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    Operational Definition

    Uploaded by

    Paolo Gubot
    1) The document defines key terms related to credit ratings, default risk, nonperforming loans, nonfinancial assets, face value, and prepayment risk. 2) It provides both general definitions and specific operational definitions for nonperforming loans, nonfinancial assets, face value, and prepayment risk. 3) The operational definitions further clarify the meaning of these terms in the context of things like car loans.

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    Operational Definition

    Uploaded by

    Paolo Gubot
    254 views6 pages
    1) The document defines key terms related to credit ratings, default risk, nonperforming loans, nonfinancial assets, face value, and prepayment risk. 2) It provides both general definitions and specific operational definitions for nonperforming loans, nonfinancial assets, face value, and prepayment risk. 3) The operational definitions further clarify the meaning of these terms in the context of things like car loans.

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    OPERATIONAL DEFINITION

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    1) The document defines key terms related to credit ratings, default risk, nonperforming loans, nonfinancial assets, face value, and prepayment risk. 2) It provides both general definitions and specific operational definitions for nonperforming loans, nonfinancial assets, face value, and prepayment risk. 3) The operational definitions further clarify the meaning of these terms in the context of things like car loans.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    254 views6 pages

    Operational Definition

    Uploaded by

    Paolo Gubot
    1) The document defines key terms related to credit ratings, default risk, nonperforming loans, nonfinancial assets, face value, and prepayment risk. 2) It provides both general definitions and specific operational definitions for nonperforming loans, nonfinancial assets, face value, and prepayment risk. 3) The operational definitions further clarify the meaning of these terms in the context of things like car loans.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    yung sa definitions, kelangan yung iba dun operational definition (non-performing loans, nonfinancial

    asset, face value & prepayment risk) the rest okay na wink emoticon

    Definition of Key Terms

    Credit Rating this refers to an assessment of the creditworthiness of a


    borrower in general terms or with respect to a particular debt or financial
    obligation. A credit rating can be assigned to any entity that seeks to borrow
    money an individual, corporation, state or provincial authority, or sovereign
    government. Credit assessment and evaluation for companies and governments
    is generally done by a credit rating agency such as Standard & Poors, Moodys
    or Fitch. These rating agencies are paid by the entity that is seeking a credit

    rating for itself or for one of its debt issues.


    Default risk this refers to the event in which companies or individuals will be
    unable to make the required payments on their debt obligations. Lenders and
    investors are exposed to default risk in virtually all forms of credit extensions. To
    mitigate the impact of default risk, lenders often charge rates of return that
    correspond the debtor's level of default risk. The higher the risk, the higher the

    required return, and vice versa.


    Nonperforming Loan this refers to the sum of borrowed money upon which
    the debtor has not made his or her scheduled payments for at least 90 days. A
    nonperforming loan is either in default or close to being in default. Once a loan is
    nonperforming, the odds that it will be repaid in full are considered to be
    substantially lower. If the debtor starts making payments again on a
    nonperforming loan, it becomes a reperforming loan, even if the debtor has not
    caught up on all the missed payments.
    Operational definition : Loans which are past due for at least 3 months.
    Considered by the bank to be bad debts and is submitted to litigation and will be
    processed for pull out or repossession.

    Nonfinancial Asset this refers to an asset with a physical value such as real
    estate, equipment, machinery, gold or oil. For example, gold is considered a
    nonfinancial asset because it has inherent value based on its use in jewelry,

    electronics, dentistry, ornamentation and historically as currency. Cash, on the


    other hand, is a financial asset because its value is based on what it represents.
    The paper the cash is printed on has very little value by itself.
    Operational Definition: Cars which are loaned by customers

    Face value this refers to the nominal value or dollar value of a security stated
    by the issuer. For stocks, it is the original cost of the stock shown on the
    certificate. For bonds, it is the amount paid to the holder at maturity (generally
    $1,000). Also known as "par value. or simply "par."
    Operational definition : The principal of the car loan, which is the original

    amount of the loan as detailed in the loan contract.

    Prepayment Risk this refers to the risk associated with the early unscheduled
    return of principal on a fixed-income security. Some fixed-income securities, such
    as mortgage-backed securities, have embedded call options which may be
    exercised by the issuer, or in the case of a mortgage-backed security, the
    borrower.

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