Business Terms

Accelerated Buy Backs

An accelerated buy back, also called an accelerated share repurchase, is a gimmick used by companies who desire a way to generate cash for their shareholders without going through the formalities of a traditional buy-back program and without throwing their balance sheet out of kilter. For those companies without preferred stock who have a good supply of cash on hand, it is a way to reward their investors without the costs normally associated with premium stock shares.


Acquiree is the term used to call the subject matter of sale that is being sold. For example if a company is being traded or sold the subject matter of the sale means all that is part of the sale. It can also be called the ‘target firm’ which is being acquired or purchased.


An acquirer can be a person or a corporation gaining financial control over some other corporation permanently. This acquisition is done by giving cash or stock in exchange, to gain the rights over that corporation. It can also be understood with the example that an acquirer is a financial institution which is approached to approve a credit or debit card purchase. The acquirer will either reject the purchase or accept it by placing money into the sellers account. With the payment that the acquirer gives for the subject matter he then becomes the rightful owner and the ownership in the property is legally transferred to that person or firm.

Act of Bankruptcy

Bankruptcy Act also called as the Insolvency Act is defined as the decree according to which there is a lawful practice of the bankruptcy laws to curb this menace especially in Canada. 

Adam Smith

Adam Smith is the pioneer name in the field of political economy. Basically he was a Scottish philosopher and was a moral dignitary. His main contribution was towards the establishment of the political economy. He has been the main figure who played a very positive and productive role during the times of Scottish Enlightenment.


The term adhocracy is commonly defined as "a form of organization that operates differently from the normal bureaucratic lines to explore opportunities, resolve the issues, and get better outcomes". 


In finance, arbitrage refers to the practice of taking advantage of a of the difference between the prices of two or more markets – striking an arrangement of matching deals that capitalize upon the difference, the profit being the difference between the market prices. While being used by the academics, an arbitrage refers to a transaction involving no negative cash flows at any temporal or probabilistic state and a positive cash flow in at least one state. Putting it simple, it is the possibility of a risk free profit at zero cost.

Asset Restructuring

Different companies have established the asset reconstruction and restructuring authorities and organizations in several countries. Various multi national companies in different countries are working in this field and are also establishing the asset restructuring phenomena...

Balance Theory

Balance theories might be of two types, the credit balance theory and the debit balance theory. The credit balance theory indicates the cash balances and the brokerage accounts of the investor that help in forecasting the trends in the market. This theory indicates that those investors who have cash in their accounts usually use that cash for buying marketable securities. When they will go to purchase them, then the demand for the securities will increase in the local markets which will ultimately increase their prices.

Bare Trust

Bare Trust is defined as the basic trust in which the beneficiary has the complete right to the assets within the trust, along with the income generated from these assets. Bare trusts are extensively used by parents and grandparents for handing over the assets to their children or grandchildren. Trust assets are alleged in the name of the trustee, who has the duty to manage the trust assets in a sensible way so as to create maximum profit for the beneficiaries. The trustee does not have any control over these assets and has no say in directing the trust's revenue or capital. It is also known as a simple trust.


Barter can be describes as an act of trading goods and services between two or more than two parties without involving the use of money. Bartering is beneficial for a companies and countries that see a mutual benefit in exchanging goods and services instead of cash, in addition to enabling those who are short of hard currency to obtain goods and services. The barter system is generally bilateral, but might also be multilateral, and by and large exists parallel to monetary systems in most developed countries, although to a very limited extent.

Benchmark Interest Rate

Various banks in the world have given their own benchmark rates for interest. Benchmark interest rate is defined as the minimum rate of interest which is liable to be accepted by the investors especially when they are willing to invest money in the non treasury security.


In trust law known as ‘cestui que use’ a beneficiary can be natural person or an entity of legal stature who is entitled to receive money or other assistances from another person known as his ‘Benefactor’. 


bond refers to a debt investment wherein an investor lends money to a business company (governmental or corporate) that borrows the funds for a specific time period at a fixed interest rate. 


Bribery is the biggest evil for any community and it also impacts the overall economy of that region. Bribery is defined as the gift granted to any individual, community or the organization for which in against the person who granted the gift ask for some favor. The favor usually which are asked by the person who granted the gift are illegal, which is against eh merit system or it can be the short cut method of achieving something for which the rules and other regulations are not been followed. Bribery kills the faith among the person and thus the whole community becomes money hunger.

Bridge Loan

Basically the bridge loan is the interim financing strategy based loan and it offers the financing of an individual or a business. This is done so that the next stage of financing until the next stage of the financing is obtained.

Budget Constraint

budget constraint refers to all the combination of goods and services that can be purchased by a consumer with his or her income at their given prices. The concepts of a preference map and a budget constraint is used by the consumer theory for analyzing consumer choices.

Budgetary Slack

Budgetary slack is an allowance set for any extra expenditure that the entity is going to incur in the fore coming period. This is a practice where an ample amount of intentional allowance is introduced in the budget for any other or miscellaneous expenditure the business is going to sustain.


Burn Rate

Burn rate is the term which is used in synonym for the cash flow in negative or opposite direction. Basically it is the measure of the speed of a company to use or consume the capital of a share holder.

Business Plan

business plan is a decision making tool which can be delineated as a formal statement of a set of business goals, the reasons for they being achievable, and the plans for achieving these goals. Moreover, a business plan may also consist of background information about the organization attempting to achieve the goals.

Business Process Reengineering

The process of assessing and then redesigning the flow of work within the business or between businesses is known to be the business process reengineering. In the fast changing global market the strategies and goals of businesses keep changing to keep up with the modern globalised market structure. To keep in sync with the goals of business there is a need to keep the business ‘lean and fit’ thus cut off all the excess joints in the workflow which are unprofitable for the business and reduce the overall efficiency in order for the business to become a strong force in the highly competitive market now days.

