haircut

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1. Valuation formula used by broker-dealers in computing net capital positions. A dealer's haircut is an estimate of potential losses, taking into account credit risk, market risk, time to maturity, and other factors. Haircuts vary according to class of security: ranging from 0% haircut for U.S. Treasury securities, 30% for equities, to 100% for issues in default, where total loss is probable. Haircuts in government securities trading are based on weekly yield volatility, as tabulated by the Federal Reserve Bank of New York. Dealer capital requirements are governed by the Securities and Exchange Commission's Rule l5c3-1. The lowest haircuts are given to securities considered least likely to default, for example, Treasury bills.

2. In lending, difference between the amount advanced by a lender and the market value of collateral securing the loan. For example, if a lender makes a loan equal to 90% of the dollar value of marketable securities, the difference (10%) is the haircut. Also called haircut financing.

3. Spread in a repurchase agreement, or the difference between the market value and the value actually used.

4. In a bank failure, a depositor's potential loss as an Uninsured Depositor when deposits exceed the $100,000 coverage limit.

1. The difference between prices at which a market maker can buy and sell a security.

2. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.

Investopedia Says:
1. The term haircut comes from the fact that market makers can trade at such a thin spread.

2. When they are used as collateral, securities will generally be devalued since a cushion is required by the lending parties in case the market value falls.

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IN BRIEF: The act of scissoring the tresses.

Tutor's tip: I will get a "haircut" (the shaping of the hair by cutting it) before I fix my "haricot" (a kind of lamb stew) for my dinner.

LearnThatWord.com is a free vocabulary and spelling program where you only pay for results!

sign description: One V-hand opens and closes acting as scissors up by the head.

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For a list of words related to haircut, see:

• Hair Styles - haircut: style of cutting and shaping hair

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See words rhyming with "haircut."

Dansk (Danish)
n. - klipning

Nederlands (Dutch)
het haar knippen, haarstijl, modellering

Français (French)
n. - coupe de cheveux

Deutsch (German)
n. - Haarschneiden, Haarschnitt

Ελληνική (Greek)
n. - κούρεμα

Italiano (Italian)
taglio di capelli

Português (Portuguese)
n. - corte (m) de cabelo

Русский (Russian)
стрижка

Español (Spanish)
n. - corte de pelo

Svenska (Swedish)
n. - hårklippning, frisyr

中文（简体）(Chinese (Simplified))
理发, 剪发的方式

中文（繁體）(Chinese (Traditional))
n. - 理髮, 剪髮的方式

한국어 (Korean)
n. - 이발, 헤어스타일

日本語 (Japanese)
n. - 散髪, ヘアスタイル

العربيه (Arabic)
‏(الاسم) قص الشعر‏

עברית (Hebrew)
n. - ‮תספורת‬

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