1. The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of "cashing out" an investment. Examples include an initial public offering (IPO) or being bought out by a larger player in the industry. Also referred to as a "harvest strategy" or "liquidity event".2. In the context of an active trader, a plan as to when a trade will be closed out. 1. It's more difficult for a VC or entrepreneur to get money out of an investment because they are generally dealing with private companies. When a firm is private, the shares cannot be sold nearly as easily as when the firm is publicly traded on a stock exchange. So, even though a private startup firm could be worth millions of dollars, the VC/entrepreneur has little access to this wealth. You can think of the exit strategy as the first opportunity to trade an illiquid asset (shares in a private firm) for a very liquid asset (cash). 2. For example, a trader might set a stop-loss order to exit a trade if a stock drops a certain percentage.
1. A British term that describes a revolving credit arrangement in which the borrower periodically renews the debt financing rather than having the debt reach maturity.2. The gradual infusion of capital into a new or recapitalized enterprise. This type of funding differs from the situation in which the aggregate capital required for a business venture is supplied up-front, in which case the company invests in short-term, low-risk securities until it is ready to use the money for business operations. 1. In a normal debt-financing arrangement, company-issued bonds or debentures have a maturity date and require principal repayment at some future point in time. An evergreen funding arrangement, however, allows a business to renew its debt periodically, pushing back the maturity date each time so that the time until maturity remains relatively constant while the arrangement is in place.2. This use of the name comes from coniferous evergreen trees, which keep their leaves and stay green throughout the entire year, rather than losing them during winter. Similarly, evergreen funding means capital is provided throughout the course of a company's development phase.
A type of futures market that occurs when a single traded price is unavailable because of the rapid and large number of transactions occurring in the pit or ring. Rather than quoting a specific price, a fast tape will give a range of prices marked by the word "fast" to indicate that the market is moving rapidly.
A communication network established in 1981 in an effort to update the Federal Reserve's old system. This system connects the Federal Reserve Bank offices, Board of Governors, the Treasury and depository institutions. It is used to initiate transfers of U.S. securities and electronic funds transfers within institutions of the Federal Reserve. Planning for FRCS-80 began in late 1975. The system was initiated to take advantage of more efficient communications and technology that was available in the 1980s. The Federal Reserve also wanted to implement a better communication system that would handle payment systems throughout all depository institutions. The goal of the Federal Reserve with this network was to improve reliability of the Federal Reserve's communications operations, reduce costs and increase security of data.
A financial market that has a combination of high volatility and heavy trading. A fast market is sometimes caused by a severe imbalance of trades - that is, when there are more sells than buys.
A phrase used to describe former Federal Reserve Board Chairman Alan Greenspan's tendency to make wordy statements with little substance. Many analysts felt that Greenspan's ambiguous "Fed speak" was an intentional strategy used to prevent the markets from overreacting to his remarks. Greenspan, who was chairman of the Fed from 1986 to 2006, was known for making vague statements that were not easily interpreted. For example, following a speech Greenspan gave in 1995, a headline in the New York Times read, "Doubts Voiced by Greenspan on a Rate Cut," while the Washington Post's headline that day said "Greenspan Hints Fed May Cut Interest Rates". Greenspan's successor, Ben Bernanke, is known for making more direct statements.
In the United Kingdom, the exchange may determine that a market movement is so sharp that quotes cannot practically be kept current. Under the Fast Market Rule, market makers may be permitted to trade outside quoted ranges where updating quotes is deemed impractical. This rule is made possible because circuit breakers are not used.
A Financial Accounting Standards Board (FASB) Statement that requires all publicly-traded companies in the U.S. to classify their assets based on the certainty with which fair values can be calculated. This statement created three asset categories: Level 1, Level 2 and Level 3. Level 1 assets are the easiest to value accurately based on standard market-based prices and Level 3 are the most difficult. FASB 157 was passed to help investors and regulators understand how accurate a given company's asset estimates truly were. Many firms (including some of the largest in terms of assets) had to write down billions of dollars in hard-to-value Level 3 assets following the subprime meltdown and related credit crisis, which began in late 2006. By making companies report to investors the breakdown of assets, they allow investors to potentially see what percentage of the balance sheet could be open to revaluation or susceptible to sudden write-downs.
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