Haircut

In a general context, a "haircut" refers to a reduction in the value of an asset or an investment. For example, if a company’s debt is considered risky, creditors may anticipate not recovering the full amount owed. They might accept a "haircut," agreeing to receive only a portion of the debt's value. This term is also used in finance to denote the difference between the market value of an asset and the amount a lender will accept as collateral for a loan. In essence, it signifies a loss in value, usually seen in financial dealings and market scenarios.