Amortize – Charge regular portion of
expenditure over fixed period of time for
intangible assets
Arbitrage – Simultaneous purchase & sale of 2
identical commodities or instruments in
different markets to get advantage of price
Ask / offer – Lowest price at which owner is
willing to sell his securities
Bid – Highest price buyer is willing to pay
Breakeven Point – No of units that should be
sold to produce revenues exactly equal to
expenses
Base Price – Price of security at beginning of
the trading day
Close Price – Price of security at day closing
Business Day - Days on which stock markets
are open
Pre-open Session – It is for 15 mins in which
we can make order entry , modification &
cancellation.
Trading Session – Period for which market is
open for buyers & sellers , i.e 9.15 to 3.30 pm
Basket Trading – In this investors are in position
to buy/ sell 30 scripts to sensex in 1 go
Badla – Carrying forward of transaction from 1
settlement period to another without effecting
delivery or payment by paying “margin money”
& “badla charges” on basis of demand & supply
Beta –Relationship between stock price of stock
and movement of whole market
Business Risk – Risk in firm’s operation if it uses
no debt
Blue Chips – Shares of well established &
financially sound companies with excellent
records of earnings & dividend
Defensive Stock – Provides constant dividend &
stable earnings even in period of economic
downturns
Listed Stocks – Companies that are traded on
stock exchange
Income Stock – A security which has solid record
of dividend payments & offers dividend higher
than common stocks
Capital Budgeting – Process of planning expenditure
on assets whose cash flows are expected beyond one
year
Capital Gains Yield – Capital gain during year divided
by beginning price
Capital Markets – Financial markets for stock
Convertible Securities – A security that can be
converted into other securities at option of holder
Derivative – A security whose price is derived from
one or more underlying assets . Most common is
market indexes , interest rates
Diversification – Reducing risk by purchasing shares
of different companies in different sectors
Consolidation – Business combination of 2 or
more entities that occurs when entity transfer all
their assets to new entity
Merger – In this 2 or more companies come
together to expand their operations
Joint Venture – A third party commercial
operation established by 2 or more firms to
undertake particular business opportunity
Acquisition – When one organisation takes over
another & controls all it’s business operations , it
is acquistion
Government Bonds – Any security that is held
with government and has highest rate of
interest
Bonds – Promissory note issued by companies
or government and tells about amount held for
specified period of time by buyer
Zero Coupon Bonds – It has no annual interest
but is sold at discount below par , thus providing
compensation to investors in form of capital
appreciation
Yield to Call – Rate of return earned on a bond if
it is called before its maturity date
Hedge – It is strategy used to minimize the risk of
particular investment and maximise the returns of an
investment
Index – Statistical measurement of change in the
economy or security market
Initial Public Offer – A company’s first issue of shares
to general public
Limit Order – An order to buy or sell specified price
Liquidation – Occurs when Assets of a division are
sold off piecemeal rather than as an operating entity
Market Capitalisation – Total no of shares multiply
with current market price of share , it is wealth of
company
Portfolio – It includes various types of securities of
different companies in different sectors
Price Earnings ratio = It is Market price of share
divided by Earning per share
Stock Split – Attempt to increase no of shares by
splitting existing shares
Thin Market – A market in which there are
comparatively low no of bids to buy & sell , since
transactions are low , prices are very volatile
Yield – It is measure of return on investment .
Dividend divided by current market price of share
One Sided Markets – Markets that has only potential
buyers or sellers and not both
Call option - Right given to investor but not
obligation to buy particular stock at specified price
within specified time period . Taken by those who feel
price will increase than stated price
Put Option – Right given to sell particular stock at
stated price within specified price . Taken by those
who feel price will reduce than stated price
Strike Price – Price at which holder can buy call or sell
put
Out of the Money – For call , it means stock price is
below strike price and for put it means stock price is
above strike price
SITUATION 1 ACTUAL PRICE 70 SITUATION 2 ACTUAL PRICE 50
Bought at 60 In this as price is less , we
Sold at 70 will not exercise call , we
Gain 10 Rs per share took because we felt price
Total Gain (1000*10) 10000 will increase
Less : call charges (1000)
Total Gain 9000 Still we have to pay call
charges
OPTION 1 ACTUAL PRICE 70 OPTION 2 ACTUAL PRICE 50
We will not do anything , Bought at 50
because we felt price will Sell at 60
decrease actually it Gain 10
increased, still we have to Total Gain(1000*10) 10,000
pay charges to put writer Less: put charges (1000)
which is loss Net Gain 9000
Barriers to Trade – Something that makes trade
between 2 countries difficult . Eg – tax on imports
Benchmarking – Process of comparing our products
& services against those of competitors to find ways
of improvement
Brand Equity – Value of Brand and included Brand
loyalty , name , awareness , quality , trademarks ,
patent etc
Brand Loyalty – Decision of customer to buy
particular brand
Brand Recognition – Customer’s awareness brand
exists and is an alternative to purchase
Business Model – Business model is storyline
of how strategy will be money maker
Consortium – It is combination of several
companies working together for particular
purpose
Corporate Culture – It is company’s values ,
beliefs , principles, traditions , ways of
operating and internal work environment
Cross Selling – Using customer’s buying
history to select them for related offers
Conglomerate Diversification – Strategy of
growing firm by acquiring other firms with
little or no anticipated strategy
Market Development – Process of growing
sales by offering existing products to new
customer groups
Differentiation – Marketing strategy aimed
at ensuring products & services have unique
element
Fast Moving Consumer Goods – That sell in high
volume and have low unit value and fast
consumer purchase
Internal Marketing – Process of eliciting support
for a company among its own employees
Market Positioning – A strategy that will
position business’s product and services against
those of competitors in minds of customer
Market Targeting – Process of evaluating
market segment and select most attractive
segments to enter with particular product /
service
Marketing Mix – It is 4P’s of marketing – Product , Price ,
Place , Promotion . Service it includes 3 Additional P’s –
People , Process & Physical Evidence
Marketing Plan – How company’s marketing mix will be
used to achieve market objectives
Niche Marketing – Exploitation of comparatively small
market segments by deciding to concentrate efforts in
that direction
Sales Promotion – Any activity to boost sales of product
Test marketing – Occurs when new product is test with
sample of customers to see their reactions
Unique Selling Proposition – It is a customer benefit that
no other product can claim
Pre-Emptive Pricing – It is a strategy of setting low
prices to discourage or stop new entrants to market
Price Skimming – Charging relatively higher price for
a short time where a new , innovative product is
launched in market
Price Discrimination – Charging different prices to
different customers
Price elasticity of demand – Responsiveness of a
change in demand has following change in price
Price Sensitivity – Effect change in price will have on
customers
Vision – Road map of company’s future .
