonds a collateral value of ninety million.

    The recognized collateral amount is below the market value.

  2. The lender increased the haircut on less liquid securities.

    A larger deduction provides more room for adverse price moves.

Common collocations

  • collateral haircut
  • apply a haircut
  • collateralAn asset, such as property, cash or securities, that a borrower pledges to a lender and that the lender can sell if the loan is not repaid.
  • repoShort for repurchase agreement: a deal in which one party sells securities and agrees to buy them back later at a higher price, which works like a short-term secured loan.

More terms: Risk Management

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This page explains English vocabulary for learners. It is not financial advice.