Capital Account

The term capital account is used most frequently in the field of macroeconomics and international finance and monetary matters. It is also known as the financial account. Therefore both the terms can be used for this thing.

Capital Accumulation

Capital accumulation means collecting or gathering of objects that have value, increasing wealth by concentrating it or creating of wealth. Capital refers to money or any financial asset that is utilized for generating money. The generated money can be received in the form of interest, profit, rent, capital gain, royalties or any other type of return. This activity is the foundation of the economic system of capitalism in which all the economic activities are planned and prepared around accumulating the capital. That is to say, all investments are made for realizing financial profit.

Cash Generating Account

Various banks and financial institutions have come up with the establishment of the cash generating units and accounts. Basically these units and accounts are subjected to the testing of annual impairment if there exists any in the banking systems and the accounts.

Cash Limit

There is a cash limit of every card whether it is the credit card of the ATM card which one can withdraw at the specific time or within 24 hours time period. This is called as the cash limit of the card or account.

Cash Transaction

cash transaction has two essential features. A transaction that takes place and cash is given immediately. Cash needs to be paid upfront and even the delivery shall take place at the same time. If delivery takes place now and payment is to be settled at a later date agreed by both parties involved in the transaction then it is no longer a cash transaction. The simplest example of a cash transaction can be if you walk into a garment shop, pick out a jacket, pay for it in cash and walk out with the jacket. In the above transaction both elements are then fully satisfied as cash payment and delivery both take place at the same time.

Certificate of Deposit

It is a timely deposit. A cost-effective product commonly accessible to the clients in the US by thrifts institutions, credit unions and banks. The trademark for the customary certificate of deposit is safety that is vended by credit unification or a bank. Financiers looking for a low jeopardy investment suppose that once it’s held to development numerous CDs would yield the full quantity of the innovative speculation even if the organization delivering the certificate of deposit breakdowns.

Claw Back

Claw back is the specific kind of a clause which is added at the time of signing a contract. This is a typical one and is added frequently in the major employment contracts of firms and companies.


Other than financing techniques, there is another term known as co-financing. Basically on official terms, the co-financing is concerned with designing of certain arrangements according to which more than one parties collaborate and contribute towards funding. This procedure and agreement is carried on and followed on international levels.


Collateral refers to assets or properties which are presented to secure a loan or other credit.

Collateralized Mortgage Obligation

Collateralized mortgage obligation is basically a kind of security that has mortgage backing and establishes separated pools of pass-through rates for multiple bondholder classes with a variety of maturities known as tranches. Any repayment from the pool of securities is utilized for retiring of bonds in an order that is laid down in the prospectus of the bonds.

Collection Agency

collection agency is the business oriented agency which is concerned with collection of money of debt from the lenders ad companies.

Commitment Letter

commitment letter is the formal letter which is issued by the lending authorities in order to inform the loan applicant about the terms and conditions about getting the loan credit. The status of the commitment letter is made equal by the authorities as being the legal and formal documents.

Commodity Paper

Commodity paper is defined as the loan or advance of issued by the borrower to the lender on part of which the raw materials owned by the borrower serve as the collateral body for both the people.

Commodity Product Spread

There are several aspects and attributes of the commodity product spread. The involvement of a commodity product spread in the purchase of a given tangible or intangible commodity is result of the purchase or subsequent sale of the products because of the commodity product spread.

Conversation Costs

Conversion cost is defined as the sum of all the costs which have been incurred in carrying out the conversion of an article into the intended output.

Conversion Premium

The surplus at which an adaptable security may be sold beyond its transfiguration value is known as premium. If the market price of an alterable security rises, its conversion premium declines. A bond valuing $1500, which is convertible into 50 common stock shares of $25 each will sell on aconversion premium of $250 {$1500 – (50 x $25)}.

Corporate Finance

Corporate finance can be delineated as a monetary or financial activity dealing with a company and its money. As per Investopedia, this can consist of anything from IPOs to acquisitions. A corporate finance specialist assists a firm in evaluation of operating data and industry indicators in addition to providing advice about management on budget adjustment and decisions regarding general investment. 

Cost Benefit Analysis (CBA)

Cost benefit analysis (CBA) refers to a systematic process that is used to calculate and compare costs and benefits of projects, decisions and government policies. Cost benefit analysis is also sometimes known as benefit cost analysis (BCA).

Cost-effectiveness Analysis (CEA)

Cost effectiveness analysis (CEA) refers to a systematic process that helps in comparing two or more courses of action by considering their relative costs and outcomes or effects. Cost effectiveness analysis is related to cost benefit analysis but there is a slight difference between them. Unlike cost benefit analysis (CBA), cost effectiveness analysis does not assign any monetary value for measuring the effects.


Covenant generally refers to a promise in an agreement, or any other formal debt indenture, that certain activities will or will not be conducted. Putting it simple, it is a clause in a contract that asks one party to carry out, or refrain from carrying out, certain things.

Credit Cooperative

There is a People’s Bank in China which has initiated the credit cooperative scheme. This is the sanctioned cooperative union which enables the citizens to get credit. This is provided on tenure system.

Credit Crunch

Credit crunch is defined as the reduction in the general availability of loans or credit. It may also be defined as the sudden restrictions and tightening of the terms and conditions which are required for obtaining the loans from banks.

Credit Limit

Credit limit is defined as the maximum amount credit that can be withdrawn as the debt from any financial institution or a bank. Basically it is decided by the financial institution to set its own credit limits and range to which the credit can be provided to a borrower in a specific time period.

