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KNOWLEDGE BASE

Grain Glossary

Get an overview of financial terms and their definitions.

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Landed cost

A landed cost is the total cost of bringing a product from the origin to its destination, including transportation, insurance, duties, tariffs, and other fees. Importing businesses must consider the landed cost, as it affects the final price of the product and ultimately their competitiveness. By calculating the landed cost, companies can determine the true cost of their imports, make informed purchasing decisions, and price their products accurately.


Letter of credit

A Letter of Credit (LOC) is a document issued by a bank on behalf of a buyer, guaranteeing payment to a seller under the terms and conditions agreed upon by the buyer and seller. The seller can use the LOC as a guarantee of payment as long as they meet the conditions outlined in it. If the buyer fails to pay the seller, the issuing bank will pay the seller. It is commonly used in international trade transactions to mitigate the risk of non-payment by the buyer.


Liquidity

Liquidity refers to the ease with which an asset can be bought or sold in the market without affecting its price. Highly liquid assets, such as cash, can be easily bought or sold with minimal impact on the price, while less liquid assets, such as real estate or collectibles, may take longer to sell and may be subject to larger price fluctuations. There are several measures of liquidity, including the bid-ask spread (the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept), the volume of trading activity, and the speed at which an asset can be bought or sold.

Local currency payment

Local currency payments are financial transactions that are conducted in the local currency of a client or supplier, rather than the company's own functional currency. These payments can be made for sales transactions, exports, or purchases transactions, imports. Operating in the local currency allows companies to avoid costly markups and expand sales by avoiding passing on exchange rate markups to clients. Effective currency hedging is necessary for companies to protect against exchange rate risk when making local currency payments.


London Interbank Offered Rate (LIBOR)

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate that is used as a reference rate for short-term interest rates around the world. It is calculated and published daily by the ICE Benchmark Administration (IBA), a financial services company, based on the interest rates at which a panel of banks in London are willing to lend to each other. There are different LIBOR rates for different currencies and maturities, ranging from overnight to one year. The most commonly quoted LIBOR rate is the three-month U.S. dollar rate. LIBOR is used as a reference rate for a wide variety of financial products, including adjustable rate mortgages, student loans, and floating rate bonds. It is also used as a benchmark for the pricing of derivatives such as interest rate swaps.


Live exchange rate

The live exchange rate is a currency exchange rate that is updated in real time. The current exchange rate on the market or between banks. Customers of money transfer companies receive exchange rates that change in real time, but also include a small margin.


Long

In finance, the term "long" refers to the buying of a security or other financial instrument with the intention of holding it for an extended period of time. The term "going long" or "taking a long position" refers to investing in a security with the expectation that it will appreciate in value over the long term. By holding the security, the investor hopes to sell it at a higher price in the future and make a profit.


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