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.
Bank Guarantees are costlier than letters of credit due to its ability to protect both parties involved in the transaction. Also, bank guarantees usually cover a wide range of transactions. A letter of credit is a commitment taken on by a bank to make a payment to a beneficiary once certain criteria are met.