🐧Definitions

Debt Market: The debt market is a market where debt securities are bought and sold. Debt securities are financial instruments that represent a loan from an investor to a borrower. The borrower agrees to repay the loan, plus interest, over a specified period of time.

There are two main types of debt securities:

• Bonds: Bonds are debt securities that are issued by governments, corporations, and other organizations. Bonds typically have a fixed interest rate and a maturity date, which is the date when the loan must be repaid in full.

• Loans: Loans are debt securities that are issued by individuals and businesses.

The secondary market is a market where investors can buy and sell debt securities that have already been issued. The secondary market allows investors to sell debt securities that they no longer want or need, and it allows investors to buy debt securities that they believe will perform well.

APY: stands for Annual Percentage Yield. It is a measure of the total amount of interest earned on an account over one year, including the effect of compounding interest. Compounding interest is when interest is earned on interest.

For example, if you have an account with an APY of 5% and you deposit $100, you will earn $5 in interest in the first year. However, in the second year, you will earn interest on the $5 of interest you earned in the first year, as well as the $100 you deposited. This means that you will earn more interest in the second year than you did in the first year.

APY is an important factor to consider when choosing a financial product, such as a savings account or a certificate of deposit. A higher APY means that you will earn more interest on your money.

Collateral is an asset that a borrower pledges to a lender as security for a loan. If the borrower defaults on the loan, the lender can seize the collateral and sell it to recoup their losses.

Collateral is used to reduce the lender's risk of loss. If the borrower defaults on the loan, the lender can sell the collateral to get their money back. This protects the lender from losing money if the borrower is unable to repay the loan.

Interest on loan : Interest on a loan is the amount of money that the borrower pays to the lender for the use of the loan. All loans on Debita have a fixed interest rate.

Lending-Collateral Ratio: A lend ratio is a measure of how much a lender is willing to lend to a borrower, relative to the value of the collateral that the borrower is providing. For example, if a lender has a lend ratio of 80%, it means that they will lend up to $80 for every $100 of collateral that the borrower provides.

Lend ratios are used by lenders to assess the risk of lending to a borrower. A higher lend ratio indicates a higher risk, as the lender is lending more money relative to the value of the collateral. Lenders typically have different lend ratios for different types of loans and borrowers. For example, a lender may have a higher lend ratio for a secured loan, such as a mortgage, than for an unsecured loan, such as a credit card.

Lend ratios can also be used by borrowers to compare the terms of different loans. A borrower with a high credit score may be able to get a loan with a lower lend ratio, which means that they will have to borrow less money relative to the value of the collateral.

Default happens when a borrower doesn't repay their loan by the due date. When this happens, the borrower may have to give up their collateral to the lender. There are two reasons why a borrower might default:

• Forgetting: If a borrower forgets to repay their loan by the due date, they may end up defaulting on their collateral. This means that the lender will take possession of the collateral, and the borrower will not get it back.

• Choosing: A borrower may also choose to default on their loan. This might happen if the borrower's collateral's value is below the loan's value. In this case, it makes more sense for the borrower to give up their collateral than to repay the loan.