Accommodation loan

Definition:

A legal agreement signed by two parties whereby one of the co-signers guarantees credit liability for the other co-signer. Accommodation loans, often called accommodation endorsements or bills, allows the guarantor to add strength to the creditworthiness of the other party. If the receiving party defaults on its debt, the guarantor is then responsible for the debt of the other party. See: Covenant

Investing Essentials


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

Term of the Day

Currency hedge

Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks).

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio