Date: 05.04.2013
ABOVE THE LINE DEDUCTION
Above the line
deductions are certain types of deductions that are subtracted from your income
before the adjusted gross income is calculated for tax purposes.
Above the line
deductions include such items as losses on a property sale, alimony payments
and educational expenses.
Since above the
line deductions are generally deducted from taxable income, they are
advantageous to taxpayers in the sense that they reduce the overall tax burden.
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Date: 04.04.2013
ABOVE-THE-LINE COSTS
Costs incurred
during the production of an advertising commercial that are associated with the
creative side of it.
These costs
include those incurred for actors, music and photography.
Because
creativity cannot be measured directly, above-the-line costs may have little
correlation with the creativity of an advertisement or commercial.
That is,
incurring high above-the-line costs may not necessarily result in a commercial
with a high degree of creativity, while a low-budget commercial with minimal above-the-line
costs may still be quite creative.
In accounting,
above-the-line costs can also refer to costs included in the calculation of net
income in the income statement. Above-the-line costs are the polar opposite of
below-the-line costs in advertising, which are costs associated with the
non-creative part of the advertising commercial production. Below-the-line
costs include expenses for props and equipment.
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Date: 03.04.2013
ABOVE PAR
A term used to
describe the price of a security when it is trading above its face value. A
security usually trades at above par when its income distributions are higher
than those of other instruments currently
available in the market.
If an investor
purchases a security above face value, he or she will incur a capital loss at
maturity when it is redeemed for face value.
For example, a 5-year bond with
$1,000 face value that pays a coupon of 10% annually may trade closer to $1,168
if similar bond rates decline to 6%.
This is because investors are willing to
pay more for a higher coupon; thus, it is said to be
trading above par. In order to make its yield equal current market rates, the
bond should trade at its present value.
In the above
example, the following calculation was used to determine the theoretical price
the bond would trade at
N = 5 years
I/Y = 6 (market rate, 6%)
FV = $1,000 (face value)
PMT = $100 (10% coupon)
Payments/Year = 1 (annual coupon payment)
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Date: 02.04.2013
ABOVE GROUND RISK
Non-quantifiable
risks that can adversely affect a project or investment.
Above ground
risk is generally used in the energy industry to refer to non-technical risks
such as environmental issues and the regulatory climate.
More broadly,
above ground risk refers to a wide range of somewhat nebulous risks such as political
risk, corporate risk, security and corporate governance whose impact is
difficult to quantify, but could be significant should one or more of these
risks become a real threat.
Above grounds
risks may also include a number of risks that are less acknowledged such as
corruption, bribery and conflicts of interest.
The degree of
above ground risk differs from one nation to the next.
Countries with
pro-business policies, strong governance and efficient legal systems may have a
lower degree of above ground risk than those nations that do not possess these
attributes.
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Date: 01.04.2013
ABOVE FULL-EMPLOYMENT EQUILIBRIUM
A macroeconomic
term used to describe the real gross domestic product (GDP) is currently in
excess of its long-run average, or some other historical measure.
Accordingly, the
amount that the current real GDP is greater than the historic average is called
an inflationary gap, as this will create inflationary pressures in this
particular economy.
Above
full-employment equilibrium simply means that a given economy is producing
goods, as measured by its GDP, at a higher level then it usually does.
Because this
market is in equilibrium, there will not be any excess supply in the short run,
but this overly active economy will create more demand for goods and services,
which will push prices upwards and possibly, lead to a greater level of
inflation.
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Date: 25.03.2013
ABSENTEE OWNER
An individual
who owns a piece of real estate but does not live in it. An absentee owner may
also be an entity such as a corporation or real
estate investment trust (REIT).
The real estate
held by an absentee owner can range widely - while an individual may own a single
condominium or apartment, a corporation may own a large chunk of real estate
such as an apartment building or shopping mall.
The primary motivation
of absentee owners is to generate returns from their real estate holdings in
the form of rental Income and potential capital appreciation.
The proportion
of absentee owners in the population at large is directly correlated to the
degree of real estate speculation prevalent in the economy.
A strong
property market and economy coupled with relatively low interest rates may
result in a higher proportion of absentee owners, while a sluggish market and
economy may limit the number of absentee owners.
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Date: 19.03.2013
ABSENTEEISM
The habitual
non-presence of an employee at his or her job. Possible causes of absenteeism
include job dissatisfaction, ongoing personal issues and chronic medical
problems.
Regardless of
cause, a worker with a pattern of being absent may put his reputation and his
employed status at risk. However, some forms of absence from work are legally
protected and cannot be grounds for termination.
Companies expect
their employees to miss some work each year due to vacation, illness and
personal issues/responsibilities, but missing work becomes a problem for the
company when the employee is absent
Repeatedly and/or unexpectedly,
especially if that employee must be paid while absent.
While disability
leave, performance of jury duty and the observance of religious holidays are
all legally protected reasons For an employee to miss work, some employees
abuse these laws to take time off that they shouldn't, which incurs unfair
costs to the employer.
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Date: 18.03.2013
ABSOLUTE ADVANTAGE
The ability of a
country, individual, company or region to produce a good or service at a lower
cost per unit than the cost at which any other entity produces that good or
service.
Entities with
absolute advantages can produce something using a smaller number of inputs than
another party producing the same product. As such, absolute advantage can
reduce costs and boost profits.
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Date: 16.03.2013
ABSOLUTE AUCTION
A type of
auction where the sale is awarded to the highest bidder. Absolute auctions do
not have a reserve price which sets a minimum required bid for the item to be
sold.
One type of
absolute auction relates to foreclosed properties, where the winning bid
acquires the foreclosed property.
This is opposed
to a lender confirmation auction, where the lender must approve the bid in
order to complete the transaction.
An absolute
auction can occur in various venues including the foreclosure marketplace, the
online marketplace (such as eBay.com)
or live auction events.
In this type of
auction, the highest bidder "wins"
the item, whether it is real estate property or any other type of product.
Absolute
auctions are often implemented where there is an immediate demand to sell an
item.
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Date: 15.03.2013
ABSOLUTE BENEFICIARY
A designation of
a beneficiary that cannot be changed without the written consent of that
beneficiary.
Also referred to
as an "irrevocable
beneficiary", absolute beneficiaries can also refer to a trust, an
employee benefit plan such as a pension, or any other instrument or contract
with a beneficiary clause.
The naming of
absolute beneficiaries is common in divorce settlements or liability cases
where part of the settlement is the naming of a given person as a beneficiary.
Any designations of absolute beneficiaries should be made very carefully and
with professional consultation.
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Date: 14.03.2013
ABSOLUTE BREADTH INDEX
A market
indicator used to determine volatility levels in the market without factoring
in price direction.
It is calculated
by taking the absolute value of the difference between the number of advancing
issues and the number of declining issues.
Typically, large
numbers suggest volatility is increasing, which is likely to cause significant
changes in stock prices in the coming weeks.
This tool is
classified as a breadth indicator because the advancing/declining values are
the only values used to create it.
This index can
be calculated using any exchange or a subset of an exchange, but traditionally the
New York Stock Exchange has been the accepted standard.
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Date: 13.03.2013
ABSOLUTE FREQUENCY
A statistical
term describing the total number of trials or observations within a given
interval or frequency bin.
The frequency
bins can be of any size, but they must be mutually exclusive, exhaustive and
the data must be grouped.
The absolute
frequency is simply the total number of observations or trials within a given
range.
For example,
Assume there is
a collection of grouped data for the percentage returns for a particular stock,
which is ranged from lowest to highest.
If there are 56 observations
within the 5-7% frequency bin, then the absolute frequency of this bin is 56.
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Date: 12.03.2013
ABSOLUTE INTEREST
Total and
complete ownership of an asset or property. An individual with an absolute
interest has both a Legal and beneficial possession of said asset or property.
The term "absolute interest" indicates
that the Owner’s interest is not diluted by another party's ownership, nor is
it dependent on conditions that must be fulfilled.
An absolute
interest in an asset or property gives the owner full entitlement to the
benefits and privileges that accrue from such ownership.
It is the
opposite of a contingent interest, which confers an ownership interest only upon
the fulfillment of certain conditions or the occurrence of specific
circumstances.
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Date: 12.03.2013
ABSOLUTE PERFORMANCE STANDARD
A way of
measuring an organization's progress and how effective and efficient it is at
running its business.
The absolute
performance standard is a benchmark for quality control that is only attainable
in theory.
However, it is a
good way to measure how well a business and its workers are doing.
Many
organizations implement different forms of performance standards that measure
different aspects.
Some companies
use "pay for performance" incentive
programs based on merit for workers who do well in their job.
Performance
standards should be attainable, specific, observable, meaningful, measurable
and stated in terms of quality, quantity, timeliness or cost.
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Date: 11.03.2013
ABSOLUTE PHYSICAL LIFE
The length of
time that it takes for an asset takes to become fully depreciated, at which
time it provides no additional use. The absolute physical life is often taken
into consideration when companies purchase assets.
The measure is
typically associated with assets that have low risk of becoming technically
obsolete.
When looking at
the life of an asset, people can take contrasting perspectives. For example,
let's examine a manager's decision to purchase new computers for his or her
business. The manager may decide to base the decision on how long it will be
until the computers become obsolete by conventional standards.
On the other
hand, if the manager isn't worried about having older technology, he or she may
care only about the Absolute physical life of the computers, which can
be considerably longer.
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Date: 09.03.2013
ABSOLUTE RATE
The fixed
portion of an interest-rate swap, expressed as a percentage rather than as a
premium or a discount to a reference rate.The absolute
rate is a combination of the reference rate and the premium or discounted fixed
percentage.
For example, if
the LIBOR is 3% and the fixed interest portion of the swap is at a 7% premium,
the absolute rate is 10%.It is sometimes
also referred to as an absolute swap yield.
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ABSOLUTE RETURN
The return that
an asset achieves over a certain period of time. This measure looks at the
appreciation ordepreciation (expressed
as a percentage) that an asset - usually a stock or a mutual fund -
achieves over a given period of time.
Absolute return
differs from relative return because it is concerned with the return of a
particular asset and does not compare it to any other measure or benchmark.
In general, a
mutual fund seeks to produce returns that are better that its peers, its fund
category, and/or the market as a whole. This type of fund management is
referred to as a relative return approach to fund investing.
As an investment
vehicle, an absolute return fund seeks to make positive returns by
employinginvestment management techniques that differ from traditional mutual
funds.
Absolute return investment techniques include using short selling, futures, options, derivatives, arbitrage, leverage and unconventional assets.Alfred Winslow Jones iscreditedwith forming the first absolute return fund in
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Date: 07.03.2013
ABSOLUTE RETURN INDEX
A stock index
designed to measure absolute returns. The absolute return index is actually a
composite index made up of five other indexes.
This index is used to compare the absolute
returns posted by the
hedge fund market as a whole against
individual hedge funds.
The hedge fund
absolute return index (HFRX) measures the comprehensive overall returns of
hedge funds.
Since hedge
funds explore unique investment strategies and seek to obtain absolute returns
rather than focus on beating the benchmark, the HFRX is representative of all
hedge fund strategies.
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Date: 06.03.2013
ABSOLUTE TITLE
Title to a
property that is free of any encumbrances or deficiencies. Absolute title gives
unequivocal right of ownership to the owner, and cannot be disputed or
challenged by anyone else.
This is opposed
to titles with liens, attachments or judgments against them. Also known as a
perfect title. A title search
will usually unearth any problems with regard to the title of a property.
The search is
well worth the cost when someone is considering buying real estate. A title search
is usually conducted at the local registry office.
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Date: 05.03.2013
ABSOLUTE VALUE
A business
valuation method that uses discounted cash flow analysis to determine a
company's financial worth. The absolute value method differs from the relative
value models that examine what a company is worth compared to its competitors.
Absolute value models try to determine a company's intrinsic worth based on its
projected cash flows.
In addition to
looking at ratios such as price to earnings and price to book value, value
investors like to calculate what an entire business is worth when they are
considering whether to buy a particular stock. Discounted cash flow models are
one way to determine this worth.
They estimate a
company’s future free cash flows, then discount that value to the present to
determine an absolute value for the company. By comparing what a company's
share price should be given its absolute value to the price the stock is
actually trading it, investors can determine if a stock is currently under or
overvalued.
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Date: 04.03.2013
ABA
Bank Index
A
banking index that is made up of community banks and banking institutions. This
index was created to represent the smaller institutions of the banking industry
and stands in contrast to the KBW Banking Index in that respect. The
ABA index trades on the NASDAQ under the symbol ABAQ.
The ABAQ Index is weighted according
to market value. The index was created in 2003 in an
effort to publicize the community banking industry and is computed for both
total and price return.
The ABAQ is also designed to aid in
improved market liquidity and more equitable market valuations.
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Date: 03.03.2013
ABATEMENT COST
A cost borne by many businesses for the removal and/or
reduction of an undesirable item that they have created.
Abatement costs are generally incurred when
corporations are required to reduce possible nuisances or negative by products
created during production.
Examples of
abatement costs would be the pollution reduction costs of paper mills and noise
reduction costs of manufacturing plants.
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Date: 02.03.2013
ABATEMENT
A reduction in the level of taxation faced by an individual or company.
Examples of an abatement include a tax decrease, a reduction in penalties or a rebate. If an individual or business overpays its taxes or receives a tax bill that is too high, it can request an abatement from the tax authorities.
A common type of tax abatement is property tax abatement. Individuals who believe that the assessed value of their property is too high, can appeal to their local tax assessor for a tax abatement.
Some localities offer property tax abatement to owners who restore, or improve, historic properties located in designated neighbourhoods. Some types of properties, such as those containing non-profit businesses, will be granted tax abatements based on the owner's tax exempt status.
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ABANDON RATE
The percentage of inbound phone calls
made to a call center or service desk that are abandoned by the customer before
speaking to an agent. It is calculated as abandoned calls divided
by total inbound calls (in percent). Abandon rates have a direct
relation to waiting times. The longer the time that customers have to wait
before being connected to an agent, the higher the abandon rate is likely to
be.