Credit Line

The credit line is defined as the credit source which is extended to any business, government, bank, individuals or any other financial institution. There are several forms in credit line can be interpreted and explained. The most common forms of credit line expansion or restriction include the loan demand, protection of overdraft, any other specific purpose, export packing of the credit, and many other attributes.

Credit Rating Agency

Credit rating agency is the rating service company which is destined to assign ratings. There are different kinds of rating included in this regard. These can be expressed as follows.

Cumulative Preferred Stock

If the past dividends have been omitted for some reasons, they must be paid to the preferred stockholders rather than the common shareholders. This is known as cumulative preferred stock.


Debenture is an instrument that is only backed up by the credibility of the issuer in the market and not with any physical asset as such. It is a type of debt instrument which is in an indenture just like other bonds. Debentures are introduced in the market by corporations and government to pool in capital.


Deflation is the opposite of inflation which means a decline in the money supply or credit. Deflation may also be caused by decrease in spending which includes government or private sector spending. Central banks tend to decrease severe deflation in order to keep the price fluctuation to minimum level because deflation creates uncertainty in the country with decreased demand.


Derivative is a financial instrument or other contract with all three of the following characteristics:

Discretionary Trust

Discretionary trust provides a trustee with the power to decide and come to a conclusion with regard to the beneficiary who would receive the funds and the amount of funds that he/she would get. The trust’s settler may look at guiding the trustee using a memorandum that is informal or through a letter comprising wishes. However, any of the settlor’s attempts to put restrictions on the discretion of trustees renders the trust invalid. Given that none of the assets can be clearly identified with any one particular beneficiary, the creditors are not allowed to attach the assets of the trust towards paying a liability or loan.


Divestment basically refers to the process of selling an asset. This process is also referred as divesture. The process is carried out either for social or financial goals. Divestment is the converse of investment.

Dutch Auction

Dutch auction is primarily a kind of auction wherein the price on a particular item is lowered till the time it attracts a bid. The bid that is made first is considered to be the winning bid and transforms into a sale, on the assumption that the bidding price is more than the reserve price. In this sort of an auction, the investors bid for an amount that they are willing to pay for buying, both in terms of price and quantity.


An escrow is basically a type of arrangement, which is made as per the provisions laid down in a contract between parties that are transacting with each other, wherein an independent 3rd party gets and disburses funds or/and documents on behalf of the parties that are transacting, with disbursement timing by the 3rd party depending on fulfilling of all the conditions listed in the contract by the parties that are transacting with each other.

Exploration Expenditures

Exploration expenditure comprises of the expenditure other than the excluded expenditure which is incurred by a taxpayer in exploration for petroleum in the eligible recovery or the exploration area in relation to the petroleum project.


Factoring can be explained as a financial transaction that involves a business job sells out its accounts receivable (called invoices) to a third party (referred as a factor) at a discount. “Advance” factoring involves the factor to provide finance to the account seller in the form of a cash advance, usually 70-85% of the purchase price of the accounts. The balance of the purchase price, along with the net of the factor’s discount fee, and other charges is paid upon collection.


Finance is generally defined as “funds management” or the management of money. However, modern finance is a family of business activity which involves the marketing, organization, and management of cash. Moreover, money surrogates through the way of instruments, capital accounts, and markets created for transacting and trading assets, liabilities, and risks.

Financial Management

Financial management can be referred to as a branch of finance dealing with the managerial significance of the finance techniques. It involves planning, organizing, directing, and controlling the financial activities of a business firm, like procurement and utilization of the funds of the business firm. 


By definition, a franchise is a form of business organization in which a firm is already successful because of a good product or service called the franchisor, who gets into a contract based relationship with another business called a franchisee, who operates under the name of the franchisor for a fee.


franchise is an agreement in which a party (franchisor) shares business knowledge, trademarks, techniques and other unique selling points with another party (franchisee). The franchisee then may operate under the franchisor’s name and carry on a separate business but within the perimeters set by the franchisor.


A franchise is an agreement in which a party (franchisor) shares business knowledge, trademarks, techniques and other unique selling points with another party (franchisee). The franchisee then may operate under the franchisor’s name and carry on a separate business but within the perimeters set by the franchisor.


Fraud is considered to be the economic evil. It’s actually a tricky or unlawful way to obtain something. Fraud vanishes the trust of the person who had been victimized from it. Fraud got motivation from the will or desire to deceive someone or unlawfully capturing the money or the property from the person who previously trusted the person who had done fraud with him. This evil has wreaked up the faith among the persons and makes the community to be less depended to the term ‘trust’.

Free Price System

The term free price system refers to an economic system where prices are decided by exchange of demand and supply and the prices resulting from it is taken as a signal which is communicated between consumers and producers and which helps in guiding production and distribution of the resources. Free price system is also known as free price mechanism and sometimes informally they are called the price mechanism or the price system.


Garnishment is a process that is extremely associated with the payroll accounting. In this process, the employer holds the wages of the employee by the order of a court. Then the employer remits this money to the person or agency, which the court specifies explicitly. This process of withholding and remittance by the order of a court is known as wage garnishment.

GE/McKinsey Matrix

The GE/McKinsey matrix is a form of analysis using a portfolio, it outlays the strategic units of the business and the position of SBU (it is a combination of product market which needs a separate business plan) in the industry. It locates the industry attractiveness on the vertical axis and the business unit strength on the horizontal axis, both in categories of high, medium and low. It was originally developed by McKinsey for the general electric company. It is indicated on the axes weigh the business options under two criteria the first is the attractiveness of the potential industry and the second is the business strength.

Golden Parachute

An agreement between a company and an employee which states that the employee will be entertained with certain benefits if his employment is terminated is known as a golden parachute. Golden parachute is provided mostly to executive employee and benefits are significant and noteworthy. In some cases, this termination of an employee is due to a merger of companies or takeover of a company while in other cases golden parachute may depict packages for executive officers like CEO as a result of separation or termination of partnership and is not related to changes in the ownership.

