Banking Marketing Aptitude Economics Economic Glossary & Acronyms

Economics and Glossary & Acronyms

 

Capital Budget: Capital budget consists of investment in shares and loans and advances granted by the Central government to State governments government companies, corporations and other parties. It includes capital receipts and capital payments.

 

Budget Deficit: Budget deficit occurs when the spending of a government exceeds that of its financial savings. It can be happen when the government does not plan its expenses, after taking into account its entire savings.

 

Fiscal Deficit: Fiscal deficit is the gap between the sum of its revenue receipt a non-debt capital receipts and Government's total expenditure,

 

Dumping: Dumping is an informal name for the practice of selling a product a foreign country for less than the price in the domestic country or the cost of" making the product.

 

Call Money: Call money is a short term money market instrument which allows for large financial institutions such as franks, mutual financial corporations to borrow and lend money at interbank rates.

 

Micro Finance: Microfinance is instrument for women economic empowerment in rural areas. It provides credit facilities to rural poor, particularly to wear with any corresponding guarantee for operating productive activities.

 

Initial Public Offer (IPO): When a company issues an initial share in primary market, it is called IPO.

 

Follow on Public Offer (FPO): When. A company issues a share more than one time in initial market, it is called FPO.

 

Hot Money:  Hot money refers to funds which flow in a country to take advantage of favorable interest rates. Hot money is highly volatile and is shifted to another market as interest rate change.

 

Flat Money: Fiat money is a type of money which is issued without being backed by any tangible assets such as gold, silver etc. Value of fiat money depends totally on confidence and expectation of the economy.

 

Permanent Account Number; PAN is a unique number issued by the income tax department to their taxpayers. A taxpayer has to mention this PAN in the tax return filed every year.

 

Multinational Company (MNC); An MNC is a large scale company which has its production base in several countries and the bulk of the production is produce in outside nations.

 

Subsidy: Subsidy is a payment by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor.

 

Acquisition: The acquiring of control of one corporation by another. In "unfriendly" takeover attempts, the potential buying company may offer a price well above current market values, new securities and other inducements to stockholders. The management of the subject company might ask for a better price or try to join up with a third company.

 

Active Market: This is a term used by stock exchange which specifies the particular stock or share that deals in frequent and regular transactions. It helps the buyers to obtain reasonably large amounts any time.

 

Amalgamation:  It means 'merger⁷. As and when the necessity arises two or more companies are merged into a large organization. The old firms completely lose their identity when the merger takes place.

 

American Depositary Receipt (ADR): A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets. Appreciation means an increase in the value of something c. s. stock of raw materials or manufactured goods. It also includes an increase in the traded value of currency. It is an increase in the value of assets over a particular time

 

Period. Example: land, building, paintings etc. Appreciation is just the opposite of depreciation. When the prices rise due to inflation, appreciation may occur.

 

Assets: Everything a corporation or an organization owns or that is due to it: cash, investments, money due to it, materials and inventories, which are called current assets; buildings and machinery, which are known as fixed assets; and patents an goodwill, called intangible assets.

 

Auction market: The system of trading securities through brokers or agents on an exchange such as the Bombay Stock Exchange. Buyers compete with other buyers while sellers compete with other sellers for the most advantageous price Balance of Payment It is the difference between a country's payments and receipts from other countries during a year. In other words the balance of payment shows the relationship between the one country's total payments to all other countries and its total receipts from them. Balance of payment not only includes visible export and imports but also invisible trade like shipping, banking, insurance, tourism, royalty, payments of interest on foreign debts.

 

Balance of Trade: It refers to the relationship between the values of country's imports and its export, i.e. the visible balance. Balance of trade refers to the total of a country's export commodities and total value of imports commodities. Thus, balance of trade includes only visible trade e. movement of goods (exports and imports of (goods). Balance of trade is part of Balance of Payment statement.

 

Bank: A bank is a financial institution. It accepts funds on current account and savings accounts. It also lends money. The bank pays the cheques drawn by customers against current or savings bank account. The bank is a trader that deals in money and credit.

 

Bank Rate: It is the official rate of interest charged by Reserve Bank of India on loans to other banks. It is the rate at which the RBI discounts first class securities including bills of exchange. Thus, it is also known as discount rate.

Bankruptcy It is a situation in which a person is unable to discharge his debt obligations.

 

Basis point: 0ne gradation on a 100 point scale representing 1%; used especially in expressing variations in the yields of bonds. Fixed income yields vary often and slightly within one percent and the basis point scale easily expresses these changes in hundredths of 1%. For example, the difference between 12.83% and 12.88% is 5

Basis points.

 

Bid and Asked: Often referred to as a quotation or quote. The bid is the highest price anyone wants to pay for a security at a given time, the asked is the lowest price anyone will take at the same time.

 

Bill of exchange: It is an unconditional order in writing addressed by one person to another requiring the addressee to pay on demand or at a fixed future time a certain sum of money to the order of the specified person or to the bearer.

 

Black Money: It is the unaccounted money which is concealed from tax authorities. All illegal economic activities are dealt with this black money. Hawala market has deep roots with this black money. Black money creates parallel economy. It puts an adverse pressure on equitable distribution of wealth and income in the economy.

 

BOND: A bond is evidence of a debt on which the issuing company usually promises to pay the bondholders a specified amount of interest for a specified length of time, and to repay the loan on the expiration date.

 

Broker:  An agent who handles the public's orders to buy and sell securities, commodities or other property. A commission is charged for this service Bridget It is a document containing a preliminary approved plan of public revenue and public expenditure. It is a statement of the estimated receipt and expenses during a fixed period. It is a comparative table giving the accounts of the receipts to be realized and of the expenses to be incurred.

 

Buyer’s marker: When the market is favorable to buyers. This situation occurs when there is a change from boom to recession i.e. demand is less than supply. Cd p 51 rd. the stock of goods which are used in production and which themselves have been produced. It is one of the major factors of production, the other being land labor and entrepreneurship.

 

Capitalism:  The economic system based, on free enterprise and private profit. Capitalism is an economic system in which all means of production are owned by private individuals. Self-profit motive is the guiding feature for all the economic activities under capitalism. Under pure capitalist system economic conditions ar regulated solely by free market forces. This system is based on 'Laissez-faire system no state intervention. Sovereignty of the consumer prevails in this system.

 

Capital stock: All shares representing ownership of a business, including preferred and common.

 

Capitalization: Total amount of the various securities issued by an organization or a company. Capitalization may include bonds, debentures, preferred and common stock, and surplus. Bonds and debentures are usually carried on the books of the issuing company in terms of their par or face value. Preferred and common shares may be carried in terms of par or stated value. Stated value may be an arbitrary figure decided upon by the director or may represent the amount received by the company from the sale of the securities at the time of issuance.

 

Cash flow: Reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extraordinary charges to reserves, which are bookkeeping deductions and not paid out in actual rupees and poise or dollars and cents.

 

Commission Broker: An agent who executes the public's orders for the purchase or sale of securities or commodities.

 

Common stock: Securities that represent an ownership interest in a company

If the company has also issued preferred stock, both common and preferred have ownership rights. Common stockholders assume the greater risk, but general exercise the greater control and may gain the greater award in the form of dividends and capital appreciation. The terms common stock and capital stock are often used interchangeably when the company has no preferred stock.

 

Coupon bond; Bond with interest coupons attached. The coupons are clipped as they come due and presented by the holder for payment of interest.

 

Current assets:  those assets of a company that are reasonably expected to be realized in cash, sold or consumed during one year. These include cash. Government bonds, receivables and money due usually within one year, as well as inventories.

 

Current liabilities Money owed and payable by a company, usually within one year.

 

Depletion accounting; Natural resources, such as metals, oil, gas and timber, that conceivably can be reduced to zero over the years, present a special problem capital management. Depletion is an accounting practice consisting of charges against earnings based upon the amount of the asset taken out of the total reserves in the period for which accounting is made. A bookkeeping entry, it does not represent any cash outlay nor are any funds earmarked for the purpose.

 

Depreciation:  It is the reduction in the value of a fixed asset due to wear and tear.

 

Discount:  The amount by which a preferred stock or bond may sell below its par value. Also used as a verb to mean "takes into account" as the price of the stock has discounted the expected dividend cut.

 

Equity: The ownership interest of common and preferred stockholders in a company. Also refers to excess of value of securities over the debit balance in a margin account.

 

Exchange Rate:  The rate at which central banks will exchange one country's currency for another.

 

Excise tax: Tax imposed on the manufacture/ sale or consumption of various commodities, such as taxes on textiles, cloth, liquor etc.

 

Foreign Exchange Reserves: Foreign Exchange Reserves of a country includes foreign currency assets and interest bearing bonds held by it. In India it also includes SDK and value of gold.

 

Gilt-edged: High-grade bond issued by a company that has demonstrated its ability to earn a comfortable profit over a period of years and pay its bondholders their interest with interruption. Interest ' Payments borrowers pay lenders for the use of their money. A corporation pays interest on its bonds to its bondholders.

 

Investment: The use of money for the purpose of making more money, to gain income, increase capital, or both.

 

Investment banker: Also known as an underwriter. The middleman between the corporation issuing new securities and the public. The usual practice is for one or more investment bankers to buy outright from a corporation a new issue of stocks or bonds. The group forms a syndicate to sell the securities to individuals and institutions Investment bankers also distribute very large blocks of stocks or bonds – perhaps held by an estate.