For
example, if a call center receives an average of 1,000 calls a day, of which 40
are abandoned by customers, the abandon rate is 4%.
High abandon times may indicate
under-allocation of resources to the call center or help desk by the company,
and can saddle a company with the reputation of offering poor customer service.
It may also result in lost sales opportunities and highly dissatisfied
customers, as anyone who has spent a significant amount of time waiting in a
virtual queue for customer service can attest.
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Date: 25.02.2013
ABSORPTION COSTING
As the name suggests, absorption costing is the
method of costing in which the entire cost
of manufacturing a product or
providing a service is absorbed in it. In contrast to the variable costing Activity based costing (ABC) method, it includes both fixed
and variable costs for absorption in addition to the direct costs.
As all the costs incurred are absorbed, this
method is also sometimes referred to as Full absorption costing or Total absorption costing (TAC).
Variable costing is generally used for the
managerial decision making whereas as per the Generally
Accepted Accounting Principles (GAAP),
an organization is bound to use the absorption costing method for financial
reporting purposes.
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Date: 21.02.2013
ABILITY TO PAY
An economic principle stating that the amount of tax an
individual pays should be dependent on the level of burden the tax will create
relative to the wealth of the individual.
The ability to pay principle suggests
that the real amount of tax paid is not the only factor that has to be
considered, and that other issues such as ability to pay should also factor
into a tax system.
The application of this principle is a progressive tax system, in which
individuals with higher incomes are asked to pay more tax than individuals
with lower incomes.
Classical economists like Adam Smith believed any elements
of socialism, such as a progressive tax, would destroy the initiative
of the population within a free market economy.
However, many countries have
blended capitalism and socialism with a great degree of success.
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Date: 05.02.2013
Bankruptcy:
When a court judges
that a debtor is unable to make the payments owed to a creditor. How bankrupts
are treated can affect economic growth. If bankrupts are punished too severely,
would-be entrepreneurs may be discouraged from taking the financial risks needed
to make the most of their ideas. However, letting off defaulting debtors too
readily may discourage potential creditors because of moral hazard.
America's bankruptcy code, in particular its Chapter 11 protection for firms
from their creditors, is particularly friendly to troubled borrowers, allowing
them to borrow more money and giving them time to work out their problems. Some
other countries quickly close down a bankrupt firm, and try to repay its debts
by selling off any assets it has.
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Date: 04.02.2013
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Date: 08.12.2012
Margin account:
A brokerage account that
permits an investor to purchase securities on credit and to borrow on
securities already in the account. Buying on credit and borrowing are subject
to standards established by the Federal Reserve and by the firm carrying the
account. Interest is charged on any borrowed funds only for the period of time
the loan is outstanding.
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Date: 07.12.2012
Credit Check:
A credit check is a review of your credit history
made by a lender or other financial services provider when you make a credit
application. The result of a credit check (i.e. it shows whether you are a good
or bad credit risk) will affect the decision of the lender. For example, if the
credit check shows that you are a bad risk, any loan you are offered will
probably involve a smaller loan amount and a higher interest rate.
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Date: 06.12.2012
Free riding:
Getting the benefit of a good or service without paying for it, not necessarily illegally. This may be possible because certain types of goods and services are actually hard to charge for--a firework display, for instance. Another way to look at this may be that the good or service has a positive externality. However, there can sometimes be a free-rider problem, if the number of people willing to pay for the good or service is not enough to cover the cost of providing it. In this case, the good or service might not be produced, even though it would be beneficial for the economy as a whole to have it. public goods are often at risk of free riding; in their case, the problem can be overcome by financing the good by imposing a tax on the entire
population.
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Date: 05-12-2012
MICR: Magnetic Ink Character Recognition:
MICR code (pronounced my-ker) is a
nine-digit number printed on banking instruments such as a cheque or a demand
draft using a special type of ink made of magnetic material. The first three
digits denote the city. The fourth to sixth digits denote the bank, while the
last three digits denote the branch number. The code is read by a machine,
minimizing the chances of
error in clearing of cheques,
thereby making funds transfer faster. For example, in the MICR code 400240019,
400 denotes Mumbai, 240 denotes HDFC Bank Ltd and 019 denotes the Colaba branch
of the bank.
You will find the number on the
right of the cheque number at the bottom of the cheque leaf.
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Date: 12.10.2012
What is Nifty BeES?
Nifty BeES is the first Exchange
Traded Fund (ETF) in India. It is a combination of a share and a mutual fund
unit. It allows you to trade Real-time on NSE and gives you Real-time
Indicative NAV. With Nifty BeES you can tracks the S&P CNX Nifty Index.
Today Quiz
Name the first private sector
corporate Mutual Fund company launched the gold fund in India?
Answer for the last day question
Which bank is promoted by 20th
Century Finance Corporation and Keppel Tatlee Bank of Singapore in India?
Answer : Centurion
Bank.
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Date: 11.10.2012
Definition of 'Baltic
Exchange'
An exchange that
handles the trading and settlement of both physical contracts and derivatives
relating to shipping and maritime transportation. The Baltic Exchange provides
daily prices for freight, and tracks shipping costs through several indexes. Traders
use these indexes to settle forward freight agreements (FFAs), which are
freight futures contracts.
Today Quiz
Which bank is promoted by 20th Century Finance Corporation and Keppel Tatlee Bank of Singapore in India?
Which bank is promoted by 20th Century Finance Corporation and Keppel Tatlee Bank of Singapore in India?
Answer for the last day question
Which is India's first Credit Rating
Agency set up jointly by LIC, GIC, UTI, ICICI and Asian Development Bank in
January 1988? …………………
Answer: Credit Rating and
Information Services of India Ltd. (CRISIL)
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Date: 10.10.2012
Warsaw Stock Exchange
- WSE
The largest stock exchange in
Eastern Europe, located in Warsaw Poland. Trading started on April 16, 1991,
and the exchange ballooned to a market capitalization of approximately $200
billion (EUR) in six years. Instruments such as shares, bonds and various
derivative products can all be traded electronically on this exchange. The WSE
is a joint-stock company founded by the state treasury.
Today Quiz
Today Quiz
Which is India's first Credit Rating
Agency set up jointly by LIC, GIC, UTI, ICICI and Asian Development Bank in
January 1988? ……………………
Answer for the last day question
Which country's foreign market is
known as 'Rembrandt Market'? ………………..
Answer: Netherland
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Date: 09.10.2012
Winnipeg Commodity Exchange (WCE)
Agricultural and options exchange serving the
country of Canada. A number
of different commodities
are exchanged on WCE, but Canola is the most active
commodity
exchanged. The exchange was established in 1887 and operates on a totally electronic
trading platform.
Today Quiz
Which country's foreign market is
known as 'Rembrandt Market'? ………………..
Answer for the last day question
Who is the first woman became the
President of Madras Chamber of Commerce?
………………
Answer: Mallika Srinivasan
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Date: 08.10.2012
Wrap Account
Account in which a brokerage helps an investor find a money manager
in exchange
for a flat
quarterly
or annual fee,
which covers
all administrative and management
expenses.
Sometimes also includes funds
of funds.
Today Quiz
Who is the first woman became the
President of Madras Chamber of Commerce?
………………
Answer for the last day question
Name the first Indian woman CEO of a
Foreign Bank?
………………
Answer: Tarini Vaidya of KBC Bank India & South Asia
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Date:06.10.2012
Definition of 'Bootstrap'
A situation in which an entrepreneur starts a company with
little capital. An individual is said to be boot strapping when he or she
attempts to found and build a company from personal finances or from the
operating revenues of the new company.
Today Quiz
Today Quiz
Name the first Indian woman CEO of a Foreign Bank?
………………
Answer for the last
day question
Bank of the middle east, Dubai is maintaining an account with SBI Mumbai.
SBI Mumbai calls this account as ……………………….
Answer : VOSTRO Account
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Date:03.10.2012
Meaning of
'Intrapreneur'
An inside
entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial
skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned a special
idea or project, and are instructed to develop the project like an entrepreneur
would. Intrapreneurs usually have the resources and capabilities of the firm at
their disposal. The intrapreneur's main job is to turn that special idea or
project into a profitable venture for the company.
Today Quiz
Today Quiz
Bank of the middle east, Dubai is maintaining an account with SBI Mumbai.
SBI Mumbai calls this account as ……………………….
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Date:28.09.2012
Definition of 'Sweat
Equity'
Sweat equity is the ownership
interest, or increase in value, that is created as a direct result of hard work
by the owner(s). It is the preferred mode of building equity for cash-strapped
entrepreneurs in their start-up ventures, since they may be unable to
contribute much financial capital to their enterprise.
What is GAAP?
What is GAAP?
(Generally
Accepted Accounting Principles).
A widely accepted set of rules,
conventions, standards, and procedures for reporting financialinformation, as established by the Financial Accounting Standards Board
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Date: 27.09.2012
What is the Banking
Ombudsman Scheme?
The Banking Ombudsman Scheme enables
an expeditious and inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks. The Banking
Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation
Act, 1949 by RBI with effect from 1995.
Who is a Banking Ombudsman?
The Banking Ombudsman is a senior
official appointed by the Reserve Bank of India to redress customer complaints
against deficiency in certain banking services.
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Date: 26.09.2012
Definition of 'Marginal VaR'
The additional amount of risk that a
new investment position adds to a portfolio. Marginal VaR (value at risk)
allows risk managers to study the effects of adding or subtracting positions
from an investment portfolio. Since value at risk is affected by the
correlation of investment positions, it is not enough to consider an individual
investment's VaR level in isolation. Rather, it must be compared with the total
portfolio to determine what contribution is makes to the portfolio's VaR
amount.
Perpetual Preferred Stock
Perpetual Preferred Stock
Stock without a fixedmaturity date.Issuers have ability to redeemperpetualpreferred stockat
any time, and stockspay dividends indefinitely.
Used by conservative,long-terminvestors.
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Date:22.09.2012
Definition of ‘Form S-4'
A form that must be submitted to the
Securities and Exchange Commission in the event of a merger or an acquisition between two companies. The form must also
be submitted for exchange offers.
Do You Know?
'Sao Paolo Stock Exchange (SAO) .SA'
Based in Sao Paolo, Brazil, this exchange has
the fourth-largest market cap in all of the Americas and the 13th largest in
the world. It is also known as the BM&F
Bovespa. The main index of this exchange is the Indice Bovespa.
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Date: 21.09.2012
EFSF - European
Financial Stability Facility
An
organization created by the European Union to provide assistance to member
states with unstable economies. The European Financial Stability Facility is a
special purpose vehicle (SPV) managed by the European Investment Bank, a
lending institution. The fund raises money by issuing debt, and distributes the
funds to euro zone countries whose lending institutions need to be recapitalized,
who need help managing their sovereign debt or who need financial
stabilization.
Definition of 'Sacred Cow'
Definition of 'Sacred Cow'
A firmly held mainstream belief that
is considered to be true without independent verification. In finance, and in
particular in investing, there are many sacred cows that are thought to be
true, but are difficult to prove scientifically.
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Date: 19.09.2012
Definition of 'Escrow'
A financial instrument held by a third party on behalf of the other two
parties in a transaction. The funds are held by the escrow service until it
receives the appropriate written or oral instructions or until obligations have
been fulfilled. Securities, funds and other assets can be held in escrow.
What is ‘CFPA’(Consumer Financial
Protection Act)
An amendment to the National Bank Act designed to identify and explain the
standards that apply to national banks. The Consumer Financial Protection Act
aims to increase oversight and clarify the laws governing financial transactions
in order to protect consumers in these transactions. The act resulted in the
creation of the Consumer Financial Protection Bureau (CFPB) to centralize the
regulation of various financial products and services.
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Date:18.09.2012
Difference Between FDI
and FII
1. FDI is an investment
that a parent company makes in a foreign country. On the contrary, FII is an
investment made by an investor in the markets of a foreign nation.
2. FII can enter the stock market
easily and also withdraw from it easily. But FDI cannot enter and exit that
easily.
3. Foreign Direct Investment targets
a specific enterprise. The FII increasing capital availability in general.
4. The Foreign Direct Investment is
considered to be more stable than Foreign Institutional
Investor.
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Date:
08.09.2012
Definition of 'Bank
Rate'?
The interest rate at which a nation's central bank lends
money to domestic banks. Often these loans are very short in duration. Managing
the bank rate is a preferred method by which central banks can regulate the
level of economic activity. Lower bank rates can help to expand the economy,
when unemployment is high, by lowering the cost of funds for borrowers.
Conversely, higher bank rates help to reign in the economy, when inflation is
higher than desired. The bank rate can also refer to the interest rate which
banks charge customers on loans.
What is ‘ SWIFT'
(Society for Worldwide Interbank Financial Telecommunications)
A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) uses a standardized proprietary communications platform to facilitate the transmission of information about financial transactions. This information, including payment instructions, is securely exchanged between financial institutions.
Date:
07.09.2012
What
is Bow Tie Loan?
A short-term,variable-rateloan in which interestpayments above a certain rate are deferred until the maturity date. For example, an individual
might take out a bow tie loan with an upper limit on the interest rateat 20%. Interest on the loan
will fluctuate with the market, but if interest ratesgo above 20% the borrowerwill not have to pay the amountover 20% until
the loan is mature.
What is (ISMA)?
International Security Market Association
International Security Market Association
A self regulatory trade association
and organization that
was originally in Zurich, Switzerland. This organization encourages compliant
and systematic trading
in the internationalsecurities market
and it also promotes the development of the Euromarkets. It is
acknowledged as a designated investmentexchange by the Financial Services Authority,
the entity that regulates the financial servicesindustry in the
United Kingdom.
