Accommodation

Definition:

A form of loan in which the borrower is not obligated to compensate the lender. These loans are often accompanied by accommodation bills, which guarantee that a third party compensates the lender, should the borrower be unable. Troubled financial institutions frequently use accommodation loans.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Credit Terms

The conditions under which credit will be extended to a customer. The components of credit terms are: cash discount, credit period, net period.

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