Providing specifics about product , market ,
customer , technology management is trying to
create
Mission – It is who we are and what we do . It
describes present capabilities , customer focus ,
activities and business make up.
Short Term Objectives – Usually one year
objectives that can be measured
Long Term Objectives / Goals – A firm’s position
over multi year period of time . Eg – Employee
relations , technology etc
Acceptance – Banker’s acceptance is signed instrument
of acknowledgement that indicates approval of all
terms and conditions of any agreement on behalf of
banker. Used in agreements and contracts
Accepting House – Bank or finance organisation that
specializes in service of acceptance and guarantee of
bills of exchange
Administered Rates- Rates of interest which can be
contractually changed by lender and also sometimes by
depositor or payee
Cap – It regulates increase or decrease in rate of interest
and instalments of an adjustable rate mortgage
Automated Clearing house – It is clearing houses
that monitors & administers process of check and
fund clearance between banks. Minimises human
work and distributes debit and credit balance
automatically
Clearing House - Place where representatives of
different bank meet for clearing cheques . It is
managed by Central Bank , if officials of RBI are not
there , then it is done by SBI
American Depositary Receipts – These are receips
equal to specified no of shares of company that have
been issued in foreign country . ADR are traded only in
USA , if traded in other countries it is GDR
Bridge Financing – It is a loan where time &
cashflow between short term and long term loan
is filled up. It begins at end of period of first loan
and ends with start of time of second loan
Bounced Cheque – Bank refuse to encash
cheque , because there are no sufficient
balances
Cashier’s Cheque - It is drawn by bank on it’s
own name to make other organisations ,
corporations or even individuals
Cash Reserve – Amount of cash present in bank
account and can be withdrawn immediately
Certificate of Deposit – It promises depositor
sum of money alone with interest
Early Withdrawal Penalty – Penalty levied by
bank because of early withdrawal of fixed
investment by an investor
Letter of Credit – Document issued by bank on
behalf of buyer stating its commitment to pay to
seller . Used in international trade
E-Cash- Electronic cash and digital cash , in
which we use electronic , computer & internet to
execute transactions and transfer funds
Debt Settlement – Person negotiates with bank to reduce
the instalments and rate of repayment by fast &
guaranteed repayment
Debt Repayment – Process of payment od debt along
with interest
Debt Recovery – It is process done by banks & lending
institutions by various procedures like debt settlement or
selling of collaterals
Earnest Money Deposit – Deposit made by buyer to seller
in real estate in initial stages of negotiation of purchase
Installment Contract – Contract in which purchaser pays
series of instalment including interest
Lock in Period – A guarantee given by lender there will be
no change in quoted mortgage rates for specified period
Value at Risk – Sum or portion of value that is
at loss from change in interest rates
Wholesale Banking – It is term used for banks
which offer services to corporate entities ,
large institutions & other financial institutions
Zero Balance Account – No minimum balance
is required
Zero Down Payment Mortgage – Buyer
borrows entire amount , no down payment is
needed . Eg – Jan Dhan Account
Bankruptcy – In this persons assets are
liquidated to pay off liabilities with help of
bankruptcy trustee or court of law
Bottom Line – Most important factor , In BCK it
is net profits because that matter the most
Triple Bottom Line – Today’s Performance is
evaluated on 3 P’s People , Profit , Planet which
is triple bottom line for companies
Sustainable Development – It is broader
measure of development of country such as
income and non economic parameters. It is
macro context of TBL
E-Filing – It is filing of information required by regulator ,
government and other electronically
Joint Product & By Product – 2 or more products separated in
course of same processing operation , usually requiring further
processing . Eg – Butter , Cheese , Paneer from Milk
By Products are products recovered from material discarded in
main process . They are produced from scrap or waste of
material in process . Eg – Molasses in sugar factory used to
produce wine , Fruit oil from peeling fruit etc
Term Insurance – It is insurance for certain time period which
provides no defrayal to insured and becomes null upon
expiration
Whole Life Insurance – It is contract between insurer and
policy owner that insurer will pay sum of money on occurrence
of event mentioned in policy