Date:
06.09.2012
Definition
of 'Odious Debt'
Money borrowed by one country from
another country and then misappropriated by national rulers. A nation's debt
becomes odious debt when government leaders use borrowed funds in ways that
don't benefit or even oppress citizens. Some legal scholars argue that successor
governments should not be held accountable for odious debt incurred by earlier
regimes, but there is no consensus on how odious debt should actually be
treated. In practice, countries often end up repaying it to uphold their
ability to borrow at favorable interest rates.
What is VCP?
Venture Capital Pool Company - a
small public capital pool company set up under the rules of the former
Vancouver Stock Exchange. Now called a Capital Pool Corp under the rules of the
Canadian Venture Exchange (CDNX).
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Date:
04.09.2012
What
is “ASBA”?
ASBA or
“Application Supported by Blocked Amount” is an application containing an
authorization to block the application money in the bank account, for
subscribing to a new issue. If an investor is applying through ASBA, his
application money shall be debited from the bank account only if his/her
application is selected for allotment after the basis of allotment is finalized,
or the issue is withdrawn/failed.
Under ASBA
facility, investors can apply in any public/rights issues by using their bank
account. Investor submits the ASBA form (available at the designated branches
of the banks acting as SCSB) after filling the details like name of the
applicant, PAN number, demat account number, bid quantity, bid price and other
relevant details, to their banking branch by giving an instruction to block the
amount in their account. In turn, the bank will upload the details of the application
in the bidding platform. Investors shall ensure that the details that are
filled in the ASBA form are correct otherwise the form is liable to be
rejected.
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Date:02.09.2012
Today Abbreviations
ACF Auto-Correlation Function
AD
Authorized Dealer
ADB
Asian Development Bank
ADR
American Depository Receipt
AFS
Annual Financial Statement
AGM Annual General Meeting
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Date:
01.09.2012
Sun outage
A sun outage is an
interruption in or distortion of geostationary satellite signals caused by
interference from solar radiation. The effect is due to the sun's radiation
overwhelming the satellite signal. Generally, sun outages occur in February,
March, September and October, that is, around the time of the equinoxes. At
these times, the apparent path of the sun across the sky takes it directly
behind the line of sight between an earth station and a satellite.
In India, the BSE (Bombay Stock
Exchange) and NSE (National Stock Exchange) use VSATs (Very Small Aperture
Terminal) for members to connect to their trading systems. VSATs depend upon
satellites for connectivity between the terminals/systems. Hence these
exchanges are affected due to the sun outage. These exchanges normally remain
closed from 11:45 to 12:30 during 'sun outages', but times vary depending on
the scientific factors. The interference in satellite signals disturbs smooth
transmission of data of online transactions; hence these share markets remain
closed for the duration of sun outages.
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26/05/2012
Mezzanine
financing
Dividend
yield
Annual rate of return
on common stock (ordinary shares) or preferred stock (preference shares),
computed by dividing the annual dividend by the shares' market price. Dividend
yield reflects the return on the current 'opportunity value,' and not on the
historical cost of the investment. As the price of the shares declines, the
dividend yield goes up indicating that the shares are priced cheaply and are a
'good buy.' Such shares usually attract risk averse investors.
Non-conventional
funding that shares characteristics of both debt and equity. It comprises of
equity-based options (such as warrants) and lower-priority (subordinate) debt,
and is used commonly in financing acquisitions and buyouts. Convertible
debentures (see convertible loan) are also an example of mezzanine financing.
Also called mezzanine debt.
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05/04/2012
05/04/2012
Definition of ‘Liquidation'
Creditors liquidate assets to try and get as much of the money owed to them as possible. They have first priority to whatever is sold off. After creditors are paid, the shareholders get whatever is left with preferred shareholders having preference over common shareholders.
04/04/2012
Definition of ‘Hard currency’
A general term for any currency that is widely enough accepted internationally to be used in international transactions. In practice, this means the currencies of the rich countries. The term ‘hard currency’ is more or less interchangeable with ‘foreign exchange’.
Definition of 'Rescheduling'
Deferment of payments of principal and/or interest due on loans, by agreement with creditors.
03/04/2012
Definition of 'International Monetary Fund (IMF)'
The international agency responsible for the operation of the international financial system. Established in 1944, the IMF’s main operational roles are the general supervision of the policies of its member countries on international payments; and, in effect, a lender of last resort for the world economy.The IMF is run by its country shareholders whose percentage of vote is determined by the amount of money they contribute. The U.S. holds the biggest percentage of vote, and virtual veto power as the biggest shareholder.The IMF has played a central part in the debt strategy since 1982, primarily through its role of setting conditions for loans and debt relief.
02/04/2012
Definition of 'Trade liberalization'
An important component of most structural adjustment programs, aimed at opening the economy to increased international trade, particularly by reducing protectionism. The main elements of trade liberalization
are reducing, and ultimately removing, taxes on exports, restrictions on imports and reducing the overall level of import tariffs.
Definition of 'HIPC'
The Heavily Indebted Poor Country Initiative, the current debt relief scheme created in 1996 by the World Bank and IMF to provide limited debt relief for the poorest countries with the goal of bringing countries to a “sustainable” level of debt.
31/03/2012
Definition of 'Deregulation'
Removal or reduction of government regulations and restrictions that affect the operation of a particular market or the economy as a whole.
Definition of 'Devaluation'
A deliberate change in the exchange rate (under a fixed exchange rate system) involving a reduction in the value of the local currency against other currencies.
30/03/2012
Definition of 'Guarantee export credit'
A loan to finance an export contract, usually made by the exporting company or a commercial bank, on which part or all of the repayments are guaranteed by the government of the exporting country.Such guarantees are issued by the export credit guarantee agencies.
29/03/2012
Definition of 'Buy-sell'
A legal agreement between two or more shareholders setting out the conditions under which each may sell their shares. Such agreements may include “shotgun,” “piggyback,” right of “first refusal” or similar clauses. Partners and shareholders in smaller businesses frequently overlook the need for such agreements.
Definition of 'Coverage'
Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations, e.g., 2 to 1 debt coverage means there are $2 of assets to $1 of debt. This could also be referred to as 200% coverage or 100% margin.
28/03/2012
Definition of 'Business interruption insurance'
A type of insurance available to cover lost income in the event of the complete or partial shutdown of a business from specified causes (e.g., fire,evacuation, etc.).
Definition of 'Deemed realization'
A transfer of assets which is considered “a sale” by Revenue Canada though no cash or other consideration may be involved.
27/03/2012
Definition of 'Hot buttons'
Key operational information which can give an early indication of the health of a company. These frequently include receivables and payables expressed in days, inventory level and turnover, warranty claims
and level of returned goods, order book, and back order levels. You should know and watch the “hot buttons” in your company.
Definition of 'Income-splitting'
A tax planning device frequently available to business owners
where total tax paid by the company and the shareholders can be minimized. “Splitting” can refer to splitting between salaries and dividends, husband and wife salaries, etc.
26/03/2012
Definition of 'Leveraged buyout'
To complete the financing in the purchase of a company, the purchaser borrows against the company’s unused borrowing capacity (usually based on the market value of the company’s assets rather than the book value).
Definition of 'Piggyback'
A clause which allows a party the same rights as another if the other takes certain actions. A piggyback buy-sell would mean that if A sold shares, B would have the right either to force sales of his or her own shares at the same price (piggyback) or buy A’s shares at the same price (right of first refusal), as well as the alternative of doing nothing.
24/03/2012
Definition of ‘Arbitrage’
Buying an asset in one market and simultaneously selling an identical asset in another market at a higher price. Sometimes these will be identical assets in different markets, for instance, shares in a company listed on both the London Stock Exchange and New York Stock Exchange. Often the assets being arbitraged will be identical in a more complicated way, for example, they will be different sorts of financial securities that are each exposed to identical risks.
Buying an asset in one market and simultaneously selling an identical asset in another market at a higher price. Sometimes these will be identical assets in different markets, for instance, shares in a company listed on both the London Stock Exchange and New York Stock Exchange. Often the assets being arbitraged will be identical in a more complicated way, for example, they will be different sorts of financial securities that are each exposed to identical risks.
23/03/2012
Definition of ‘Barter’
Paying for goods or services with other goods or services, instead of with money. It is often popular when the quality of money is low or uncertain, perhaps because of high inflation or counterfeiting, or when people are asset-rich but cash-poor, or when taxation or extortion by criminals is high. Little wonder, then, that barter became popular in Russia during the late 1990s.
Paying for goods or services with other goods or services, instead of with money. It is often popular when the quality of money is low or uncertain, perhaps because of high inflation or counterfeiting, or when people are asset-rich but cash-poor, or when taxation or extortion by criminals is high. Little wonder, then, that barter became popular in Russia during the late 1990s.
Definition of ‘Flotation’
Going public. When shares in a company are sold to the public for the first time through an initial public offering. The number of shares sold by the original private investors is called the "float". Also, when a bond issue is sold in the financial markets.
Going public. When shares in a company are sold to the public for the first time through an initial public offering. The number of shares sold by the original private investors is called the "float". Also, when a bond issue is sold in the financial markets.
22/03/2012
Definition of ‘Institutional investors’
The big hitters of the FINANCIAL MARKETS: pension funds, fund-management companies, INSURANCE companies, investment BANKS, HEDGE FUNDS, charitable endowment trusts. In the United States, around half of publicly traded SHARES are owned by institutions and half by individual investors. In the UK, institutions own over two-thirds of listed shares. This gives them considerable clout, including the ability to move the PRICES in financial markets and to call company bosses to account. But because institutions mostly invest other people’s MONEY, they are themselves prone to AGENCY COSTS, sometimes acting against the best long-term interests of the people who trust them with their SAVINGS.
The big hitters of the FINANCIAL MARKETS: pension funds, fund-management companies, INSURANCE companies, investment BANKS, HEDGE FUNDS, charitable endowment trusts. In the United States, around half of publicly traded SHARES are owned by institutions and half by individual investors. In the UK, institutions own over two-thirds of listed shares. This gives them considerable clout, including the ability to move the PRICES in financial markets and to call company bosses to account. But because institutions mostly invest other people’s MONEY, they are themselves prone to AGENCY COSTS, sometimes acting against the best long-term interests of the people who trust them with their SAVINGS.
21/03/2012
Definition of ‘Propensity’
ECONOMICS abounds with propensities to do various things: consume, save, invest, import, and so on. In each case, it is important to distinguish between the AVERAGE propensity and the MARGINAL one. The average propensity to consume is simply total CONSUMPTION divided by total INCOME. The marginal propensity to consume measures how much of each extra dollar of income is consumed: the percentage change in consumption divided by the percentage change in income. The value of the marginal propensity to consume, which determines the MULTIPLIER, is harder to predict than the value of the average propensity to consume.
ECONOMICS abounds with propensities to do various things: consume, save, invest, import, and so on. In each case, it is important to distinguish between the AVERAGE propensity and the MARGINAL one. The average propensity to consume is simply total CONSUMPTION divided by total INCOME. The marginal propensity to consume measures how much of each extra dollar of income is consumed: the percentage change in consumption divided by the percentage change in income. The value of the marginal propensity to consume, which determines the MULTIPLIER, is harder to predict than the value of the average propensity to consume.
20/03/2012
Definition of ‘Securities’
Financial contracts, such as BONDS, SHARES or DERIVATIVES, that grant the owner a stake in an ASSET. Such securities account for most of what is traded in the FINANCIAL MARKETS.
Definition of ‘Shadow price’
The true economic PRICE of an activity: the OPPORTUNITY COST. Shadow prices can be calculated for those goods and SERVICES that do not have a market price, perhaps because they are set by GOVERNMENT. Shadow pricing is often used in COST-BENEFIT ANALYSIS, where the whole purpose of the analysis is to capture all the variables involved in a decision, not merely those for which market prices exist.
Financial contracts, such as BONDS, SHARES or DERIVATIVES, that grant the owner a stake in an ASSET. Such securities account for most of what is traded in the FINANCIAL MARKETS.
Definition of ‘Shadow price’
The true economic PRICE of an activity: the OPPORTUNITY COST. Shadow prices can be calculated for those goods and SERVICES that do not have a market price, perhaps because they are set by GOVERNMENT. Shadow pricing is often used in COST-BENEFIT ANALYSIS, where the whole purpose of the analysis is to capture all the variables involved in a decision, not merely those for which market prices exist.
19/03/2012
Definition of ‘Venture capital’
PRIVATE EQUITY to help new companies grow. A valuable alternative source of finance for ENTREPRENEURS, who might otherwise have to rely on a loan from a probably RISK AVERSE bank manager. The United States has by far the world’s biggest venture capital industry. Some economists reckon that this is why more innovative new firms have become successful there. As legend has it, with a bright idea, a garage to work in and some venture capital, anybody can create a Microsoft. However, the bursting of the dotcom bubble in 2000 threw American venture capital into a severe recession, damaging its reputation for financing profitable innovation.
PRIVATE EQUITY to help new companies grow. A valuable alternative source of finance for ENTREPRENEURS, who might otherwise have to rely on a loan from a probably RISK AVERSE bank manager. The United States has by far the world’s biggest venture capital industry. Some economists reckon that this is why more innovative new firms have become successful there. As legend has it, with a bright idea, a garage to work in and some venture capital, anybody can create a Microsoft. However, the bursting of the dotcom bubble in 2000 threw American venture capital into a severe recession, damaging its reputation for financing profitable innovation.
17/03/2012
Definition of ‘Commoditisation’
The process of becoming a COMMODITY. Microchips, for example, started out as a specialised technical innovation, costing a lot and earning their makers a high PROFIT on each chip. Now chips are largely homogeneous: the same chip can be used for many things, and any manufacturer willing to invest in some fairly standardised equip ment can make them. As a result, COMPETITION is fierce and PRICES and profit margins are low. Some economists argue that in today's economy the faster pace of innovation will make the process of commoditisation increasingly common.
