Layoff

DEFINITION of 'Layoff'

1. When a company eliminates jobs regardless of how good the employees' performance.

2. A risk reduction, made by investment bankers, that minimizes the potential downside associated with a commitment to purchase and sell a stock issue unsubscribed by stockholders holding rights.

BREAKING DOWN 'Layoff'

1. This is usually because the company is facing financial difficulties.

2. This is a method whereby an investment banking firm, who has committed to buying up all the unsubscribed shares during a rights offering, will reduce the time risk involved due to the difference between entering into the contract and selling the shares. In other words, they are hedging against any losses due to time.

RELATED TERMS
  1. Unsubscribed

    Newly issued securities that have not seen much interest, or ...
  2. Backstop Purchaser

    An entity that agrees to purchase all the remaining, unsubscribed ...
  3. Investment Banker

    Someone working at an institution raising capital for companies, ...
  4. Capital Commitment

    Future capital expenditures that a company has committed to spend ...
  5. Rights

    A security giving stockholders entitlement to purchase new shares ...
  6. Advance Commitment

    A promise or agreement to take some future action. For example, ...
Related Articles
  1. Managing Wealth

    Investment Banker: Job Description & Average Salary

    Identify what investment bankers do in a typical work day, learn what skills are needed to be successful and understand how investment bankers get paid.
  2. Investing

    What Does an Investment Banker Do?

    An investment banker works for a financial institution that helps companies, governments and agencies raise money by issuing securities.
  3. Professionals

    What Do Investment Bankers Really Do?

    Investment bankers are essentially corporate financial advisors and can help companies manage the process of raising financing for their activities.
  4. Investing

    Stock Rights Issue

    Rights are offers that allow existing stockholders to buy additional shares at a predetermined price, for a set time period. Usually, the number of shares the investor can purchase are in proportion ...
  5. Investing

    What Is Stockholders' Equity?

    Stockholders’ equity represents the equity that shareholders own in a company.
  6. Markets

    A Day in the Life of an Investment Banker

    Take a look at a day in the life of an investment banker, one of the most sought-after and stressful jobs in the financial sector.
  7. Investing

    Investment Banker: Career Path & Qualifications

    Learn more about the work of investment bankers, and discover how most professionals got started in the field and progressed into their roles.
  8. Professionals

    Financial Careers: Investment Banking Jobs

    By Brian Perry This chapter will examine investment banking jobs. These jobs generally involve working with corporations, governments and other large institutions and either helping them to ...
  9. Financial Advisor

    Why Investment Bankers Need Financial Advisors

    Even the most successful investment bankers need financial advisors. Here's why.
  10. Managing Wealth

    Career Advice: Investment Banking Vs. Private Banking

    Examine the two potential career options of investment banking and private banking, with an eye toward choosing the most suitable career.
RELATED FAQS
  1. How do I create a trading strategy when a stock doesn’t reach a lower swing?

    Learn how investing in a corporate bond is different from purchasing shares of a company's stock while reviewing the benefits ... Read Answer >>
  2. Does stockholders equity accurately reflect a company's worth?

    Learn whether stockholders' equity accurately reflects a company's worth. Stockholders' equity is found by taking the difference ... Read Answer >>
  3. What is a direct rights offering?

    Discover what a direct rights offering is, what it means for shareholders who receive the offering, and the reasons a company ... Read Answer >>
  4. What is the difference between risk avoidance and risk reduction?

    Learn what risk avoidance and risk reduction are, what the differences between the two are, and some techniques investors ... Read Answer >>
  5. What are the pros and cons of owning preferred stock instead of common stock?

    Understand and explore the advantages and disadvantages of owning preferred stock as opposed to owning common stock shares ... Read Answer >>
  6. Who facilitates buying and selling on the primary market?

    Learn more about the primary marketplace -- home of initial public offerings -- and the major players that make buying and ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center