haircut

noun

Pronunciation: /ˈhɛə(ɹ)kʌt/

Etymology: From hair + cut.

The act of cutting of the hair, often done professionally by a barber, hair stylist, or beautician.
The style into which the hair is cut.
A partial loss, financially: thus, in a bankruptcy proceeding, the proportional reduction in the debt that will be paid to each creditor (based on an evaluation of the total debt owed and the total assets of the debtor); among investors, the negative return on investment from a losing proposition.
“to take a haircut”
“And he needs to make sure that any American bank that was involved in loans to Asia, and now wants to share in the I.M.F. bailout, takes a haircut. And I'm not just talking about a trim.”
The difference between the value of a loan and the value of its collateral.
“Government securities having high credit rating such as Treasury bonds and Treasury bills are usually subjected to 1% to 10% haircut, while for more risky, volatile or illiquid securities, such as a stock option, the haircut might be as high as 30%.”

Etymology: From hair + cut.

To reduce the value assigned to an asset.
“But whereas in the past it has been possible for a brokerage house to credit a customer’s account for 100 percent of the value of a commodity, we have required that that value be haircutted significantly.”
“That is because the future stream of income is discounted to present value at perhaps as much as two to three percentage points above the prime rate and then haircutted by as high as 33½%.”