The process of becoming a COMMODITY. Microchips, for example, started out as a specialised technical innovation, costing a lot and earning their makers a high PROFIT on each chip. Now chips are largely homogeneous: the same chip can be used for many things, and any manufacturer willing to invest in some fairly standardised equip ment can make them. As a result, COMPETITION is fierce and PRICES and profit margins are low. Some economists argue that in today's economy the faster pace of innovation will make the process of commoditisation increasingly common.
16/03/12
Definition of ‘Pooled investment’
A pooled investment (also called a collective investment) is one where many people put in different amounts of money into a fund, which is then invested in one asset or a mix of assets such as shares, property, bonds or cash. A professional fund manager picks the investments and chooses when to buy and sell them. The main benefits of pooled investments are that you can spread your risk, choose from a range of different funds and have lower dealing and administration costs.
15/03/12
Definition of 'Personal identification number (PIN)’
This is a unique code number you use, along with a credit, debit or cash card, to authorise transactions such as cash withdrawals from your account(s). It is personal to you and should be kept secret and separate from your card. You can change your PIN.
Definition of 'Personal retirement savings account (PRSA)’
A personal retirement savings account (PRSA) is a type of personal pension policy available from banks, life assurance companies, and through brokers. It is more flexible than a traditional personal pension plan. Anyone up to the age of 75 can take out a PRSA. You don't have to be earning an income to do so.
14/03/12
Definition of ‘Long-term care conversion’
This is a benefit included on some life insurance policies. It gives you the option of converting your life cover to long-term care cover, to ensure that you have money to fund the cost of future care. It is paid out in the form of a cash payment for an agreed period of time.
Definition of 'Investor compensation scheme’
The investor compensation scheme pays compensation, subject to certain limits, to eligible consumers if an authorised investment firm fails. You can get more information about the scheme on the The Investor Compensation Company website.
13/03/12
Definition of ‘Letter of Closure’
If you are closing your credit card you should ask your credit card provider to send you a 'letter of closure' which confirms you have paid the stamp duty on the account. Once you receive this letter you should send it to your new bank to avoid getting charged for stamp duty twice. Your letter of closure is an important document so keep it somewhere safe and before you send it to your new bank, make a copy of it.
12/03/12
Definition of 'Financial Services Ombudsman’
The Financial Services Ombudsman is an indepednent statutory office who deals with complaints from consumers about financial services providers. The FSO only deals with complaints that have not been resolved through your provider. It is a free service to the complainant. Broader issues of consumer protection are the responsibility of the Central Bank.
10/03/12
Definition of ‘Exchange-traded fund (ETF)’
This is an investment fund that tracks the shares of a particular stock market index, such as the top 20 shares quoted on the Irish Stock Exchange. The fund itself is also quoted and traded on the stock market.
Definition of 'Discretionary service’
This is when a stockbroker will invest money on your behalf. The stockbroker does not have to tell you about every trade that is made on your behalf.
09/03/12
Definition of 'Dormant account’
An account on which there has been no transaction for 15 years or more. If this happens, the institution where your account is held will try to contact you to find out what you want to do with the account. Any money not claimed will be transferred to a fund managed by the National Treasury Management Agency (NTMA). The money remains yours and it can be reclaimed at any time, including interest. If you have a dormant account, contact the branch where the account was held. If the institution no longer exists, contact the Irish Banking Federation. Then complete the relevant claim form. If someone has died and you think they had a dormant account, their next-of-kin can reclaim the money in the same way.
08/03/12
Definition of 'Cross-border handling fee’
This is a fee you may have to pay to your credit card provider when using your credit card abroad in a non-euro area. When charged, this fee is typically a percentage of the transaction (it can range from 1% to 3%). These fees can also be known as ‘currency conversion fees'.
Definition of 'Buy-out bond’
If you leave or move jobs, you can transfer the value of your employer pension to an individual fund, where your money grows tax free, until you retire. This fund usually invests in a mix of assets including: property, stock, cash and bonds. You can also choose to transfer the money to a personal pension plan instead.
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07/03/12
Definition of 'Standard excess'
This is the first part of any insurance claim that you have to pay yourself. It is usually a fixed sum. Remember for home insurance a subsidence excess will be a much higher amount (typically €1,000). For motor insurance you may not have to pay any excess on certain types of claim such as windscreen replacement on a motor policy.
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06/03/12
Definition of 'Acceptance Market'
Investment market based on short-term credit instruments. An acceptance is a time draft or bill of exchange that is accepted as payment for goods. A banker's acceptance, for example, is a time draft drawn on and accepted by a bank, which is a common method of financing short-term debts in international trade including import-export transactions.
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05/03/12
Definition of 'Absorbed Account'
An account that has been combined or that has merged with another related account. Accounts are often absorbed into existing accounts as a way of simplifying the accounting process. Once an account has been absorbed the original account will cease to exist, although a paper trail will remain to show how funds have been moved.
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03/03/12
Definition Of 'Passbook Loan'
A personal loan extended to a savings-account holder by the custodial bank. Passbook loans use the balance of the savings account as collateral for the loan. The amount of the loan therefore cannot exceed the savings-account balance.
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02/03/12
Definition of 'Clearance Certificate'
There are many different situations to which a clearance certificate may apply. A business may be required to obtain an income tax clearance certificate when it decides to dissolve. An estate whose assets have a high value may be required to obtain an estate tax clearance certificate when the estate owner dies and the estate's assets are distributed to heirs. A sales tax clearance certificate allows someone purchasing an existing business to ensure that they will not be responsible for any unpaid sales taxes upon becoming the business' new owner.
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01/03/12
Definition of 'Whole of life policy'
This type of life insurance policy covers you for your whole life. It pays out a benefit when you die – whenever that happens – as long as the policy is still in force. The benefit is not usually fixed and can vary over the life of the policy depending on the performance of the investment fund used by the policy. Also, your premiums are not fixed and may increase from time to time, for example every 10 years or so.
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29/02/12
Definition of 'Carrot Equity'
A type of equity where current equity owners can purchase additional equity if the company reaches certain financial goals or benchmarks. Financial goals include certain net income, earnings per share, economic value added and operating cash flow thresholds.
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28/02/12
Definition of 'Dangerous Asset'
An asset which, by its nature, creates a substantial risk of liability to the asset owner. Dangerous assets include commercial real estate, motor vehicles and construction equipment.
Definition of 'Dead Money'
A slang term for money invested in a security with minor hopes of appreciation or earning a return. The stock may also be referred as dead money by analysts, as a warning to investors who might purchase the shares. -------------------------------------------------------------
27/02/12
Definition of 'Carbon Trade'
An idea presented in response to the Kyoto Protocol that involves the trading of greenhouse gas (GHG) emission rights between nations.
Definition of 'Terminal illness'
Insurance companies usually define terminal illness as an illness that is likely to result in a person dying within 12 months.
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25/02/12
Definition of 'Cash Budget'
An estimation of the cash inflows and outflows for a business or individual for a specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular operations and/or whether too much cash is being left in unproductive capacities.
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24/02/12
Definition of 'Balloon Loan'
A type of loan which does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.
Definition of 'Carbon Trade'
An idea presented in response to the Kyoto Protocol that involves the trading of greenhouse gas (GHG) emission rights between nations.
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23/02/12
Definition of 'Debt Management Plan'
A debt management plan is a way of deciding how to repay all your non-priority creditors after giving consideration to your priority payments such as mortgage/rent, council tax, fuel/water bills and other essential expenditure.
Definition of 'Dividend cover'
22/02/12
Definition of 'Index-linking'
Index linking, or indexation, increases the benefit on your life insurance or investment policy automatically every year to make allowances for inflation. Your premium also increases each year to pay for indexation.
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21/02/12
Definition of 'Credit Reference Agency (CRA)'
It allows creditors to share credit-related information to help them lend responsibly. This includes public records (for example, electoral roll entries), credit account information (for example, repayment records for loans, credit agreements, mortgages, or hire purchase) and records of recent credit checks that have previously been requested. CRAs make it possible for lenders to quickly make accurate lending decisions and also helps lenders guard against fraud.
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20/02/12
18/02/12
17/02/12
This is a payment taken from your account by a third party to whom you have given written permission to do so. You may, for instance, give the ESB permission to withdraw variable amounts of money to pay your electricity bill. To stop a direct debit contact the third-party supplier, in this case the ESB, and your bank to let them know you want to cancel the payment.
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16/02/12
Definition of 'Deposit interest retention tax (DIRT)'
This is a tax you pay on any interest you earn for money deposited in a financial institution. Most financial institutions automatically take it from the interest it pays to your account and pass it over to the Revenue Commissioners.
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15/02/12
Definition of 'Death Star IPO'
A company's highly anticipated initial public offering (IPO) that becomes a blockbuster with investors. The Death Star IPO is a reference to the DS-1 Orbital Battle Station, also more popularly know as the "Death Star," from the movie "Star Wars." This planetary weapon had the ability to destroy entire planets with a single beam, resulting in a massive explosion. In the stock market, stocks that have the ability to explode out of the gate are usually highly anticipated tech stocks, although stocks from other sectors can also fit the bill.
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14/02/12
Definition of 'Daily Trading Limit'
The maximum gain or loss on a derivative contract, such as options and futures contracts, that is allowed in any one trading session. The limits are imposed by the exchanges in order to protect against extreme volatility or manipulation within the markets.
Definition of 'Death Valley Curve'
Definition of 'Deal Blotter'
A trader's record of all the transactions executed on a given day. The deal blotter contains basic information pertinent to a transaction, with additional information included on the deal slip. The deal blotter for a forex trader would include both opening and closing currency positions initiated by the trader.
Definition of 'Dangerous Asset'
An asset which, by its nature, creates a substantial risk of liability to the asset owner. Dangerous assets include commercial real estate, motor vehicles and construction equipment.
Risk of personal injury and/or property damage is higher with dangerous assets. For example, a truck, by its mere use, has the potential to cause physical harm to its occupant as well as bystanders.
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11/02/12
Definition of 'Cancellation Of Debt - COD'
When a creditor forgives a debt without requiring consideration in return. The amount of debt that is forgiven by cancellation of debt is considered income to the debtor and must be reported as a result. In most cases, it is taxable as ordinary income and is known as cancellation-of-debt (COD) income.
In some cases, this debt is from one country to another and is partially or fully wiped away to help rebuild the nation.
Definition of 'Daily Average Revenue Trades - DARTs'
A common metric used in the investment brokerage industry that represents the number of trades from which a given broker can expect to generate revenue through commissions or fees on any given day.
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10/02/12
Definition of 'Call Swaption'
Definition of 'Canceled Order'
1. A previously submitted order to purchase or sell a security that is canceled before it has been executed on an exchange.
2. An order that can't be executed due to parameter limitations, such as a limit order that can't be filled because the price has moved outside of range.
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23/02/12
Definition of 'Debt Management Plan'
A debt management plan is a way of deciding how to repay all your non-priority creditors after giving consideration to your priority payments such as mortgage/rent, council tax, fuel/water bills and other essential expenditure.
Definition of 'Dividend cover'
Dividend cover is broadly the number of times the agreed dividend could have been paid out from net profits.It is a good indicator of the company's ability to pay the dividend and also its level of generosity.
---------------------------------------------------------------- 22/02/12
Definition of 'Index-linking'
Index linking, or indexation, increases the benefit on your life insurance or investment policy automatically every year to make allowances for inflation. Your premium also increases each year to pay for indexation.
Definition of 'Terminal illness benefit'
This is a benefit included on some life insurance policies. It means that your life cover will be paid early if you are diagnosed as being terminally ill. In some cases there will be a maximum percentage of life cover that can be paid out on terminal illness, with the balance payable on death.
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21/02/12
Definition of 'Credit Reference Agency (CRA)'
It allows creditors to share credit-related information to help them lend responsibly. This includes public records (for example, electoral roll entries), credit account information (for example, repayment records for loans, credit agreements, mortgages, or hire purchase) and records of recent credit checks that have previously been requested. CRAs make it possible for lenders to quickly make accurate lending decisions and also helps lenders guard against fraud.
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20/02/12
Definition of 'Grant of Probate'
Authority to deal with a dead person's estate. The Grant of Probate is the document which allows the assets of the dead person to be gathered and distributed.
Definition of 'Guaranteed insurability option'
This is a benefit included on some life insurance policies. It means that you have the option to take out additional life cover at certain stages, for example if you have children or your mortgage amount increases, without having to provide evidence of good health.
------------------------------------------------------------18/02/12
Definition of 'Endowment policy'
An endowment policy is an investment plan. You usually pay premiums into it each month, and the money is invested in shares, bonds, property and cash. The aim is to grow the policy value so that after a set number of years, it will be enough to pay off the original mortgage you borrow.
Endowment policy values can fall as well as rise so there is no guarantee the policy will be enough to pay off your mortgage.
-------------------------------------------------------------17/02/12
Definition of 'Direct debit'
This is a payment taken from your account by a third party to whom you have given written permission to do so. You may, for instance, give the ESB permission to withdraw variable amounts of money to pay your electricity bill. To stop a direct debit contact the third-party supplier, in this case the ESB, and your bank to let them know you want to cancel the payment.
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16/02/12
Definition of 'Deposit interest retention tax (DIRT)'
This is a tax you pay on any interest you earn for money deposited in a financial institution. Most financial institutions automatically take it from the interest it pays to your account and pass it over to the Revenue Commissioners.
Definition of 'Deposit protection scheme'
This is a scheme designed to compensate depositors, when a bank, building society or credit union fails, subject to certain limits. ---------------------------------------------------------------------
15/02/12
Definition of 'Death Star IPO'
A company's highly anticipated initial public offering (IPO) that becomes a blockbuster with investors. The Death Star IPO is a reference to the DS-1 Orbital Battle Station, also more popularly know as the "Death Star," from the movie "Star Wars." This planetary weapon had the ability to destroy entire planets with a single beam, resulting in a massive explosion. In the stock market, stocks that have the ability to explode out of the gate are usually highly anticipated tech stocks, although stocks from other sectors can also fit the bill. ---------------------------------------------------------
14/02/12
Definition of 'Daily Trading Limit'
The maximum gain or loss on a derivative contract, such as options and futures contracts, that is allowed in any one trading session. The limits are imposed by the exchanges in order to protect against extreme volatility or manipulation within the markets.