 

Joint Stock Company: It is a form of company in which a number of people contribute funds to finance a firm in return for 'shares' in the company.

 

Leverage: The effect on a company when the company has bonds, preferred stock, or both outstanding. Example: If the earnings of a company with 1,000,000 common shares increases from $1,000,000 to $1,500,000, earnings per share would go up from $1 to $1.50, or an increase of 50%. But if earnings of a company that had to pay $500,000 in bond interest increased that much, earnings per common share would jump from $.50 to $1 a share, or 100%.

 

Limit, limited order/ or limited price order: An order to buy or sell a stated amount of a security at a specified price, or at a better price, if obtainable after the order is represented in the trading crowd.

 

Liquidation: The process of converting securities or other property into cash. The dissolution of a company, with cash remaining after sale of its assets and payment of all indebtedness being distributed to the shareholders.

 

Liquidity: The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes. Liquidity is one of the most important characteristics of a good market.

 

Margin: The amount paid by the customer when using a broker's credit to buy or sell a security. Under Federal Reserve regulations, the initial margin requirement since 1945 has ranged from the current rate of 50% of the purchase price up to 100%.

 

Market order: An order to buy or sell a stated amount of a security at the most advantageous price obtainable after the order is represented in the trading crowd.

 

Market price: The last reported price at which the stock or bond sold, or the current quote.

Economic Liiossary

 

Market value: The market value of an equity share is the price at which it is traded in the market. This price can be easily established for a company that is listed on the stock market and actively traded. (For a company that is listed on the stock market but traded very infrequently, it is difficult to obtain a reliable market quotation for a company that is not listed on the stock market/ one can merely conjecture as to what its market price would be if it were traded.)

 

MUTUL FUND: It is a form of collective investment that is useful in spreading risks an optimizing returns.

 

Poverty Line: The poverty line has been fixed by the planning commission on the basis of an average daily intake of 2400 calories per person in rural areas and 2100 calories per capita in urban areas. In monetary terms the poverty line is commented to be Rs- 76 per month in rural and Rs. 88 in urban areas in terms of 1979- 80 prices.

 

Preferred stock:  A class of stock "with a claim on the company's earnings before payment may be made on the common stock and usually entitled to priority over common stock if the company liquidates. Usually entitled to dividends at a specified rate - when declared by the board of directors and before payment of a dividend on the common stock - depending upon the terms of the issue.

 

Primary distribution: Also called primary or initial public offering. The original sale of a company's securities.

 

Recession: Recession cycle characterized by a modest downturn in the level of economic activity means fall up of demand.

 

Reflation: It is an increase in the level of National income and  output Reflection  often deliberately brought about by the authorities in order to secure full employment and to increase the rate of economic growth.

 

SDRs Special Drawing Rights): The SDR is a reverse asset created within the framework of the International Monetary Fund in an attempt to increase international liquidity and forming a part of country's official reserves along with gold, reserve positions in the IMF and convertible foreign currencies. It is also known as "Paper Gold".

 

Seller's Market:   It is a market situation which exists for a short time period. During this period there is an excess demand for goods and services at current prices which forces price up to the advantage of the seller.

 

Sensex: The Stock Exchange Sensitive Index (popularly referred to as the SENSEX) reflects the weighted arithmetic average of the price relative of a group of share included in the index of sensitive shares. For example/ Bombay Stock Exchange Sensitive Index is a group of 30 sensitive shares.

 

Shares: These are the equal portions of the capital of a limited company. Shares in a company do not carry fixed rate of interest. The holders of the ordinary share the residual risk of the business; they rank after debenture holders and Preference shareholders for the payment of dividends and they are liable for losses, although this liability is limited to the value of the shares and to the limit of guarantee given by them.

 

Preference share: are such shares of a company on which interest is paid before any others, and owners have prior right to repayment of capital if company is wound up.

 

Share index: It is the statistical indicator of overall share values, based on selected group.

 

Sinking fund; Money regularly set aside by a company to redeem its bonds, debentures or preferred stock from time to time as specified in the indenture or charter.

 

Speculation: The employment of funds by a speculator. Safety of principal is a secondary factor.

 

Speculator: One who is willing to assume a relatively large risk in the hope of gain?

 

Stock exchange: An organized marketplace for securities featured by the centralization of supply and demand for the transaction of orders by member brokers for institutional and individual investors.

 

Stock dividend: A dividend paid in securities rather than in cash. The dividend may be additional shares of the issuing company, or in shares of another company (usually a subsidiary) held by the company.

 

Stop limit order: A stop order that becomes a limit order after the specified stop price has been reached.

