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Equity is a term with several meanings, both in the law and in finance. In another part of this issue of the Digest, the term ‘equity’ is addressed in the context of fairness in the application of law. Equity in…

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M&A Imagery

The language of corporate mergers and acquisitions is filled with fairytale imagery which is used to describe various players in and aspects of the transactions. For example: A Black Knight is a company that makes a hostile takeover offer on…

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Odd Lot

Odd lot is a securities trade made for less than the normal trading unit, (normally 100 shares of stock or $25.00 face amount of bonds) which is called a round lot. An investor making an odd-lot trade usually pays a…

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Hung Up

Hung up is the expression used to describe the situation of an investor whose securities have dropped in value below the original purchase price, presenting the problem of a substantial loss if the securities were sold.

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Hedging is a strategy used to limit the risks of an investment. Investors often try to hedge against inflation by using assets that will appreciate (rise in value) faster than inflation. A hedge fund is a mutual fund that uses…

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Nil Paid

The term nil paid (alternatively, "nil-paid") denotes rights that are tradeable but that were not originally paid for by the seller. Such a right is simply a right to purchase more shares, usually at the current share price or a…

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Basket And Cap

In commercial transactions, one worry common to both buyers and sellers is the unexpected costs that may arise after closing. To avoid these types of problems the parties may elect to set forth ground rules in the Sales Purchase Agreement…

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Revlon Rule

Article: The Revlon rule The so-called Revlon rule is a legal precedent derived from a case involving the sale of Revlon, Inc. (Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., Supreme Court of Delaware, 1985, 506 A.2d 173). In that…

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Hammering The Market

Hammering the market is the intense sale of stocks by those who believe that prices are inflated. Speculators who suspect that the market will drop may hammer the market by selling short (i.e. the sale of securities not actually owned…

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Arbitrage denotes a transaction yielding risk-free profit, usually by simultaneously buying and selling the same asset on two different markets to take advantage of price differences on the markets. This is also known as riskless profit. Arbitrage also describes the…

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