Glossary: B&C Lending – Bull Market
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- B&C Lending
- – another term for subprime lending. Loan applicants that qualify for prime loans are referred to as A+, A or A- borrowers. B&C refers to the higher risk categories of borrowers that do not qualify for prime loans.
- Bankruptcy
- – is an individual or organization’s legally declared inability or impairment of ability to pay their creditors (the people the debts are owed to). In America, common forms of bankruptcy are Chapter 7 (basic liquidation) and Chapter 11 (reorganization for business or individual) and Chapter 13 (rehabilitation for individuals with a regular income via a payment plan.)
- Balloon Payment
- – a payment that is of a much higher amount than all of the other previous payments made. Usually, this term is used when a borrower has made one large payment to pay off their remaining balance. Not all mortgages allow lump sum payments without penalty. Balloon payments are often negotiated as part of interest-only mortgages.
- Bear Market
- – a prolonged decline in stock prices that may occur for months or years. In bonds and securities, a bear market is usually caused by rising interest rates. Stocks, on the other hand, are described as bearish when investors are pessimistic and expect economic activity to decline. Bear markets are generally shorter than bull markets.
- Bubble
- – a rise in the price of an asset (property/stocks) based not on the current or prospective income that it provides but solely on expectations by market participants (buyers) that the price will rise in the future. When those expectations cease, the bubble bursts and the price falls rapidly. This almost always ends in tears for investors that are not savvy enough to get out at the right time.
- Bull Market
- – a sharp, prolonged rise in the price of stocks, usually lasting several months. Bubbles, before they burst, are prime examples of bull markets. Trading is done in very high volume as speculators try to make the most of the good times while they last.
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