Definition of 'Death Valley Curve'
A slang phrase used in venture capital to refer to the period of time from when a startup firm receives an initial capital contribution to when it begins generating revenues. During the death valley curve, additional financing is usually scarce, leaving the firm vulnerable to cash flow requirements.
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13/02/12
Definition of 'Deal Blotter'
A trader's record of all the transactions executed on a given day. The deal blotter contains basic information pertinent to a transaction, with additional information included on the deal slip. The deal blotter for a forex trader would include both opening and closing currency positions initiated by the trader.
Definition of 'Dangerous Asset'
An asset which, by its nature, creates a substantial risk of liability to the asset owner. Dangerous assets include commercial real estate, motor vehicles and construction equipment. Risk of personal injury and/or property damage is higher with dangerous assets. For example, a truck, by its mere use, has the potential to cause physical harm to its occupant as well as bystanders.
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11/02/12
Definition of 'Cancellation Of Debt - COD'
When a creditor forgives a debt without requiring consideration in return. The amount of debt that is forgiven by cancellation of debt is considered income to the debtor and must be reported as a result. In most cases, it is taxable as ordinary income and is known as cancellation-of-debt (COD) income. In some cases, this debt is from one country to another and is partially or fully wiped away to help rebuild the nation.
Definition of 'Daily Average Revenue Trades - DARTs'
A common metric used in the investment brokerage industry that represents the number of trades from which a given broker can expect to generate revenue through commissions or fees on any given day. ---------------------------------------------------
10/02/12
Definition of 'Call Swaption'
A type of option between two parties that can be exercised on a swap where the buyer of the swap has the right, but not obligation to, receive an agreed upon fixed interest rate. The buyer pays a premium for the right to swap at this fixed rate. Short for a call swap option, a call swaption can be used as a hedging tool to avoid risk if a bond issuer believes interest rates might decrease. Also known as a payer swaption.
Definition of 'Canceled Order'
1. A previously submitted order to purchase or sell a security that is canceled before it has been executed on an exchange.2. An order that can't be executed due to parameter limitations, such as a limit order that can't be filled because the price has moved outside of range.
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09/02/12
Definition of 'Call Money Rate'
Definition of 'Call Protection'
A protective provision of a callable security prohibiting the issuer from calling back the security for a period early in its life.
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08/02/12
Definition of 'Caisse Populaire'
A cooperative, member-owned financial institution that fulfills traditional banking roles as well as diverse activities such as lending, insurance, investment dealing. Caisses Populaires are primarily found in the province of Quebec in Canada, as caisses populaires are essentially the francophone equivalent of a credit union.
Definition of 'Calamity Call'
A call feature of a Collateralized Mortgage Obligation (CMO) designed primarily to reduce the issuer's reinvestment risk. If the cash flow generated by the underlying collateral is not enough to support the scheduled principal and interest payments, then the issuer is required to retire a portion of the CMO issue. Also known as a "clean-up call."
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07/02/12
Definition of 'Cafeteria Plan'
An employee benefit plan that allows staff to choose from a variety of benefits to formulate a plan that best suits their needs. Cafeteria plan options may include health and accident insurance, cash benefits, tax advantages and/or retirement plan contributions.Also known as "cafeteria employee benefit plan" or "flexible benefit plan".
Definition of 'Cabinet Security'
A security that is listed under a major financial exchange, such as the NYSE, but is not actively traded. A cabinet security is traded by an inactive investment crowd, and is more likely to be a bond than a stock.
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06/02/12
Definition of 'Baltic Exchange'
Definition of 'Bag Man'
Any person in charge of organizing and collecting contributions to political parties or funds gathered for political reasons.
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04/02/12
Definition of 'Balloon Loan'
A type of loan which does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.
Definition of 'Balloon Interest'
An increased coupon rate on the longer term maturity instruments within a serial bond issue. In a serial issue, bonds mature at different intervals, creating a string of short- to long-term instruments. Higher interest is earned on the long-term bonds, providing incentive to investors for holding the instrument for an increased period.
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03/02/12
Definition of 'Back-To-Back Letters Of Credit'
Two letters of credit (LCs) used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.
Definition of 'Balloon Maturity'
1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).
2. A final loan payment that is considerably higher than prior payments. This is also known as a "balloon payment."
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02/02/12
Definition of 'B-Share'
A class in a family of multi-class mutual funds. This class is characterized by a back-end load structure that is paid only when the fund is sold.
Definition of 'Baby Berkshire'
Baby Berkshire refers to the 50:1 stock split after the market close on January 20th, 2010 by Berkshire Hathaway Class B shares. This split made the value of each share much smaller as far as price was concerned. At the market close, Berkshire Class B shares were trading at $3,476. The stock split came as a result of Berkshire’s acquisition of Burlington Northern Santa Fe.
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01/02/12
Definition of 'Back-to-Back Commitment'
A commitment to make a second take-out loan that piggybacks another loan. With a back-to-back commitment, once the terms of the first loan are satisfied, it will be rolled into the second loan.
Definition of 'Back Charge'
A billing made to collect an expense incurred in a previous billing period. A back charge may be an adjustment due to an error, or it may be to collect an expense that was not billable until a later period due to timing issues. ---------------------------------------------------------------
31/01/12
Definition of 'Baby Bond'
Definition of 'Back Door Listing'
30/01/12
Definition of 'Backflip Takeover'
Definition of 'Back-to-Back Loan'
A loan in which two companies in different countries borrow offsetting amounts from one another in each other's currency. The purpose of this transaction is to hedge against currency fluctuations. With the advent of currency swaps this type of transaction is no longer used very often.
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Definition of 'Acceleration Principle'
Definition of 'ABC Agreement'
An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may:
a) transfer the seat to another employee of the firm
b) retain ownership and purchase a new seat for another individual designated by the firm
c) sell the seat and transfer any gains to the firm.
Definition of 'Accelerated Share Repurchase - ASR'
A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company. The shares are returned to the client through purchases in the open market, often purchased over a period that can range from one day to several months.
Definition of 'Accelerated Vesting'
A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to receive the monetary benefit from the option much sooner. If a company decides to undertake accelerated vesting, then it may expense the costs associated with the stock options sooner. ----------------------------------------------------------------
Definition of 'Accelerated Depreciation'
Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. ---------------------------------------------------------------------25/01/12
Definition of 'Fixed-For-Fixed Swaps'
An arrangement between two parties (known as counterparties) in which both parties pay a fixed interest rate that they could not otherwise obtain outside of a swap arrangement.
Definition of 'Accommodation Paper'
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24/01/12
Definition of 'Competition-Driven Pricing'
A method of pricing in which the seller makes a decision based on the prices of its competition. Competition-driven pricing focuses on determining a price that will achieve the most profitable market share and does not always mean the price is the same as the competition, it could be slightly lower. Research is done in an attempt to eliminate the competition and it is important to accurately interpret communication signals in order to prevent a price war.
Definition of 'Boom'
A period of time during which sales of a product or business activity increases very rapidly. In the stock market, booms are associated with bull markets, whereas busts are associated with bear markets. The cyclical nature of the market and the economy in general suggests that every strong economic growth bull market in history has been followed by a sluggish low growth bear market.
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23/0/12
Definition of 'Capital Market Line - CML'
A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio.
Definition of 'Cass Freight Index'
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21/01/12
Definition of 'Financial Modeling'
The process by which a firm constructs a financial representation of some, or all, aspects of the firm or given security. The model is usually characterized by performing calculations, and makes recommendations based on that information. The model may also summarize particular events for the end user and provide direction regarding possible actions or alternatives.
Definition of 'Financial Infidelity'
Financial infidelity occurs when couples with combined finances lie to each other about money. For example, one partner may hide significant debts in a separate account while the other partner is unaware. Another common example is when one partner makes large discretionary expenditures without discussing the matter with their partner.
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20/01/12
Definition of 'Financial Risk Manager - FRM'
A financial designation, obtained through the Global Association of Risk Professionals (GARP) by achieving a passing score on the Financial Risk Manager (FRM) examination, having an active membership in GARP and by having two years of experience in financial risk management.
The FRM program and exam, follows the major strategic disciplines of risk management: market risk, credit risk, operational risk and investment management.
Definition of 'Fisher's Separation Theorem'
A theory stating that:
1. A firm's choice of investments are separate from its owner's attitudes towards the investments.
2. It is possible to separate a firm's investment decisions from the firm's financial decisions.
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19/01/12
An arrangement in a merger and acquisition deal that protects the buyer from significant fluctuations in the stock's price, between the time the merger begins and the time the merger is complete. Collar agreements are utilized when mergers are financed with stock rather than cash, which can be subject to significant changes in the stock's price and affect the value of the deal to the buyer and seller.
Definition of 'Fixed-For-Fixed Swaps'
An arrangement between two parties (known as counterparties) in which both parties pay a fixed interest rate that they could not otherwise obtain outside of a swap arrangement.
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18/01/12
Definition of 'Canadian Income Trust'
A type of corporate structure as designated by the Canada Revenue Agency that operates as a profit-seeking corporation. This type of company pays out all earnings to unit holders before paying taxes, and is usually traded publicly on a securities exchange. In 2011 all Canadian income trusts lost their special corporate tax privileges, and were required to be converted into traditional corporate stru
Definition of 'Cheap Money'
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17/01/12
The risk of business cycles or other economic cycles adversely affecting the returns of an investment, an asset class or an individual company’s profits. Cyclical risks exist because the broad economy has been shown to move in cycles – periods of peak performance followed by a downturn, then a trough of low activity. Between the peak and trough of a business or other economic cycle, investments may fall in value to reflect the uncertainty surrounding future returns as compared with the recent past.
Cyclical risk can also be tied to inflationary risks, as some investors consider inflation to be cyclical in nature.
A figure that represents the net number of jobs provided from newly started businesses (births) and business closings (deaths) during a period of time, typically a month in conjunction with government-sponsored jobs reports. Birth-death figures are put out by the Bureau of Labor Statistics (BLS) as part of the monthly employment report; they use a rolling average to determine the monthly total based on historical averages over the past several years.
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16/01/12
Definition of 'Dayrate Volatility'
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15/01/12
09/02/12
Definition of 'Call Money Rate'
The interest rate on a type of short-term loan that banks give to brokers who in turn lend the money to investors to fund margin accounts. For both brokers and investors, this type of loan does not have a set repayment schedule and must be repaid on demand.
Definition of 'Call Protection'
A protective provision of a callable security prohibiting the issuer from calling back the security for a period early in its life. ------------------------------------------------------
08/02/12
Definition of 'Caisse Populaire'
A cooperative, member-owned financial institution that fulfills traditional banking roles as well as diverse activities such as lending, insurance, investment dealing. Caisses Populaires are primarily found in the province of Quebec in Canada, as caisses populaires are essentially the francophone equivalent of a credit union.
Definition of 'Calamity Call'
A call feature of a Collateralized Mortgage Obligation (CMO) designed primarily to reduce the issuer's reinvestment risk. If the cash flow generated by the underlying collateral is not enough to support the scheduled principal and interest payments, then the issuer is required to retire a portion of the CMO issue. Also known as a "clean-up call." ------------------------------------------------------
07/02/12
Definition of 'Cafeteria Plan'
An employee benefit plan that allows staff to choose from a variety of benefits to formulate a plan that best suits their needs. Cafeteria plan options may include health and accident insurance, cash benefits, tax advantages and/or retirement plan contributions.Also known as "cafeteria employee benefit plan" or "flexible benefit plan".
Definition of 'Cabinet Security'
A security that is listed under a major financial exchange, such as the NYSE, but is not actively traded. A cabinet security is traded by an inactive investment crowd, and is more likely to be a bond than a stock. ----------------------------------------------------------
06/02/12
Definition of 'Baltic Exchange'
An exchange that handles the trading and settlement of both physical contracts and derivatives relating to shipping and maritime transportation. The Baltic Exchange provides daily prices for freight, and tracks shipping costs through several indexes. Traders use these indexes to settle forward freight agreements (FFAs), which are freight futures contracts.
Definition of 'Bag Man'
Any person in charge of organizing and collecting contributions to political parties or funds gathered for political reasons. ----------------------------------------------------------
04/02/12
Definition of 'Balloon Loan'
A type of loan which does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.
Definition of 'Balloon Interest'
An increased coupon rate on the longer term maturity instruments within a serial bond issue. In a serial issue, bonds mature at different intervals, creating a string of short- to long-term instruments. Higher interest is earned on the long-term bonds, providing incentive to investors for holding the instrument for an increased period. ----------------------------------------------------------
03/02/12
Definition of 'Back-To-Back Letters Of Credit'
Two letters of credit (LCs) used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.
Definition of 'Balloon Maturity'
1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date). 2. A final loan payment that is considerably higher than prior payments. This is also known as a "balloon payment."
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02/02/12
Definition of 'B-Share'
A class in a family of multi-class mutual funds. This class is characterized by a back-end load structure that is paid only when the fund is sold.
Definition of 'Baby Berkshire'
Baby Berkshire refers to the 50:1 stock split after the market close on January 20th, 2010 by Berkshire Hathaway Class B shares. This split made the value of each share much smaller as far as price was concerned. At the market close, Berkshire Class B shares were trading at $3,476. The stock split came as a result of Berkshire’s acquisition of Burlington Northern Santa Fe. ---------------------------------------------------------------
01/02/12
Definition of 'Back-to-Back Commitment'
A commitment to make a second take-out loan that piggybacks another loan. With a back-to-back commitment, once the terms of the first loan are satisfied, it will be rolled into the second loan.
Definition of 'Back Charge'
A billing made to collect an expense incurred in a previous billing period. A back charge may be an adjustment due to an error, or it may be to collect an expense that was not billable until a later period due to timing issues. ---------------------------------------------------------------31/01/12
Definition of 'Baby Bond'
Fixed income securities issued in small denominations, generally with a maximum face value of $5,000. The small denominations enhance the attraction of baby bonds to the average retail investor.