Grace Period

grace period is the time period during which the late penalty on the obligation due is not charged. In this period of time, the late payments regarding your due obligations are not charged with the default surcharges. In other words, Grace period is an extension period that is provided to you from your borrower out of good will.

Grey Market

grey market or gray market is an unauthorized and unofficial market where products are bought and sold at lower prices than the official price of that product. While grey market is legal, it is an unofficial market where goods are traded through distribution channels which are unauthorized by the manufacturer of that product. Grey market is similar to the term black market. However grey economy, sometimes known as ‘hidden economy’ or underground economy means paying the workers under the table where no income tax is paid or no contribution is made to Medicare, Social Security and such other public services.

Gross Domestic Product (GDP)

The actual definition for Gross Domestic Product (GDP) can be given as the financial value of all finished goods and services generated within a nation’s borders in a certain time period, though GDP is generally evaluated on a yearly basis. This counts all of public and private consumption investments, government outlays, and exports less imports occurring within a specific territory.

Gross National Product (GNP)

Gross National Product (GNP) can be defined as an economic statistic which includes Gross Domestic Product, plus any income earned by the residents from investments made overseas. Also, the income earned within the domestic economy by overseas residents. As explained by Investopedia, Gross National Product (GNP) refers to a quantification of economic performance of a country.


hedge is, generally, an investment position projected to make up for potential losses which might be incurred by a cohort investment. In theoretical terms, a hedge refers to an investment made to reduce the risk of unfavorable price movements in an asset.


HIBOR is actually the rate through which the banks in Hong Kong deal with each other in the inter bank market. The lending and borrowing in Hong Kong dollars between their banks is done with the help of a rate that is known as HIBOR.

Highly Leveraged Transaction (HLT)

A bank loan given to a company which is already in huge debt is high leveraged transaction. It results in doubling the liabilities of the borrower because the acquisition or recapitalization transaction is made. The high leveraged company means that already huge loans has been taken the interest rate might also be high too.

Holding Company

Holding company can be explained as a parent corporation which owns sufficient voting stock in another corporation to control its board of directors (and, thus, controlling its policies and management). As explained by Investopedia, it is essential for a holding company to own a minimum of 80% of voting stock to obtain tax consolidation benefits, like tax-free dividends.

Horizontal Integration

When the same level of value chain acquires additional business activities, then it is referred to as horizontal integration. This can be said that horizontal integration refers to control and ownership.

Hostile Takeover

hostile takeover takes place when the company is taken over without the choice of management especially the directors. It is either done with the purchase of shares or with the help of a demand to request the change in the management.

Human Resource Management

Human Resource Management is important for every company, as it helps in organizing the recruitment process within a company. Human resource management is not limited just to the recruitment process alone, but also helps in managing the employees and also help in providing the necessary guidance that is required by the people employed with a given organization.

Human Resources

Human resources are the collection of individuals who work in an organization and form its workforce. Human resources are also sometimes known as human capital, but the term human capital has a narrow view where individuals working in the organization are seen only from the viewpoint of the knowledge that they have and how that can be useful to the organization. There are also many other terms that are commonly used for human resources and they are ‘manpower’, ‘labor’, ‘people’ or ‘talent’.


Hyperinflation is actually the process when the prices become out of control and they increase rapidly. Hyperinflation in the economy results in the decrease in the value of money as the demand supply formula loses its original shape.


Incorporation is a procedure that declares that a corporate company is separate from its owners. There are many benefits of incorporation both for the owners and business, such as...


Incoterms is the term (short for International commerce terms) that is used in the international contracts and published by the International Chamber Of Commerce. This term was developed to bridge the gap between the members of the industry so that they can use a uniform language.

Inflation Rate

Inflation is the rise in the price of products for general consumers which in turn affect the cost of living of a normal consumer.

Initial Public Offering (IPO)

Initial Public Offering (IPO) is the first stock sold by a private entity to the public. Initial Public Offerings are generally used by younger and small entities that are looking to raise or expand their capital. However, IPOs can also be offered by large private companies that wish to trade publicly.

Inside Information

Inside information is the material information regarding an entity, which only the board of directors, management, or/and employees and not the public is aware of.

International Monetary Fund

IMF which is the abbreviation of International Monetary Fund is the largest financial and economic organization of the world.

Job Analysis

Job Analysis is a process, which is used to collect information relating to the responsibilities, duties, skill sets, conclusion and work environment of any given job. The information needed to analyse the job could require a person collecting endless data. This analysis helps in figuring out the result of a given job. The result can be in the form of performance development, recruitment planning and more.

Joint Stock Company

Joint Stock Company may be defined as a company that issues stock and allows derived promotion trading making the stockholders legally responsible for the debts caused to the company. A Joint Stock Company is a combination of a partnership and a corporation. A joint stock company has right to use the liquidity and fiscal funds of stock markets but also is restricted like a partnership.


Kickback is considered to be a part of the bribe. Kickback is actually a job which is performed by the person or the organization which is considered to be bribed. In other words, the favor which is done by the passive bribe partner against the money or the granting of the gift. This process is totally unlawful and against the moral values and ethics. Kickbacks and bribery both harms the public especially to the poor class whose prosperity and progress only lies on the merit system. Moreover, the kickbacks and the bribery impact the welfare system and have the impact on the overall economy too.

