Financial matters

The loan agreement provides a legal contract between the borrower and the bank. It spells out in detail the terms of the loan. This normally specifies the amount(s) to be drawn down, the interest rate that will be charged and sets out a schedule of the dates when interest payments and principal repayments are due. It will also contain a detailed breakdown of any fees to be paid and penalties that the bank may charge for minor transgressions such as late or missed payments. For secured loans it will also include details of the collateral being pledged by the borrower. Most agreements also contain clauses indemnifying the bank against potential liabilities arising from specified events.
If the loan is a floating rate loan the loan agreement will specify the underlying benchmark rate, the margin over that benchmark, the conditions under which the rate charged to the customer will be changed and the notice to be given when such a change is made.
The bank will try to ensure that the loan agreement covers all possible eventualities. If the value of the collateral pledged falls below a certain level the agreement may require the borrower to provide additional collateral to restore the original value.
In countries such as the US where litigation is a constant potential threat it is important that the agreement states clearly any risks arising out of taking out the loan.

Once the coefficients have been determined, they are used to calculate the forecast value. These forecasts are most accurate for the next day, and should be used with less confidence for subsequent days.
What if the forecast does not work? First. the process should be checked to be certain that it was performed properly. Pay particular attention to the removal of trends using the correlogram. Next, check the data used in the process. if the data sample is changing (which can be observed on a price chart), select either a shorter or longer period that contains more homogeneous data, that is. data similar to the current market period.