Baby bonds are now issued mainly by municipalities, counties and states to fund expensive infrastructure projects and capital expenditures. These tax-exempt municipal bonds are generally structured as zero-coupon bonds with a maturity of between eight and 15 years.
Definition of 'Back Door Listing'
A strategy of going public used by a company that fails to meet the criteria for listing on a stock exchange. To get onto the exchange, the company desiring to go public acquires an already listed company.
------------------------------------------------------------30/01/12
Definition of 'Backflip Takeover'
An uncommon type of takeover that occurs when the acquiring company becomes a subsidiary of the acquired company.
Definition of 'Back-to-Back Loan'
A loan in which two companies in different countries borrow offsetting amounts from one another in each other's currency. The purpose of this transaction is to hedge against currency fluctuations. With the advent of currency swaps this type of transaction is no longer used very often. -------------------------------------------------------------
28/01/12
Definition of 'Acceleration Principle'
An economic concept that draws a connection between output and capital investment. According to the acceleration principle, if demand for consumer goods increases, then the percentage change in the demand for machines and other investment necessary to make these goods will increase even more (and vice versa). In other words, if income increases, there will be a corresponding but magnified change in investment. Also referred to as the accelerator principle.
Definition of 'ABC Agreement'
An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may: a) transfer the seat to another employee of the firm
b) retain ownership and purchase a new seat for another individual designated by the firm
c) sell the seat and transfer any gains to the firm.
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27/01/12
Definition of 'Accelerated Share Repurchase - ASR'
A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company. The shares are returned to the client through purchases in the open market, often purchased over a period that can range from one day to several months.
Definition of 'Accelerated Vesting'
A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to receive the monetary benefit from the option much sooner. If a company decides to undertake accelerated vesting, then it may expense the costs associated with the stock options sooner. ----------------------------------------------------------------
26/01/12
Definition of 'Accelerated Death Benefit - ADB'
A benefit that can be attached to a life insurance policy that enables the policy holder to receive cash advances against the death benefit in the case of being diagnosed with a terminal illness. Many individuals who choose the accelerated death benefit have less than one year to live and use the money for treatments and other costs needed to stay alive.
Definition of 'Accelerated Depreciation'
Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. ---------------------------------------------------------------------25/01/12
Definition of 'Fixed-For-Fixed Swaps'
An arrangement between two parties (known as counterparties) in which both parties pay a fixed interest rate that they could not otherwise obtain outside of a swap arrangement.
Definition of 'Accommodation Paper'
A negotiable instrument that provides a third-party promise of payment in the case that the original borrower does not live up to the terms of the original transaction. Accommodation papers are usually used to support one party's creditworthiness through endorsement by a second party with a better credit rating.
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24/01/12
Definition of 'Competition-Driven Pricing'
A method of pricing in which the seller makes a decision based on the prices of its competition. Competition-driven pricing focuses on determining a price that will achieve the most profitable market share and does not always mean the price is the same as the competition, it could be slightly lower. Research is done in an attempt to eliminate the competition and it is important to accurately interpret communication signals in order to prevent a price war.
Definition of 'Boom'
A period of time during which sales of a product or business activity increases very rapidly. In the stock market, booms are associated with bull markets, whereas busts are associated with bear markets. The cyclical nature of the market and the economy in general suggests that every strong economic growth bull market in history has been followed by a sluggish low growth bear market. --------------------------------------------------------
23/0/12
Definition of 'Capital Market Line - CML'
A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio.
Definition of 'Cass Freight Index'
A measurement of the monthly aggregate shipment of freight that is processed by Cass Information Systems. The Cass Freight Index ultimately serves as one of the national indicators of shipping activity. The index itself encompasses over 1,200 divisions of over 400 unique types of companies and manufacturers.
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21/01/12
Definition of 'Financial Modeling'
The process by which a firm constructs a financial representation of some, or all, aspects of the firm or given security. The model is usually characterized by performing calculations, and makes recommendations based on that information. The model may also summarize particular events for the end user and provide direction regarding possible actions or alternatives.
Definition of 'Financial Infidelity'
Financial infidelity occurs when couples with combined finances lie to each other about money. For example, one partner may hide significant debts in a separate account while the other partner is unaware. Another common example is when one partner makes large discretionary expenditures without discussing the matter with their partner. -----------------------------------------------------------
20/01/12
Definition of 'Financial Risk Manager - FRM'
A financial designation, obtained through the Global Association of Risk Professionals (GARP) by achieving a passing score on the Financial Risk Manager (FRM) examination, having an active membership in GARP and by having two years of experience in financial risk management.The FRM program and exam, follows the major strategic disciplines of risk management: market risk, credit risk, operational risk and investment management.
Definition of 'Fisher's Separation Theorem'
A theory stating that: 1. A firm's choice of investments are separate from its owner's attitudes towards the investments.
2. It is possible to separate a firm's investment decisions from the firm's financial decisions.
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19/01/12
Definition of 'Collar Agreement'
An arrangement in a merger and acquisition deal that protects the buyer from significant fluctuations in the stock's price, between the time the merger begins and the time the merger is complete. Collar agreements are utilized when mergers are financed with stock rather than cash, which can be subject to significant changes in the stock's price and affect the value of the deal to the buyer and seller.
Definition of 'Fixed-For-Fixed Swaps'
An arrangement between two parties (known as counterparties) in which both parties pay a fixed interest rate that they could not otherwise obtain outside of a swap arrangement. --------------------------------------------------------------
18/01/12
Definition of 'Canadian Income Trust'
A type of corporate structure as designated by the Canada Revenue Agency that operates as a profit-seeking corporation. This type of company pays out all earnings to unit holders before paying taxes, and is usually traded publicly on a securities exchange. In 2011 all Canadian income trusts lost their special corporate tax privileges, and were required to be converted into traditional corporate stru
Definition of 'Cheap Money'
A loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. Cheap money is good for borrowers, but bad for investors, who will see the same low interest rates on investments like savings accounts, money market funds, CDs and bonds. Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.
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17/01/12
Definition of 'Cyclical Risk'
Cyclical risk can also be tied to inflationary risks, as some investors consider inflation to be cyclical in nature.
Definition of 'Birth-Death Ratio'
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16/01/12
Definition of 'Debt Signaling'
A theory that states that an announcement regarding a firm's debt can be used as a signal of the stock's future performance. A company announcement regarding the issuance of debt is said to signal positive news, while an announcement that states that debt will be taken on at a future date is said to be a negative signal about the company.
Definition of 'Dayrate Volatility'
The intraday unpredictability of an exchange rate (or price of a good or service), that changes due to imbalances in supply and demand. Price levels of various goods or services can change very quickly, depending on the current market condition.
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15/01/12
Accrual Basis
Accounting method that recognizes income and expense as it’s earned or incurred, even though the transaction or activity did not result in an actual cash payment. The alternative to accrual accounting is cash basis accounting.
Acknowledged Fiduciary
A financial advisor who acknowledges he or she is a fiduciary when providing financial advice. This type of advisor has more accountability for the suitability of his or her advice. Some advisors are fiduciaries but refuse to acknowledge it to reduce their personal liability for their advice.
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14/01/12
Active Management
Portfolio managers make investment decisions that result in the purchase and sale of securities. The goal of active management is to beat the returns of passive alternatives, usually index funds. Commonly referred to as beating the market. Active management is the opposite of passive management where portfolio managers match the performance of indexes, but don't try to beat their results
Actuary
Mathematician employed by a pension administration firm or insurance company who calculates pension liabilities, premiums, reserves, dividends, and annuity rates, using risk factors obtained from experience and mortality tables.
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13/01/12
Benchmark
An index or composite of indexes that can be used as a reference point. For example, the Standard & Poors 500 Stock Index is the most commonly used benchmark for comparing the performance of equity portfolios.
Bond Swap
The simultaneous sale of one bond issue and the purchase of another. The reasons for bond swaps vary. For example, a maturity swap would be to sell a bond with a ten year maturity and buy a bond with a five year maturity, thereby reducing that average maturity of a bond portfolio.
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12/01/12
Blue Chip
The common stock of a brand name company that has a long record of profitable growth and/or dividend payments, stable management, and a dominant position in its industry.
Blue Sky Laws
Laws that are passed by states to protect investors from securities fraud. These laws require sellers of new stock issues or mutual funds to register their offerings and provide financial details on each issue so that investors can base their judgments on relevant data.
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11/01/12
Central Registration Depository (CRD)
The National Association of Securities Dealers (NASD) maintains a database of 650,000 representatives who are licensed to sell investments to the public. The database contains the compliance records of the representatives and is accessible to the public. All representatives have CRD numbers that can be used to view their compliance information.
Certified Financial Planner - CFP(r)
A certification that is issued by the College for Financial Planning and the Certified Financial Planner Board of Standards. The program content is very broad and it includes financial, retirement, tax, and estate knowledge.
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10/01/12
Discretionary Income
The amount of income a person earns that is over and above the amount needed to pay for essential goods and services: lodging, food, utilities, etc. Discretionary income drives the purchase of certain products, for example, automobiles, and is used for investment
Dollar Cost Averaging
An investor buys a fixed dollar amount of stock at regular intervals so that more shares are bought at lower prices and fewer are bought at higher prices resulting in a lower overall average cost that is lower than the average price paid for the shares.
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09/01/12
Chartered Financial Consultant (ChFC)
Designation awarded by American College to financial planners who complete a four-year program that covers economics, insurance, taxation, real estate, and other areas related to finance and investing. American College is associated with the insurance industry.
Chartered Life Underwriter (CLU)
Designation granted by American College to insurance agents and other professionals. Designation requires completion of ten college-level courses, three years of qualifying experience, and adherence to a strict code of ethics.
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08/01/12
Closet Indexing
An investment strategy that is based on replicating an index with an actively managed portfolio. This strategy eliminates the risk of underperforming the index, but charges active management fees for an index fund return. Index funds charge substantially lower fees than actively managed funds.
Collectibles
High value objects that are collected by investors. For example: rare cars, stamps, coins, oriental rugs, antiques, Chinese porcelain, baseball cards, photographs, etc. Frequently considered to be a hedge against inflation.
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07/01/12
Less Developed Countries (LDC)
Countries that are not fully industrialized or lack sophisticated financial and legal systems. Sometimes referred to as Third World countries of Emerging Markets. Most LDCs are in Asia, South America, and Africa.
Level Load
A sales charge that is used to pay commissions and does not change over time. Mutual funds that pay level loads are called C Shares. Level loads are a way for a representative to earn continuous commissions from investor assets
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06/01/12
Information Ratio
Variation of the Sharpe Ratio that measures the consistency of a portfolio manager's performance. It is calculated by taking the average excess portfolio return and dividing it by the standard deviation of the excess return.
Know Your Client
An ethical standard for financial advisors. They are required to know their clients well enough that they can make suitable recommendations. Knowing clients well enough includes goals, risk tolerance, current situtation, etc.
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05/01/12
Dow Jones Industrial Average (DJIA)
The oldest and best known stock market index that measures the price changes of 30 large capitalization stocks.
Enhanced Indexing
An indexing strategy that uses refinements to exceed the performance of the index by small margins. For example, an index fund manager may select stocks that produce higher income to increase the income return of the fund versus the index.
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04/01/12
Geographic Risk
The investment risk that occurs when all or a high percentage of an investor's assets are concentrated in one country or one region of the world.
Growth at a Reasonable Price
Describes a strategy for purchasing stocks at reasonable prices in relation to historical prices, P/Es, book value, dividends and multiples of cash flows. Investors reduce their exposure to risk by not overpaying for securities.
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22/12/11
Group Rotation
The tendency of stocks in the same industry to perform similarly - group behavior. Money managers attempt to identify hot and cold groups and "rotate" money in and out of the groups.
Growth Stock
A stock of a company that has revenue and earnings that are growing faster than other companies in the same industry group. Growth companies reinvest earnings in the company to fuel faster, future growth and don't pay out earnings to investors in the form of dividends. Investors buy growth stocks for appreciation and not income.
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21/12/11
Hard Dollars
A reference to the way money managers pay for services. Hard dollars is the use of cash to pay for services. The alternative is soft dollar payments, that is pay for services with commissions that are generally derived from the trading of securities.
Hedge Fund
A pooled investment, organized as a limited partnership, that invests in any type of security that can make money for the owners of the fund. This flexibility is a major difference between a mutual fund and a hedge fund. Another difference is the lack of regulatory oversight for hedge funds compared to mutual funds. Most hedge funds also have relatively high investment requirements
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20/12/11
Portfolio Beta
Used to measure the relative volatility of a portfolio. The market has a beta of 1. Portolios with betas of more than one are considered to be more volatile than the market. Portfolios with betas of less than one are considered to be less volatile than the market. Beta has no predictive value so it should be used to compare the volatility of funds to each other.
Prudent-Man Rule
A standard of care that has been adopted by pension plans and trusts. For example, when making investment decisions, decision-makers must do what a prudent people would do given the same information. For example, trustees of retirement plans are expected to act with prudence when they select Fiduciary Advisors.
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19/12/11
Real Rate of Return
The rate of return an investor would receive after inflation, usually the CPI, is deducted from gross performance. For example, a gross return of 10% less 3% for inflation would produce a real return of 7%. Real return is important for long-term investors so they make sure they protect the purchasing power of their money.
Real Estate Investment Trust (REIT)
A company organized to pool investors' funds and buy, develop, and sell real estate. REIT mutual funds are the most common form of investment for individuals.
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18/12/11
Soft Dollars
Commission proceeds from the purchase or sale of securities that money managers use to pay for research and other services.
Spiders (SPDRs)
A nickname for a Standard & Poor's 500 depository receipt (SPDR). An investment product that represent a proportionate interest in the stocks in the Standard & Poor's 500 Stock Index.