Labor Theories of Value

The labor theories of value (LTV) are different from the accepted theories of value and states that the value of a commodity only has relation with the labor required for obtaining or producing that commodity and is not related to any other factors of production. The concept of labor theories of value is often linked with Marxian economics in present times. It is also related to earlier classical economic theories like the theories of David Ricardo and Adam Smith. The term ‘labor theory of value’ was never used by Karl Marx for describing the theory of value; instead he referred to a law of value which has no association with the concept of’ labor theory of price’ which is a classical economics concep


A person lending a property after making an agreement in black in white is a lessee. It can be also be defined as the tenant who take a property on rent and performs his part of obligations as mentioned in the agreement. As this is a legal document if the lessee fails to perform the obligations he can be evicted.


Lessor can be defined as the owner of the property that has been the subject matter of the leased agreement. It can also be known as the person who gives his property to the lessee for a particular duration.

Letter of Credit

letter of credit, generally, refers to a letter supplied by the buyer’s bank to the seller after the accomplishment of a contract between a buyer and a seller. This letter of credit from the bank guarantees that the buyer’s payment will be made to the seller on time and for the right amount. If, in any case, the buyer is unable to make payment at the time of purchase, it is required by the bank to cover the full or pending amount of payment.

Life Annuity

It is a sort if a life insurance that a person wishes to take making his/her retirement safe. Life annuity is based on a pre-determined amount that the annuitant wishes to pay periodically till the retirement day. The payments made to him until he ceases to live anymore that is till that person dies.

Limited Liability Company (LLC)

According to definition a Limited Liability Company (LLC) is a corporate structure in which the shareholders of the company have limited liability to the company’s actions. A Limited Liability Company provides the shareholders the required personal liability protection for any action of the business. The compensation of the business is not recovered with the assets of the owners.

Limited Liability Partnership (LLP)

Limited Liability Partnership (LLP) is basically a new kind of corporate framework, which combines the flexibility involved in a partnership and the benefits of limited liability of an entity at a compliance price that is very low. Thus, it offers the advantages of limited liability of an entity and also permits its members to organize their internal management based on a mutual agreement, like in the case of a partnership entity.

Management Discussion and Analysis

Management Discussion and Analysis is basically business related information that has been mandated by the Securities and Exchange Commission, which must also come with 3 years of financial statements that have been audited. At present, it is considered as a prominent part of filing of registration and must reveal the liquidity related position, operations results, capital resources, prominent causes of material alterations in the finance related statements, events of infrequent or unusual nature, negative and positive trends as well as important uncertainties of the corporation.

Marginal Utility

Marginal utility is the concept according to which the customer can be provided with the sense of satisfaction when any gain is received by the consumer while he or she is getting any goods or service by one more unit.

Market Economy

Market economy can be defined as the economy in which all the decisions are taken on the basis of demand and supply and free price system. In a market economy, decisions related to production, investment and distribution are dependent on the demand and supply and free price system or free price mechanism is used for determining the prices of goods and services.


Maturity, basically, refers to the length of time by which the principal amount of a bond should be paid off. In simple words, it can be explained as the end of a security’s life. The Investopedia explains maturity as the date by which the borrower is supposed to pay back the amount borrowed by him through the issue of a bond.


Microcredit is the scheme which is introduced to benefit the small level borrowers. In this scheme there is an extension of small loans which is offered to the small level borrowers.


Microeconomics is that particular branch of economics, which focuses on analyzing how individual firms and consumers are behaving in the market with an intention to understand the procedure of decision making of the households and firms better. Microeconomics takes the interaction taking place between individual sellers and buyers as well as the factors, which influences the selection made by the sellers and buyers into consideration. Thus, in general, microeconomics pays attention to the patterns of demand and supply and determines output and price in different markets.


Micro finance also known as micro credit is a type of banking service which serves those who cannot afford the service otherwise. Like the unemployed and those in a low income group. It brings the essential services of finance like insurance, loans and savings in reach of the mentioned class which is not going to be able to gain access to such services otherwise, so this is a socially conscious attempt at making them independent and better off. To improve the standards of living for the masses which will thus, make the whole society better off.

Mixed Economy

Mixed economy is referred to the economic system in which both public sector and private sector coexist. In this type of economic system, private sector as well as the state direct the economy and the means of production is shared between them. This economic system exhibits characteristics of both market economy and planned economy. Mixed economy can be best described as the market economy where there is a strong regulatory oversight and which has many government enterprises and government provision of public goods.

Money Laundering

Money laundering is considered to be the serious crime. This crime is at the growing rate as most of the individuals are not known to this term. In such case, the Government becomes lone and thus it’s become harder and harder for them to tackle this serious crime like this money laundering. Money laundering refers to the transfer or exchange of the property which is gathered from and illegal source. It’s actually the process where the illegal money or property becomes legal under the rule or law table.

Money Market

Money market is basically that particular section of the finance market wherein finance related instruments, with very brief maturities and high amount of liquidity are adequately traded. The money market is utilized by the participants for the purpose of lending and borrowing for a brief period, for a number of days to a little less than a year. The securities of money market incorporates certificates of deposit that are negotiable, U.S. Treasury related bills, bankers acceptance, commercial paper, federal funds, repurchase agreements and municipal notes.


Monopoly is a situation wherein a single entity owns either nearly all or all of the market for a particular kind of service or product. This happens in situations where a barrier exists for entrance into the industry, which permits the single entity to operate in the absence of competition. In this type of industrial structure, the products manufacturer will mostly produce a volume which is lesser in comparison to the amount that would enhance social welfare.


mortgage refers to a lien or loan on a property which is supposed to be paid off over a specific time period. It can be considered as your personal guarantee which ensures that you will repay the money borrowed to buy a property.

Negotiable Instrument

Negotiable instrument is the document which provides the guarantee of payment of a specific amount of money. This payment is required to be made either on the set time or on demand by the lender.

Non-Cumulative Preferred Stock

Noncumulative preferred stock refers to the preferred stock shares which usually have dividends starting all over in every year. In case the company fails to pay dividends in one year, the dividends will not accumulate in arrears. The company is only expected to pay the dividends for the current year before the remaining amount is paid to the common shareholders.

