Insider Trading. Insider trading is a poorly defined concept with roots in adverse selection theory and the efficient market hypothesis (EMH). The popular notion is that insiders have an unfair advantage because they possess materially significant and non-public information â an informational asymmetry.
In format, a letter of guarantee is normally a short document that addresses a specific transaction. The text contains data that establishes the identity of the buyer, his or her relationship with the bank, and the nature and general value of the asset that is pledged as collateral.
A letter of credit (LOC) is a promise from a bank to make a payment assuming certain conditions are met. LOCs are complicated. The easiest way to understand how they work is to see an example. This tutorial shows how a letter of credit works step-by-step.