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17/12/11
12-b-1 Fee
Some mutual funds assess this fee to shareholders to recover costs they incur for marketing the fund to new investors. The fee is frequently used to pay selling commissions to custodians and financial representatives.
Watch List
Money managers and others have watch lists of securities and other investments that contain the names of companies that have exhibited problems. These stocks are "watched" more closely than the stocks of companies that haven't exhibited the same weaknesses.
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16/12/12
Contingent Deferred Sales Charge (CDSC)
Sales charges associated with the early sale of investment products that were sold with back-end loads. For example, if a person invested in a back-end loaded mutual fund with a seven year CDSC period, then sells the product in the first year, the investor is liable for a 7% penalty that is deducted from assets. The penalty declines 1% per year over a seven year period. CDSCs are designed to discourage investors from selling investments before the product company can recover the commissions that are paid to sales representatives.
Contrarian
An investor or professional who invests in out of favor securities. Contrarians buy stocks when they are cheap in relation to other stocks. This investment strategy is the equivalent of betting against the herd instinct that dominates the thinking of most investors.
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15/12/11
Deep Discount Bond
A longer term bond that has a low interest rate in relation to current rates. Consequently, the bond trades at a substantial discount to its par value.
Defensive Stock
A stock whose price stays stable or declines less in a falling market because demand for its product doesn't decline in a slowing economy. For example, the stocks of utilities and food companies are defensive because people still use electricity and buy food in down markets, but they may defer the purchase of a new car.
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14/01/12
Charitable Remainder Trust
An irrevocable trust that enables donors to make a future gift to charity and take current tax deductions. It is the only provision in the tax code that allows investors to sell appreciated property tax free. Donors receive income from the trust, usually until the death of the surviving spouse, then the principal reverts to the charity of the donor's choice. Donors are supposed to be motivated by philanthropy and not tax avoidance.
Chartered Financial Analyst - CFA(r)
A designation that is awarded by the CFA Institute. Subject matter takes three years to complete and includes economics, financial accounting, portfolio management, security analysis, and standards of conduct. Three complex examinations must be passed to earn the designation.
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30/11/11
What Does Portfolio Income Mean?
Income from investments, dividends, interest, royalties and capital gains. Portfolio income does not come from passive investments and is not earned through normal business activity. Typically, income from interest on money that has been loaned does not count as portfolio income.
What Does Capital Gains Tax Mean?
A type of tax levied on capital gains incurred by individuals and corporations. Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price.
Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold.
Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold.
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29/11/2011
What Does Accumulation Bond Mean?
A bond issued at an original issue discount (OID). This means that the interest accumulates but is not paid until maturity; there are no semi-annual coupon payments as with most bonds.
These bonds are also referred to as "accrual bonds."
These bonds are also referred to as "accrual bonds."
What Does Credit Crunch Mean?
An economic condition in which investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, which drives up the price of debt products for borrowers.
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28/11/2011
What Does Bond ETF Mean?
A type of exchange-traded fund (ETF) that exclusively invests in bonds. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. Bond ETFs trade like stocks and are passively managed.
A type of exchange-traded fund (ETF) that exclusively invests in bonds. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. Bond ETFs trade like stocks and are passively managed.
What Does Index Fund Mean?
A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
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25/11/11
What Does Conveyance Tax Mean?
A tax imposed on the transfer of real property at the state or municipal level. The conveyance tax is generally calculated as a percentage of the sale price. If the property is sold for a very low amount, or transferred for free (such as between family members), it may be exempt from any conveyance tax, although estate transfer taxes may apply.
What Does Global Fund Mean?
A type of mutual fund, closed-end fund or exchange-traded fund that can invest in companies located anywhere in the world, including the investor's own country. These funds provide more global opportunities for diversification and act as a hedge against inflation and currency risks
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23/11/2011
What Does Farm Credit System - FCS Mean?
The Farm Credit System is a nationwide network of cooperative banks and associations that provide credit to farmers, agricultural concerns and related businesses. It was created by Congress in 1916 and was originally funded by the federal government to ensure American agriculture had a dependable source of credit. It is now self-funding and owned by its member-borrowers.
What Does Beta Mean?
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns..
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12/11/2011
What Does Buy And Hold Mean?
A passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.
What Does Elephants Mean?
Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants deal in, any investment decisions that they make will have a large influence on the price of the underlying financial asset.
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11/11/ 2011
What Does Blue Month Mean?
The month during which there is the greatest trading activity in derivatives trading. These derivatives can be options, futures, or other type of derivative-based instruments. The occurrence of a blue month is typically of interest to hedge funds and large financial institutions because the volume of derivative trading can be used as a technical trading signal.
What Does Bull Market Mean?
A financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.
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10/11/2011
What Does Activist Investor Mean?
An individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change in the company. A company can become a target for activist investors if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the activist investor believes it can fix to make the company more valuable
What Does Activist Investor Mean?
An individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change in the company. A company can become a target for activist investors if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the activist investor believes it can fix to make the company more valuable
What Does Active Investing Mean?
An investment strategy of involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.
An investment strategy of involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.
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09/11/2011
EVA = Economic Value Added
After-tax profit that exceeds the required minimum return on capital. Computed by deducting the cost of capital(both debt and equity) from the after-tax profit, it is said to be the best measure of the true profitability of an enterprise, and is tied to cash flow and not to earnings per share (EPS). EVA is a registered trademark of the US firm, Stern Stewart & Company.
IPO
Initial public offering. The first time a company issues shares and lists on the stock exchange is known as an IPO, new share issue or flotation.
IVA
Individual Voluntary Arrangement. A legally binding repayment agreement between debtor and creditors. Usually seen as preferable to bankruptcy.
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1/11/2011
NASDAQ
The National Association of Security Dealers Automated Quotation is the largest US stock market in terms of companies listed and number of shared traded. Launched in 1971, NASDAQ is home to more than 82% of all the technology listings in the US. It is operated by the NASDAQ Stock Markets Inc, a wholly owned subsidiary of the National Association of Security Dealers.
PLUS
The PLUS market is a prescribed market under Section 118 of the Financial Services and Markets Act 2000. It provides a secondary market for the trading of unlisted and unquoted securities in the UK off exchange. It can provide a stepping stone for young companies to Aim or Full Listing.
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30/10/2011
Fiscal Deficit
Fiscal deficit is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
MAT
This is the minimum alternative tax, a minimum tax that a company must pay, even if it is under zero tax limits.
Fiscal deficit is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
MAT
This is the minimum alternative tax, a minimum tax that a company must pay, even if it is under zero tax limits.
Treasury bill
A short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value
A short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value
at maturity is the amount of interest.
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29 /10/2011
Commodity Stock market
A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock(shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion at the start of October 2008.The total world derivatives market has been estimated at about $791 trillion face or nominal value,11 times the size of the entire world economy.
The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The largest stock market in the United States, by market capitalization, is the New York Stock Exchange (NYSE). In Canada, the largest stock market is the Toronto Stock Exchange.
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28/10/2011
Top 3 Finance service Companies in India
SBI Capital Markets Limited:
This happens to be the oldest organizations in the sphere of capital markets in India. Established in 1986 in the form of an ancillary of SBI, they have ranked second in Asia's Project Advisory services. The company is a traiblazer in privatization and securitization. The subsidiaries of SBI Capital Markets are SBICAPs Ventures Ltd., SBICAP Trustee Co.Ltd. and many others.
This happens to be the oldest organizations in the sphere of capital markets in India. Established in 1986 in the form of an ancillary of SBI, they have ranked second in Asia's Project Advisory services. The company is a traiblazer in privatization and securitization. The subsidiaries of SBI Capital Markets are SBICAPs Ventures Ltd., SBICAP Trustee Co.Ltd. and many others.
Bajaj Capital Limited:
One of the major financial services companies in India, Bajaj Capital offers best investment advisory and financial planning services. The services are meted out to the institutional investors, NRIs, corporate houses, individual investors, high network clients as well.
One of the major financial services companies in India, Bajaj Capital offers best investment advisory and financial planning services. The services are meted out to the institutional investors, NRIs, corporate houses, individual investors, high network clients as well.
DSP Merrill Lynch Limited:
A major player in the equity and debt market in India, DSP Merrill Lynch offers financial advises to varied corporations and institutions. With an array of wealth management and investor services, their services are customized in a manner that they meet every investor requirement.
A major player in the equity and debt market in India, DSP Merrill Lynch offers financial advises to varied corporations and institutions. With an array of wealth management and investor services, their services are customized in a manner that they meet every investor requirement.
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27/10/11
RBI allows banks, non banking financial companies to set up infrastructure debt funds
India's central bank will allow banks and non banking financial companies (NBFCs) to set up Infrastructure Debt Funds (IDFs) to accelerate and broaden the funding sources for the country's huge infrastructure spend plans.
India's top state-run infrastructure financing company India Infrastructure Finance plans to set up an IDF and has chosen to take the NBFC route."They are targeting above 5000 crore ($1 billion.This money will be raised through various investors like Life Insurance Corp, banks, our own contribution and we may rope in some foreign investors who can give some long-term investments for this debt-fund." The NBFC should continue to maintain the required level of NOF after accounting for investment in the proposed fund,” RBI said. If the debt fund is in the form of an NBFC, the bank or the NBFC floating the fund will have to contribute a minimum equity of 30% and a maximum of 49%.
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26 /10/2011
World bank
The World Bank is one of five institutions created at the Bretton Woods Conference in 1944. The International Monetary Fund, a related institution, is the second. Delegates from many countries attended the Bretton Woods Conference. The most powerful countries in attendance were the United States and United Kingdom, which dominated negotiations.Although both are based in Washington, D.C., the World Bank is, by custom, headed by an American, while the IMF is led by a European
The World Bank is an international bank that lends money and other help to developing nations for infrastructure. The World Bank has the goal of reducing poverty.The World Bank is different from the World Bank Group, because the World Bank is made up of only two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank Group has these two, but also three more. International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
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15/10/2011
Cash flow
Sometimes called working capital, cash flow is the business's ability to pay for things. The ability to draw on financial reserves to finance opportunities as well as to protect against downturns is essential. The best example depicted in personal terms is the monthly relationship an employee has with net income and monthly outgoings. Cash flow would be said to be very tight if a £2,000 net family income had to cover £1,800 worth of fixed outgoings. Clearly, an increase in mortgage rate for
example, would leave this family exposed and with little cash left over for day-to-day living. Cash flow can be measured on the balance sheet of a company by looking at the relationship between current assets and current liabilities. As a rule a business with considerably more current assets than current liabilities will have better cash flow.
Net profit percentage
The profit a business makes after tax has been paid, expressed as a percentage of the company's total turnover. Therefore a business with a turnover of £10,000,000 making £200,000 net profit would be making a net profit return of 2%.
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8/10/2011
Equity %
The level of shareholders' equity in a business. Generally speaking, a strong equity position is desirable. Take the example of the house above. Most of us would willingly accept that it's better to own more of it than less of it. The key to understanding equity lies in understanding the relationship between ownership and debt. In the example of the house, the owner has a 41.7% equity percentage. The house cost £120,000, the mortgage debt is £70,000 total, therefore the householder owns £50,000 of the house's value. Expressed as a percentage of the house's value, we arrive at the equity %. Exactly the same logic applies to business equity measurement.
Gearing ratio
This is another way of looking at equity. It's all about how much a company owns of itself, set against how much it borrows. Again, looking at the house ownership example, if you divide the total shareholders' stake into the value of total liabilities, it goes 3.79 times; or, to express it in financial terminology, it is geared 3.8:1.
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7/10/2011
HDFC Mutual Fund
The HDFC mutual fund that was approved by SEBI in June 2000 offers Equity Funds, Balanced Funds, and Debt Funds schemes. HDFC Mutual Fund has witnessed significant growth in the past few years. It is regulated by HDFC Asset Management Company Limited which is a Joint Venture between India’s largest housing finance company HDFC and British investment firm Standard Life Investments Limited. The HDFC Asset Management Company Limited manages the assets of various mutual fund schemes and has assets over Rs. 25000 crores.
Tata Mutual Fund
ABN AMRO Bank, N.V. and Dutch Bank are the other custodians of Tata Mutual Fund and that speaks volumes for its reliability. It is widely acknowledged that Tata Asset Management Limited is one of the most rapidly growing fund management firms in India and the AMC of Tata Mutual Fund has consistently performed well and provided ample returns to its investors. Tata Mutual Fund offers a wide range of investment products for both institutional and individual investors and has assets exceeding Rs. 13000 crores.
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7/8/2011
Commercial bank
An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.
Name of the Chairman/MD
Allahabad Bank J.P.Dua
Andhra Bank R.Ramachandran
Bank of Baroda M.D.Mallya
Bank of India Alok Kumar Mishra
Bank of Maharashtra Anup Sankar Bhattacharya
Canara Bank S.Raman
Central bank of India M.V.Tanksale
Corporation Bank Ramnath Pradeep
Dena Bank D.L.Rawal
IDBI Bank R.M.Malla
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6/8/2011
TOP Mutual Fund COMPANY
ICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI Bank, India’s second largest commercial bank & a well-known and trusted name in the financial services in India, & Prudential Plc, one of the United Kingdom’s largest players in the financial services sectors.
Average Assets under Management (AAUM) as on Mar 2011 Month-end in Mutual Fund Schemes stood at Rs. 73551.95 Crores. As an Asset Management Company, They have over 15 years of experience and are currently managing a comprehensive range of schemes of more than 46 Mutual funds and a wide range of PMS (portfolio mgt service)Products for our investors, spread across the country. They service this investor base with our own branch network of over 160 branches and a distribution reach of over 42,000 channel partners.
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04/08/2011
Top public bank
Allahabad Bank is the oldest public sector bank in India with branches all over India. Allahabad Bank India was established in the year 1865. Apart from serving to domestic customers, Allahabad Bank NRI section also provides a wide range of attractive Deposti Schemes to Non-Resident Indians.