 

Trader: - Individuals who buy and sell for their own accounts for short-term profit. Also, an employee of a broker/dealer or financial institution who specializes in handling purchases and sales of securities for the firm and/or its clients.

 

Transfer: This term may refer to two different operations. For one, the delivery of a stock certificate from the seller's broker to the buyer's broker and legal change of ownership, normally accomplished within a few days. For another, to record the change of ownership on the books of the corporation by the transfer agent. When the purchaser's name is recorded, dividends, notices of meetings, proxies, financial reports and all pertinent literature sent by the issuer to its securities holders are mailed directly to the new owner.

 

Transfer agent: A transfer agent keeps a record of the name of each registered shareowner, his or her address, the number of shares owned, and sees that certificates presented for transfer are properly cancelled and new certificates issued in the name of the new owner.

 

Treasury stock:  It may be held in the company treasury indefinitely, reissued to the public or retired. Treasury stock receives no dividends and has no vote while held by the company.

 

Turnover rate; The volume of shares traded in a year as a percentage of total shares listed on an exchange, outstanding for an individual issue or held in an institutional portfolio.

 

VAT: It seeks to tax the value added at every stage of manufacturing and sale with a provision of refunding the amount of VAT already paid at earlier stages to avoid double taxation.

 

Voting right: Common stockholders' right to vote their stock in affairs of a company. Preferred stock usually has the right to vote when preferred dividends are in default for a specified period. The right to vote may be delegated by the stockholder to another person.

 

Zero coupon bond: A bond that pays no interest but is priced, at issue, at a discount from its redemption price.

 

                      Acronyms

 

ADR'S	American Depository Receipts.
AOC	Annual Operating Cost
AIC	Asian Clearing Union
AHRC	Asian Human Rights Commission
AIDWA	All India Democratic Women's Association
B2B	Business to Business
B2C	Business to Consumer
B2E	Business to Employee
B2E	Business To Employees
BEA	Bureau of Economic Analysis
BPM	Business Process Modeling\
BPO	Business Process Outsourcing
PEB	Pacific Economic Bulletin
PFDRA	Pension Fund and Regulatory and Development Fund
BPQL	Business Process Query Language
BSE	Bombay Stock Exchange
BOLT	BSE online Trading
BSF	Benefit Sharing Fund
CA	Cost Account
CJSC	Closed joint Stock Company
CLRB	Cost Limit Review Board
COCOMO	Constructive Cost Model
COF	Cost Of Facilities
COLA	Cost-of-Living Adjustment
COF	Cost Of Facilities
CPFF	Cost Plus Fixed Fee
CPG	Consumers Packaged Goods
CPIF	Cost Plus Incentive Fee
CCI	Cabinet Committee on Infrastructure
CDCP	Centre for Disease Control and Prevention
DOTS	Delhi on line Trading System
EA	East Asian Economic Association
EAEA	Economic Analytical Unit
EAU	Economic and Social Council
ECE	Employment Cost Index
ECO	Economic Cooperation Organization
EEA	European Economic Area
EEA	European Economic Association
EEE	Econometrics and Empirical Economics
EEZ	Exclusive Economic Zone
ECGS	Export Credit Guarantee Corporation
EETA	European Free Trade Association
FPC	Fixed-Price Contractor
FPO	Fruit Product Ordinance
FPO	Follow on Public Offer
GBD	Government Business Division
GBP	Great-Britain Pound
GDP	Gross Domestic Product
GNP	Gross National Product
GRADE	Gas Revenue Accounting Data Exchange
GDRs	Global Depository Receipts
IEG	Institute of Economic Growth
IDFC	Infrastructure Development Finance
JSC	Joint Stock Company
JEF	Japan Economic Foundation
JEH	Journal of Economic History
LME	London Metal Exchange
LNG	Liquefied Natural Gas
LPG	Liquefied Petroleum Gas
MIBOR	Mumbai Inter Bank Offer rate
MIBID	Mumbai Inter Bank Bid Rate
MPI	Multidimensional Poverty Index
NBS	National Bureau of Standards
NGL	Natural Gas Liquids
NAV	Net Asset Value
NBFCs	Non-Banking Financial Companies
NPA	Non- Performing Assets
NGRBA	National Ganga River Basin Authority
OMSP	Open Market Selling Price
P&E	Pricing and Estimating
PEB	Pacific Economy Bulletin
PFDRA	Pension Fund and regulatory and development Fund
RIDF	Rural Infrastructure Development Fund
SME	Small & Medium Entities
SBA	Small Business Administration
SBE	Small Business Economics
SCARDBs	State Co Operative and Rural Development Banks
SCOPE	Standing Conference of Public Enterprise
SMTA	Standard Material Transfer Agreement
UN	United Nations.