TERMINOLOGY

1. Liquidation- Liquidation in finance and economics is the

process of bringing a business to an end and distributing its
assets to claimants. It is an event that usually occurs when a
company is insolvent, meaning it cannot pay its obligations
when they are due. As company operations end, the
remaining assets are used to pay creditors and shareholders,
based on the priority of their claims. General partners are
subject to liquidation.
2. Capital Structure- Capital structure is the particular
combination of debt and equity used by a company to finance
its overall operations and growth.
3. Financial Structure - Financial structure refers to the mix of debt
and equity that a company uses to finance its operations. This
composition directly affects the risk and value of the associated
business.
4. Trust fund of doctrine- Trust fund doctrine is a principle of
judicial invention which says that corporate assets are held as
a trust fund for the benefit of shareholders and creditors and
that the corporate officers have a fiduciary duty to deal with
them properly.
5. Financial leverage- Financial leverage is the use of debt to
buy more assets. Leverage is employed to increase the return
on equity. ... The financial leverage formula is measured
as the ratio of total debt to total assets. As the proportion of
debt to assets increases, so too does the amount of financial
leverage.
6. Bond- A bond is a fixed-income instrument that represents a
loan made by an investor to a borrower (typically corporate or
governmental). A bond could be thought of as an I.O.U. between
the lender and borrower that includes the details of the loan and
its payments. Bonds are used by companies, municipalities, states,
and sovereign governments to finance projects and operations.
Owners of bonds are debtholders, or creditors, of the issuer.
7. Bond Indenture- A bond indenture is the contract associated
with a bond. The terms of a bond indenture include a
description of the bond features, restrictions placed on the
issuer, and the actions that will be triggered if the issuer fails
to make timely payments
8. Dividend- A dividend is the distribution of corporate profits to
eligible shareholders. Dividend payments and amounts are
determined by a company's board of directors. Dividends are
payments made by publicly listed companies as a reward to
investors for putting their money into the venture.
9. Bond Premium- A premium bond is a bond trading above its
face value or costs more than the face amount on the bond. A
bond might trade at a premium because its interest rate is
higher than the current market interest rates. The company's
credit rating and the bond's credit rating can also push the
bond's price higher.
10. Bond Discount- Bond discount is the amount by which the
market price of a bond is lower than its principal amount due
at maturity. A bond issued at a discount has its market price
below the face value, creating a capital appreciation upon
maturity since the higher face value is paid when the bond
matures.
11. Financial market- A financial market is a market in which
people trade financial securities and derivatives at low
transaction costs. Some of the securities include stocks and
bonds, raw materials and precious metals, which are known in
the financial markets as commodities.
12. Financial intermediaries- A financial intermediary is an entity
that acts as the middleman between two parties in a financial
transaction, such as a commercial bank, investment bank,
mutual fund, or pension fund.
13. Money market- The money market refers to trading in very
short-term debt investments. At the wholesale level, it involves
large-volume trades between institutions and traders. At the retail
level, it includes money market mutual funds bought by individual
investors and money market accounts opened by bank customers.
14. Over the counter- Over-the-counter (OTC) refers to the
process of how securities are traded via a broker-dealer
network as opposed to on a centralized exchange. Over-the-
counter trading can involve equities, debt instruments,
and derivatives, which are financial contracts that derive their
value from an underlying asset such as a commodity.
15. Ordering cost- Ordering costs are the costs related to the
preparation of a supplier’s order, including the cost of placing
an order, inspection costs, documentation costs, and others.
16. Public finances- Public finance is the study of the role of the
government in the economy. It is the branch of economics
that assesses the government revenue and government
expenditure of the public authorities and the adjustment of
one or the other to achieve desirable effects and avoid
undesirable ones
17. Reserves- A reserve is profits that have been appropriated
for a particular purpose. Reserves are sometimes set up to
purchase fixed assets, pay an expected legal settlement, pay
bonuses, pay off debt, pay for repairs and maintenance, and
so forth.
18. Revaluations- A revaluation is a calculated upward
adjustment to a country's official exchange rate relative to a
chosen baseline. The baseline can include wage rates, the
price of gold, or a foreign currency. Revaluation is the
opposite of devaluation,
which is a downward adjustment of a country's official
exchange rate
19. Operating leverages- Operating leverage is a cost-
accounting formula that measures the degree to which a firm
or project can increase operating income by increasing
revenue. A business that generates sales with a high gross
margin and low variable costs has high operating leverage.
20. Universal bank- Universal banking is a system in which
banks provide a wide variety of comprehensive financial
services, including those tailored to retail, commercial, and
investment services. Universal banking is common in some
European countries, including Switzerland.