TeachMeFinance.com - explain flat
flat -- an apartment located entirely on one floor.
Flat -- Without interest.
When bonds are sold flat no additional charge is made to
the buyer for the interest accrued on them ; in other words, the
interest is included in the sale.
When stocks lend flat the lender has not to pay interest
to the borrower of the stock. Ordinarily the borrower of
stock pays the lender the market value of the stock and the lender
pays interest to the borrower on this money.
The rate of interest paid is usually a little less than the ruling
rate for call money. When a stock is lending flat the fact
signifies that this particular stock is in inadequate supply, or
at least that it is not easy to obtain by borrowers.
When a stock is lending at a premium the borrower
only receives no interest on the money that he advances to the
lender, but he also has to pay whatever amount may be agreed
upon for the use of the stock. In such a case the stock is very
scarce or very difficult to obtain.
There is another meaning to flat ; when little business is
done in the stock market or in any other market the market
is said to be flat.
On the London Stock Exchange the word flat is used,
though rarely, to indicate that the quotation for a stock (bond)
does not include accrued interest. Transactions of this kind
are seldom carried out in London.
About the author
Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".
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