Off Shoring

You must have heard of outsourcing, it is when a company hires another to perform certain functions for it. It is an external recruitment. Off shoringis the type of outsourcing where the company outsources its functions to be done in another country. This has a lot of benefits for the company yet some drawbacks too, like everything else it has its own pros and cons.


The oligopoly refers to the market structure where the hold is held in the hands of a few firms. This situation leads to a highly concentrated market. Oligopoly does not merely means that only a few firms operate, but it suggests that operating firms can be many but the domination is held by a few ones.

Omnibus Account

“Omnibus” refers to an item which has a number of other items inside it. For example, a book has several different stories of different authors will be called omnibus. Similar is the case of Omnibus account, a combine account of different investors is known as Omnibus account.


An overdraft can be defined as the amount by which withdrawals surpasses the deposits, or the extension of credit through a lending institution to consent to such a situation. In simple words, an overdraft allows the individual to continue withdrawals even with zero funds. 

Participative Management

Participative management is a decentralized form of management. It is an employee friendly environment where the workers are encouraged by giving advices and actively participate in the role in decision making. It is practiced by the managers or employers who value their employees and believe that a cooperative relations which their employees will have a positive impact on their morale thus productivity, as labor is a huge asset of any business.

Pension Parachute

Pension parachute is a kind of defensive approach adopted by corporations to get secured against unreceptive takeover. Basically, Pension Parachute is a pension agreement which states that in the case of hostile take over the raiding firm will not be able to use pension assets to finance the acquisition and the pension plan assets are only available to provide benefit to the participants of the plan.

Performance Management

Performance management is the process which focuses on achieving targets and goals in an efficient and effective manner. This process aims at enhancing organizational effectiveness by improving individual performances of employees, department, or processing.

Perpetual Debenture

Perpetual debenture is also called the perpetual bond or simply Prep. It is defined as the bond with no maturity date. Therefore it is advised to be treated as the equity and not as the debt. The issuers of this bond pay coupons on the perpetual bonds for ever. In this way these people have to redeem the principal. It is due to the same reason that the phenomenon of cash flows of the perpetual bond is known as perpetuity.

Personnel Selection

Personnel selection is the process used for hiring individuals from the pool of job applicants having the required qualifications, knowledge, skills and competence to fill the vacant positions in the organization. The personnel selection process is the tool that management applies to differentiate between applicants who are qualified and who are unqualified by using different techniques. Selection is a negative process of employment because the applicants who qualify are only offered employment and the unqualified applicants are denied the opportunity. The aim of the selection process is to choose the most suitable candidate whose contributions will be most valuable for the organization.

Petty Corruption

The term "petty corruption" is used for the corruption which are done on the small scale or the corruption which is done on the low-level. The corruption amount seems to be little if we compare it to the overall business transactions. Petty corruption has reeked up the overall business performance and thus the whole corporate world is getting affected because of it. The petty corruption includes inside the use of Grease money, this includes the extortion money (the money which is paid to the police or any other person to avoid the penalties and fines) and the bribes, for example: paying the customs officials to clear the goods or other thing which is considered to be banned in that particular region.

Pledged Asset

Pledged asset is defined as the asset which is given to the lender in order to secure the loans. The word pledge means a promise or such a thing which makes you bound to do something. So the term pledged asset is an asset which is given just to prove that the borrower has got the capacity to pay the market. If you are associated with the financial market since the dawn of business, you must be knowing about a document or a particular asset must be deposited in order to get a loan.

Predatory Lending

Predatory lending is not at all considered as the legal practice. In terms of capitalism and economics, this procedure is considered as the unfair and deceptive practice on part of lenders and they can then use these unfair means for the unfair loan origination procedures.

Preemptive Right

Preemptive rights refer to shareholders who possess the right to maintain some share of ownership of an organization through the buying of the proportional number of shares to the percentage of shares they already have in the corporation. The stockholder has the right to buy some additional shares in the company of new issues for Equity preservation. This is done before anyone else can purchase shares of a new issue for equity preservation.

Preference Shares (Preferred Shares)

Preference shares (preferred shares) refer to the stock which proffers a specific dividend being paid prior to the payment of any dividends which are paid to the common shareholders.


Prepayment is the phenomenon which marks the repayment of loan before time and in early installments. The borrower normally repays the loan in order to save oneself form the high interest rates and the repayment is observed in cases of the refinancing by the borrower.

Private Company

Also known as private corporation, private company,  is a company whose shares are not traded in the open market. The ownership of the company is private which is a reason why it is not required to meet the necessary rules of public companies. The stocks can be issued and the company can have shareholders but these shares are restricted only to the company and company holders and not given out for the public.

Private Property

Private property is the ownership of the property and this ownership is by the non governmental legal bodies. There are clear distinctions between the private and public properties. Usually the public property is owned by the governmental bodies. The private property is even different from the collective property which is owned by a group of individuals.

Producer Price Index (PPI)


prospectus is a legal document that is required by every company and is to be filed with the Securities and Exchange Commission to provide with the details of investments that are being offered to the public for sale. A prospectus should contain all the necessary facts and figures relating to the investments that would be useful for the investor to make the necessary investment related decisions while making purchase of these investments. The prospectus is also called “Offer Document”.


Protectionism is a policy adopted by some countries to protect domestic industries from global competitors by imposing some restrictions on trade of goods and services between countries. In this policy government of that particular country increases tariffs (import taxes), Quotas, Embargoes (a complete ban on imported goods), import licensing, subsidies, exchange controls etc to increase prices of imported products which make them expensive and less attractive. Countries using protectionism when they feel that their industries are getting damage from unfair global competition. In short-term, it work like a defensive measure but if it remains for long-term may ruin the industries trying to protect as less competitive on global marketplace.