Allahabad Bank gives an exclusive service for outstation cheques. Bank of Allahabad guarantees 7 Days outstation cheques to be credited from its 180 locations.Allahabad Bank has more than 1800 branches all over the country. In Uttar Pradesh alone Allahabad Bank has approximately 600 branches and approximately 500 in West Bengal. Allahabad Bank also has 7 days banking branches.
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29/07/2011
Seeding fund
Seed money, sometimes known as seed funding, friends and family funding or angel funding (and sometimes also as venture capital), is a securities offering whereby one or more parties that have some connection to a new enterprise invest the funds necessary to start the business so that it has enough funds to sustain itself for a period of development until it reaches either a state where it is able to continue funding itself, or has created something in value so that it is worthy of future rounds of funding. Seed money refers to the money invested. New seed money options are also emerging from crowd funding.
Seed money is typically used to pay for such preliminary operations as market research and product development. Investors are often the business founders themselves, using savings, mortgage loan proceeds, or funds borrowed from family and friends.
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28/07/ 2011
MUTHOOT FINANCE LTD
Chairman :M G George Muthoot
MD: George Alexander Muthoot
Muthoot Finance Ltd. the largest gold financing company in the country in terms of loan portfolio, has recorded a growth of 125% in its net profit to Rs 190 crore for the quarter ended June 30, 2011. The total income of the company touched Rs 920 crore showing a growth of 140%. The retail loan assets under management increased by Rs 2080 crore to Rs 17,949 crore. The EPS went up by 198.89% to Rs 5.39.
The interest income to average retail loans assets under management stood at 21.63% and interest expense to average retail loans assets under management stood at 10.43%. The capital adequacy ratio touched 19.19 and return on average retail loan improved to 4.51% .
The minimum subscription will be Rs 5000 and thereafter in multiples of Rs 1000. The company, they said, will have to fix the interest rate in the background of recent hike in key rates by RBI.
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23/07/2011
IBO (Institutional buy-out)
Where a financial institution acquires a business and installs its own management. Slightly different from a bought deal, where an institution negotiates the acquisition of a business with a view to handing it over to an MBO or MBI team.
Instrument -
Sometimes used to describe a particular type of loan or share capital.
Intermediary -
Advisers that bring together the principals in a deal or prospective deal. They are usually accountants, other corporate advisers and merchant bankers.
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21/07/2011
Credit and Investment Corporation of India
CEO: Chanda Kochhar
ICICI Bank Limited is the second largest financial service company headquartered at Mumbai, India. It ranks second in term of sales and total assets. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. Total assets are us$117.589 billion in 2011.
ICICI Bank first Indian bank to list on the New York Stock Exchange with its 5-million American depository shares issue generating a demand book 13 times its size at 2 billion.
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20/07/2011
“ With You - All the way”
Chairman: Mr. O.P. Bhatt
State Bank of India (SBI)) is the largest Indian banking and financial services company its headquarters in Mumbai, India. It is state-owned. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India
The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas.
With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institution in the world
The State Bank of India is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010.
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19/07/2011
RBI
Governor of RBI: D. Subbarao
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion (2011) of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934 and plays an important part in the development strategy of the government. It is a member bank of the Asian Clearing Union.
The Central Board of Directors is the main committee of the central bank. The Government of India appoints the directors for a four-year term. The Board consists of a governor, four deputy governors, four directors to represent the regional boards, and ten other directors from various fields.
The Reserve Bank of India is the main monetary authority of the country and beside that the central bank acts as the bank of the national and state governments. It formulates implements and monitors the monetary policy as well as it has to ensure an adequate flow of credit to productive sectors.
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8/07/2011
HDFC
We understand your world
CEO: Aditya Puri
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies.
Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000 crore and net advances of about Rs.89,000 crore. The balance sheet size of the combined entity is more than Rs. 1, 63,000 crore.
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16/07/2010
BAJAJ ALLIANZ
'Power on Your Side'
CEO: Mr. Kamesh Goyal
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Financial service Limited and Allianz .
Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration on 2 May 2001 to conduct General Insurance business in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Finservice Limited holds 74% and the remaining 26% is held by Allianz
As of 2011, it was the world's 12th-largest financial services group and 23rd-largest company. Allianz is an insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth worldwide with 115 years of financial experience in over 70 countries.
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15/07/2011
[Hong Kong and Shanghai Banking Corporation]
“The world's local bank”
CHARMAIN: DOUGLAS FLINT
CEO : STUART GULLIVER
HSBC INDIA CEO: Stuart Davis
HSBC is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. As of 2011[update], it was the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine. It has around 7,500 offices in 87 countries and territories across Africa, Asia, Europe, North America and South America and around 100 million customers. As of 30 June 2010, it had total assets of $2.418 trillion, of which roughly half were in Europe, a quarter in the Americas and a quarter in Asia. HSBC's primary listing is on the London Stock Exchange and it is a constituent of the FTSE 100 Index. It has secondary listings on the Hong Kong Stock Exchange, the New York Stock Exchange, Euronext Paris and the Bermuda Stock Exchange. As of August 2010, it was the largest company listed on the London Stock Exchange, with a market capitalization of £115.8 billion.
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7/07/2011
RBI
The RBI has raised repo rate nine times since March 2010 by 250 basis points. The wholesale price index, India's main inflation gauge, rose an annual 9.06 percent in May, above the median forecast for an 8.70 percent rise in a Reuters poll and the April figure of 8.66 percent.
Two respondents in the poll expect the key lending rate to be maintained at 7.25 percent on June 16.The RBI has projected the economy to grow at around 8 percent in the fiscal year ending in March 2012.
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18/06/2011
Exit fee
The cost incurred for paying off a loan in full, typically incurred when clearing or changing yourmortgage.
Can also apply when selling an investment such as a mutual fund or an annuity.
According to mortgage lenders, exit fees cover the costs of things like releasing the deeds to your house.
Most mortgage lenders set a fixed fee but they can vary wildly - from £50 to around £250.
Can also apply when selling an investment such as a mutual fund or an annuity.
According to mortgage lenders, exit fees cover the costs of things like releasing the deeds to your house.
Most mortgage lenders set a fixed fee but they can vary wildly - from £50 to around £250.
Exchange traded fund
ETFs are listed as shares on a stock market but are, in effect, investment funds. These funds are usually low-charging tracker funds, replicating a particular index. In the UK, Barclays Global Investors offers the only ETFs at present, known as iShares.
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17/06/2011
Fund manager
The expert running a unit trust, investment trust or pension fund who decided what shares, bonds or gilts the fund should buy or sell.
Ex-marker dates
Ex-marker dates refer to ex-dividend dates. It is the period from when a share begins to trade ex-dividend through to the date the its dividend is paid.
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16/06/2011
Final salary
A pension where the amount you get is worked out on the basis of how much you earn in the last (or last few years) of service and your length of service.
Financial Services Authority
The Financial Services Authority is the main City regulator whose job is to protect investors' interests.
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15/06/2011
VAT
Different rates of VAT apply to different goods and services. There are normally three rates - the standard 17.5%, a reduced rate charged at 5% and zero rate. VAT could be theoretically applied to the goods in the latter category, but the Government chooses not to do so at present. There is a separate category of items, known as 'exempt', which are not covered at all by the VAT regime. They have been kept out for various historical reasons.
Stamp duty
A tax on the purchase of shares - at 0.5% of the value - and on the purchase of property. For shares the tax is a flat rate. As for residential property, there is a range of tax rates applied at different thresholds. See our Mortgage Guides for the latest information.
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14/06/2011
IPO
Initial public offering. The first time a company issues shares and lists on the stock exchange is known as an IPO, new share issue or flotation.
IVA
Individual Voluntary Arrangement. A legally binding repayment agreement between debtor and creditors. Usually seen as preferable to bankruptcy.
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13/06/2011
Cash cow
Any business venture or product which is a dependable and ongoing source of income.
CBI
Confederation of British Industry, the UK's leading employers' organization.
Central bank
A country's principal monetary authority which prints, issues and manages that nation's currency.
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10/06/2011
Basic state pension
This is a government-administered pension, based on the number of qualifying years gained through National Insurance contributions (NICs) you've paid or credited with throughout your working life.
Bear market
One where share prices are falling.
Bull market
One in which share prices are rising
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8/06/2011
Retail Prices Index
No longer the official measure of inflation, but still used when uprating pensions and other state benefits.
Return on Equity
A company's net profits divided by shareholders funds, expressed as a percentage, which gives a clearer insight into the profitability of a company and makes comparison between companies easier. However it does not take the company's debt into acc
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7/06/2011
Recession
Technically, a recession is where a country's economy shrinks for two consecutive quarters (equivalent to six months) as measured by GDP. On a more tangible level, President Harry Truman defined it thus: 'It's a recession when your neighbor loses his job; it's a depression when you lose your own
Oil sands
Possibly one of the last frontiers for oil extraction. The oil is a thick type of bitumen caked in tons of sands and the large cost of extracting and processing it is only viable with triple-digit oil prices. Canada is particularly rich in these deposits.
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6 June 2011
Smart card
A plastic card, such as a credit card, which has a microchip embedded within it instead of the traditional magnetic strip.
Stamp duty
A tax on the purchase of shares - at 0.5% of the value - and on the purchase of property. For shares the tax is a flat rate. As for residential property, there is a range of tax rates applied at different thresholds. See our Mortgage Guides for the latest information.
Audit
Each company is obliged by law to produce their own accounts and publish them at Company's House every year.
If a company is above a certain size, they are required to also file an audited statement. This statement is carried out by a third party auditor and is essentially a report on whether the annual accounts provided give a 'true and fair' reflection of the company's performance.
They also assess whether the company has used the correct accounting standards
If a company is above a certain size, they are required to also file an audited statement. This statement is carried out by a third party auditor and is essentially a report on whether the annual accounts provided give a 'true and fair' reflection of the company's performance.
They also assess whether the company has used the correct accounting standards
Asset turnover
This is a measure of sales and how efficiently a company uses its assets. The figure is calculated by dividing net sales by total assets. The higher the figure, the better. It is useful to compare these figures over time, and other companies in the same industry.
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2/06/2011
Assurance
Life insurance this is a contract between the policy owner and the insurer, whereby the insurer agrees to pay a sum of money in the occurrence of the policy owner's death. To obtain this agreement, the policy holder will pay a regular interval or lump sum (called a premium) to the insurer.
Trading range
A trend spotted by technical analysts. This is where a market index, share or commodity forms a pattern by trading within a familiar range. i.e. between a support level and a resistance level.
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26/05/2011
Rights issues
Extra issues of shares designed to raise more cash for a company.
Registrar
The organisation that keeps a record of individual shareholders and information, such as dividend payment dates.
Gross national product
The value of all goods and services produced in a year.
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21/05/2011
Dividend
The payout from shares. Expressed in pennies. Most shares pay an interim and final dividend. A share on This Is Money with 'xd' next to it has gone ex-dividend.
Discount mortgage
A mortgage where you get a fixed cut of the lender's normal rate. The cut is fixed for the period, but you could still pay more if the lender's rate rises
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20/05/2011
Tax code
A mixture of letters and numbers used by employers to take tax from the wage packets of people paid under the pay-as-you-earn system. The code is calculated by adding up all your allowances and then taking away the deductions from this total, such as tax on perks. The Inland Revenue takes the first three numbers of the result and adds a letter referring to your status. The first three figures of the code followed by zero is what you can earn each year before paying tax.
Tax efficient
An investment that is designed to take advantages of tax breaks. This is a good idea, but investing solely to take advantage is unwise. Better to keep an eye on the big picture and ask yourself whether you would invest if the tax break were not there.
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18/05/2011
Bank rate
The main interest rate in the economy, set by the Bank Of England, upon which others rates are based. Previously known as the base rate, it has been known as the bank rate since 2007.
Book-keeping
The process or recording and maintaining a company's financial transactions. This is the starting point of the accounting process.
Gross domestic product
The total value of all goods and services produced domestically in a year. It is the same as gross national product with net investment from abroad taken out.
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16/05/2011
Accident insurance
Accident insurance is private insurance which enables the policy holder to receive a payout in the event of an accident or injury.
You can also take out ASU insurance – which is accident, sickness and unemployment insurance. Generally, the insurer will pay out for a limited period – normally 12 to 24 months.
You can also take out ASU insurance – which is accident, sickness and unemployment insurance. Generally, the insurer will pay out for a limited period – normally 12 to 24 months.
Accidental death insurance
This type of policy provides a financial pay out in the event of death due to accidents but not illness, murder or suicide. In the event of death, a lump sum is paid out to the beneficiary
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12/05/ 2011
Accrual rate
The rate at which pension benefits build up each year in a final salary pension. Pension holders receive a certain amount for each year of pensionable service, usually expressed as a fraction or a percentage of the final salary. The pension benefits at retirement age will increase as the length of service increases.
Accrued interest
This is the amount of interest that has accumulated on an investment over time.
For example, if you have an investment of £100 at 10% annual interest, you would have accrued half of the interest after six months, or 5%.
For example, if you have an investment of £100 at 10% annual interest, you would have accrued half of the interest after six months, or 5%.
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11/05/2011
AIM
The London Stock Exchange's Alternative Investment Market which provides an alternative route for smaller companies seeking a listing.
Angel
A wealthy individual who invests in entrepreneurial firms or a successful entrepreneur, who has built up a business, sold it and now brings not just money but experience to a young developing business.
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10/05/2011
Treasury bill
A short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value at maturity is the amount of interest.
A short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value at maturity is the amount of interest.
Pump Priming
A stimulating monetary or fiscal policy to set in motion an expansionary multiplier process. Regressive Tax
A tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax.
A stimulating monetary or fiscal policy to set in motion an expansionary multiplier process. Regressive Tax
A tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax.
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29/04/2011
Revenue Receipts
Revenue receipts consist of tax collected by the government and other receipts consisting of interest and dividend on investments made by government, fees and other receipts for services rendered by government.
