Back-to-Back Loan
In doing business with people or companies overseas, particularly with companies in countries with unsettled political and/or economic environments, the two parties may wish to do their business in their respective currencies. My friend in Chile may want to use the Chilean pesos, being "sure" the peso will soar against the U.S. dollar. An American may think the U.S. dollar will remain stable against the Chilean peso.
Each party is seeking to make the deal more favorable, hoping that the currency fluctuation will be in their favor. Same maturity date, just two loans.
Related or Semi-related Video
Finance: What is an Accredited Investor?9 Views
Finance a la Shmoop. What is an accredited investor. Well the difference
between an accredited college and an unaccredited college, can be like you
know the difference between Princeton, and the school of Feel Good Energy, that
your great Aunt Bertha, set up in her garage last year. Yeah different kind of [woman dancing in garage with disco ball]
college. Well accredited investors work on a
similar idea. A bunch of someone's have come along and agreed that accredited
investors, have a bunch of qualifications. In other words they're legit. So
accredited investors are simply investors, who qualify to do a certain
investment. Usually accredited means, that they have credit, or assets, or wampum, or
knowledge, like intellectual capital, instead of financial capital, or along with
both. Which means that they're big boys and big girls, who are able to invest a
large amount of money, in a risky venture. Officially they're investors who have an
income of at least $200,000 for the past two years, three hundred thousand for [checklist for investors on chalkboard]
joint accredited investors, like married people or partners, or have a net worth
of at least a million bucks individually, or jointly, or our executives, partners, or
directors of the entity issuing those securities. Meaning raising the dough
itself. Institutional investors, such as mutual funds, hedge funds, and pension
funds, also fit the bill. Additionally entities can be considered
accredited, but their threshold is 5 million bucks in assets. By the way if [man talking on lawn]
all the owners of an entity, like a law firm or something like that, are
accredited, well then the entity is considered accredited
as well. So yeah they're accredited investors. Not to be confused with a
credited investor, who is really excited to have a small part in a movie. [guy in movie theater]
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