Public Company

Public company, also known as public corporation, is a company whose shares are traded publicly and such a company has plenty of shareholders. The company offers its shares to the company as a public offering and the daily value of the company is evaluated because of daily trading that happens in the company.

Quasi Loan

It happens many times when an agreement is signed between two parties and according to this agreement one out of two parties agrees to pay the debts and loans of the other party. In return to this favor provided by the party paying the loan for another, the second party has to agree upon the reimbursement of the amount at some later date but keeping this agreement the first and foremost priority.

Quasi Rent

The term quasi rent is not new to the economists. This is basically an analytical term which is used for the income earned as a result of the opportunity cost after investment. Usually it so happens that the individuals face the loss of cost investment and their payment may be sunk. The amount earned after such a loss is called as the quasi rent. The term of quasi rent is not too old and it was used for the first time by Alfred Marshall. He was the first economist to earn quasi rents.


Company records are changed to remove the deficit of the retained earnings and restating the balance sheet by showing bankruptcy. Although bankruptcy is not filed, shareholders have to agree to the changes. These are controversial policies because they do not change the financial position of the company, instead it just plainly makes the balance sheet looks prettier and healthier. This accounting policy is seldom done. This is just a tool in the accounting industry to restructure corporate

Real Estate Investment Trust (REIT)

It is a form of security that sells like stocks through major exchanges and directly invested in real estate, either through the help of mortgages or through the properties. They get tax-relief and other tax considerations that offer investors high yields including liquid methods and ways of buying out properties and real estate.

Real Estate Mortgage Investment Conduit (REMIC)

REMIC is a special purpose vehicle or an SPV for issuance of mortgage-backed securities (MBS) or to pool in mortgage loans. Real estate mortgage investment conduits (REMIC) are responsible in holding residential and commercial mortgages in trust and issuing new interest for these mortgages to investors. It is a pass through tax thing that holds the real estate property. This financing vehicle was created through tax reform act of 1986. They are mortgage backed security.


Recapitalization is a term used to denote some sort of legal reorientation of the company’s capital structure. There may be a variety of reasons because of which the recapitalization takes place. Mainly it is denoted as a procedure by which a large part of the equity is converted into debt and also a large part of the debt is converted into equity.


The word recession is mainly associated with a big decline in the economic activity of a country in terms of industrialization, employment and other such activities. It is such a condition where people have no employment or the employment is very scarce. It is also indicated by a steep decrease in the growth of economy as measured in the terms of Gross Domestic Product (GDP). It is also defined as a slowdown of the business cycle throughout the country. If we look from the macroeconomic view, then the indicators like GDP, employment of people, capacity utilization, spending on investment, household incomes, and profits in business and inflation sharply declines.

Regulated Investment Company (RIC)

In matters of the business agreements and the other issues, it is necessary that you count on the companies that are eligible to permit the interests or dividends, taxes that depend on the capital gains that are earned due to the investment of the funds. It is passed to the shareholders on a highly personal basis so that one can avoid the aspects of the double taxation to a certain extent.


In matters of the economy, the first thing that strikes the mind of the people is the security and the risk management. It is important to give proper priority to the financial aspects that include the uncertainty on the ground of the accidents, legal liabilities, failures of the projects, natural disasters and other calamities. To ensure a healthy background and security of the public, it is necessary to choose the right kind of the management procedure. It is not that the risks will come into the investment field with proper notification. It becomes the duty of investors to make sure of their security to a certain level. Reinsurance is that part of the investment that is completed by the insurance company, to handle the risk managing factor.

Related Party Transaction

Related Party Transaction is one of the most common genres today in the field of business and finance. The present economic background deserves special attention for it is in a pretty vulnerable condition. People are giving the Related Party Transaction a thought just because it has the facilities of both the commercial and the personal transactions. Apart from the commercial transactions it is possible that one can carry on the transactions on the basis of consideration. To conduct the long distance transactions, this system has come up with some well-organized terms and conditions so that it becomes beneficial for the management to get the transactions done.

Risk Management

Risk management is the process in which there is involves analysis, identification and either adoption or palliation of uncertainty is involved in decision-making of investment. And essentially, risk management happens any time a capitalist or fund manager examines and efforts to quantify the possibility for deprivation in an investment then carries the precise action or inaction which given their investment targets and risk margin.

Sale–Leaseback Transactions (Leaseback)

In a sale-leaseback arrangement, an owner sells his or her belongings or property and instantly leases it back to the buyer as part of the same transaction.


Self financing is the procedure in which the company or an individual spends his own money for the completion of ongoing projects in case of unavailability of funding sources.

Single-Premium Deferred Annuity (SPDA)

Single Premium Deferred Annuity (SPDA) is a type of annuity contract that is recognized with a solitary lump-sum payment by the owner.

Sole Proprietorship

Sole Proprietorship by definition is an unincorporated business which has only one owner and is one of the simplest businesses to set up and is a very popular choice of most of the business men today. A Sole Proprietor is the owner of the company and does not have to pay taxes of the business separately but has to provide with the details of his business profits and losses as an individual income tax return. Most businessmen prefer sole proprietorship as they would not have to think of names to run as a company but can be named after the sole proprietor himself.

Spot Market

The spot market is a commodity or security market where goods, both perishable and non-perishable are sold for money and delivered immediately or within a short span of time. Contracts traded on a spot market are also in effect instantly.

Standard Industrial Classification

A standard 4-digit code used by the US government to identify the industries according to their functions or products is Standard Industrial Classification (SIC). These codes were later replaced in 1997 with 6-digit codes mostly. However the Securities and Exchange Commission still uses the SIC codes.

Start-up Costs

Start-up costs are basically non-recurring costs,which are associated, with setting up a business such as fees of an accountant, registration charges, legal fees, promotional and advertising activities, as well as employee training. It is also called as start-up, preliminary or pre-opening expenses. In other words, start-up cost means a variety of different costs,which a new business owner should incur so that the business gets established. These are typically one-time costs, and they are often allowed to be amortized. Start-up cost also includes the acquiring equipment, fees, paying for a place for conducting the business, living expensesand so forth.

Strategic Planning

No doubt no one can violate the importance of strategic planning in any organization. It's simple as putting some strategic planning to analysis and determines where the company is going over in the next few years or more and how it is going to get that position and how it will know that it's getting the specified goals or not?

Subordinated Debt

It is a type of debt that is risky and is secondary in position with respect to repayment of loan, in case of default by the borrower. In other words asubordinated debt that ranks below other securities or loans when the phase of loan repayment occurs.

Subprime Lending

There are many names for the term subprime lending. It is also called as the near prime lendingnon prime lending andsecond chance lending. In principle the sub prime lending refers to making loans to the people who are having any difficulty in maintaining the schedule of repayment of the loan. This is sometimes very disturbing on part of the borrowers when they do not find any way of paying off their loans.

Surplus Value

The surplus value, according to Karl Marx is the new value that the workers create in addition to their own labor cost and that which is available for appropriation by the capitalist. It allows for making profit and is the foundation for capital accumulation. This concept of surplus theory was developed and written by Karl Marx, but the term is not invented by him.


Customarily, swap is delineated as the exchange of one security for another to alter the quality of issues (stocks or bonds), maturity (bonds), or because of change in investment objectives. In recent times, swaps have grown to take account of currency swaps and interest rate swaps.

Task Analysis

Task Analysis is the recognition of the prime elements of any given job and then understanding the skills required to make sure that the job is done with perfect outcome. This information is essential for the human resource management department, as it will allow them to plan objectives and help in organizing training programs and necessary tools that are required to make sure that the required job is done.


Taylorism which is also known as scientific management was a theory of management that describes and integrates actions. The main goal of Taylorism is to provide the way of bettering the economy, especially in the field labor production. It was involved several steps of involving, resource allocation and development. It becomes Taylorism due to the name of Frederick W. Taylor in way back 20th century.

Technical Analysis

Technical analysis refers to a method used to gauge securities by analyzing statistics produced by market activity, like past prices and volume. Technical analysts do not endeavor to estimate the intrinsic value of a security. They rather use charts and similar tools to recognize patterns which can suggest future prospects.

Theory of Value

Theory of value is a term used in economics which covers all the theories included in economics that explain price of goods and services or exchange value. The basic and most important questions of the theories of economics are why the price of goods and services are priced as they are, how the price of goods and services are considered and how the correct price of goods and services can be calculated.

Time Management

Time management refers to the process or act to plan and exercise control over the amount of time that is used for performing specific activities. The main purpose of time management is to increase productivity, efficiency and effectiveness. For time management a variety of techniques, skills and tools may be used for managing time when specific goals, projects and tasks are needed to be accomplished within a given due date.


Trademark is a registered symbol that represents that the specific product is the intellectual property of the manufacturer or the distributor of the product and only these specified personnel have a right to manufacture and distribute the product and realize profits on it.

Transfer Pricing

Transfer pricing is when the business divisions are treated as separate entities so that the price charged by one part of the company from another part of the same company in order to provide them with certain service is known as transfer pricing.


Trustee is the legal term and it has been used in its broadest form. This term refers to the person holding any property or any position or any authority and he or she runs the matters of that possession for the benefit of another person or persons. In other terms he is holding the trusteeship of the property or possession.


Underwriting can be explained as a process through which the investment bankers raise investment capital from investors on the behalf of governments and corporations which are issuing securities (debt as well as equity). However, underwriting is also referred as the process of issuing insurance polices.

Unique Selling Proposition (Unique Selling Point)

Let’s start with the basic question, what is a unique selling proposition? It is the factor or aspect of a product the producer highlights or claims to be special to make it stand out in the market. This concept of USP is crucial to any strong marketing plan. It represents what is your business all about and how does your product serve the target audience better than the other competitors do. In today’s globalised market it is very important for a firm to create a successful USP in order to gain competitive advantage over the many close substitutes available.

Unsecured Bond

Venture Capital

Venture Capital is the financial capital which is provided by investors to high potential and high risk start-up firms and small companies with long term growth potential.

Vertical Integration

This is not new that a certain company tends to expand its production line into different areas especially when the manufacturer has some liabilities. Here comes the point when vertical integration plays role as its provide companies an edge in cutting down the extra costs and show efficiency by cutting down the expenses spend on transportation and reducing the duration of the work as well. Despite of the advantages of vertical integration, many times companies follow economies of scale and knowledge of the suppliers.


Voucher is a piece of evidence, which proves that a certain event or transaction is carried out. Voucher can be in three different forms. 


warrant refers to a derivative security which provides the holder with the right to purchase securities (generally equity) from the issuer at a particular price within a specific period of time. Warrants are generally included in a fresh debt issue as a “sweetener” to inveigle investors. They can also be used for enhancement of the bond yield thus making them more attractive to prospective buyers.

Work Breakdown Structure (WBS)

Work Breakdown Structure (WBS) may be defined as the form of work to be performed by people in an order or chain of command. It is a structure that helps define the tasks to be performed at different stages by the elements involved in a hierarchy to achieve the end result. The form of work could be anything like a product, data or a service. 


yield refers to the income return on an investment. This indicates the dividends or interest received from a security and is generally expressed yearly as a percentage based on the cost of investment, as well as the face value or the current market value.

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