LIST OF FINANCIAL TERMS (ALPHABET WISE: LETTER-A).
ACCEPTANCE: The drawee's acknowledgement of the LIABILITY on a BILL OF EXCHANGE, in writing on the instrument itself. A bill may also bear the co-acceptance by a bank, which is a guarantee to honour the instrument in the event of default by the drawee.
ACCOMMODATION BILL: A Bill of Exchange without any consideration, or quid pro quo. In this case, a person signs a bill & makes himself liable, without receiving any value in return, such as, an advantage or a benefit. The purpose of accepting such a bill is to accommodate the drawer who is temporarily in need of funds. The acceptance enhances the LIQUIDITY of the instrument, which can be discounted by the drawer with a bank.
ACCURAL BASIS: A method of accounting that recognizes revenues & expenses as they accrue, even though cash would not have been received or paid during the accrual period.
ADR: An acronym for American Depository Receipt. It is an instrument traded at U.S. exchanges representing a fixed number of shares of a foreign company that is traded in the foreign country. By trading in ADRs, U.S. investors manage to avoid some of the problems of dealing in foreign securities markets. The ADR route enables companies to raise funds in the U.S. financial markets, provided they meet the stringent regulatory norms for disclosure & accounting.
ALLOTMENT: The acceptance of an application subscribing to the shares or other securities of a company. Such allotment establishes the contractual relationship that underlies an investment through public subscription.
AMORTIZATION: The reduction f an amount at regular intervals over a certain time period. This term is used to refer to the reduction of debt by regular payment of loan installments during the life of a loan. It is also used to described the accounting process of writing off an intangible ASSET.
ANNUAL REPORT: A yearly publication that contains particulars relating to the operating data of a company & which is published and distributed by the company to its share-holders, as per the requirement of the Companies Act. The important contents are the profit & loss statement and the BALANCE SHEET. These statements show a company's performance in terms of sales & earnings during a financial year, and also its year-end financial position in terms of ASSETS & LIABILITIES. It also contains the directors' report, a notice to the shareholders about the proposed business agenda of the annual general meeting & the auditor's report.
ARBITRAGE: Simultaneous purchase and sale transactions in a security or a commodity, undertaken in different markets to profit from price differences. For example, an arbitrageur may find that the share of The Tata Iron and Steel Company (TISCO) is trading at a lower price, at the Vadodara Stock Exchange compared to the exchange at Bombay. Hence, he may simultaneously purchase TISCO stock in Vadodara at, say Rs.250, and sell in Bombay at a higher price, say Rs.256, making a profit of Rs.6 per share less expenses.
ASSET MANAGEMENT COMPANY (AMC): A company set up for floating and managing schemes of a MUTUAL FUND. An AMC earns fees by acting as the PORTFOLIO manager of a fund. The AMC is appointed by the Board of Trustees, which oversees its activities. Thus, a mutual fund is generally established as a trust by a SPONSOR, which could be a registered company, bank or FINANCIAL INSTITUTION. Also, a custodian & a registrar are appointed to ensure safe keeping of the fund's securities & to deal with investors' applications, correspondence, etc.
AT-THE-MONEY: The term relates to trading in listed OPTIONS. An option is said to be trading 'At-the-Money' when the STRIKING PRICE and the market price of the underlying share are equal (See Options as well as Appendix-II).
ANGEL INVESTOR: These are high worth individuals who provide seed capital for start-ups in return for a minority share in business. They are also known as Business Angel or simply Angel. They can also be a group of individuals who pool their savings or funds to invest in start-ups. Angels come into picture when the business idea is in its inception stage. Business ideas that do not get much respect from banking sector can approach Angels. Angels also invest in an idea that has potential to get market's attention. Usually bank's risk appetite is lesser than Angels. Also they charge a little lower than banks. They do not invest in huge in a single project rather in a multi-portfolio to balance out their losses..
ACCEPTANCE: The drawee's acknowledgement of the LIABILITY on a BILL OF EXCHANGE, in writing on the instrument itself. A bill may also bear the co-acceptance by a bank, which is a guarantee to honour the instrument in the event of default by the drawee.
ACCOMMODATION BILL: A Bill of Exchange without any consideration, or quid pro quo. In this case, a person signs a bill & makes himself liable, without receiving any value in return, such as, an advantage or a benefit. The purpose of accepting such a bill is to accommodate the drawer who is temporarily in need of funds. The acceptance enhances the LIQUIDITY of the instrument, which can be discounted by the drawer with a bank.
ACCURAL BASIS: A method of accounting that recognizes revenues & expenses as they accrue, even though cash would not have been received or paid during the accrual period.
ADR: An acronym for American Depository Receipt. It is an instrument traded at U.S. exchanges representing a fixed number of shares of a foreign company that is traded in the foreign country. By trading in ADRs, U.S. investors manage to avoid some of the problems of dealing in foreign securities markets. The ADR route enables companies to raise funds in the U.S. financial markets, provided they meet the stringent regulatory norms for disclosure & accounting.
ALLOTMENT: The acceptance of an application subscribing to the shares or other securities of a company. Such allotment establishes the contractual relationship that underlies an investment through public subscription.
AMORTIZATION: The reduction f an amount at regular intervals over a certain time period. This term is used to refer to the reduction of debt by regular payment of loan installments during the life of a loan. It is also used to described the accounting process of writing off an intangible ASSET.
ANNUAL REPORT: A yearly publication that contains particulars relating to the operating data of a company & which is published and distributed by the company to its share-holders, as per the requirement of the Companies Act. The important contents are the profit & loss statement and the BALANCE SHEET. These statements show a company's performance in terms of sales & earnings during a financial year, and also its year-end financial position in terms of ASSETS & LIABILITIES. It also contains the directors' report, a notice to the shareholders about the proposed business agenda of the annual general meeting & the auditor's report.
ARBITRAGE: Simultaneous purchase and sale transactions in a security or a commodity, undertaken in different markets to profit from price differences. For example, an arbitrageur may find that the share of The Tata Iron and Steel Company (TISCO) is trading at a lower price, at the Vadodara Stock Exchange compared to the exchange at Bombay. Hence, he may simultaneously purchase TISCO stock in Vadodara at, say Rs.250, and sell in Bombay at a higher price, say Rs.256, making a profit of Rs.6 per share less expenses.
ASSET MANAGEMENT COMPANY (AMC): A company set up for floating and managing schemes of a MUTUAL FUND. An AMC earns fees by acting as the PORTFOLIO manager of a fund. The AMC is appointed by the Board of Trustees, which oversees its activities. Thus, a mutual fund is generally established as a trust by a SPONSOR, which could be a registered company, bank or FINANCIAL INSTITUTION. Also, a custodian & a registrar are appointed to ensure safe keeping of the fund's securities & to deal with investors' applications, correspondence, etc.
AT-THE-MONEY: The term relates to trading in listed OPTIONS. An option is said to be trading 'At-the-Money' when the STRIKING PRICE and the market price of the underlying share are equal (See Options as well as Appendix-II).
ANGEL INVESTOR: These are high worth individuals who provide seed capital for start-ups in return for a minority share in business. They are also known as Business Angel or simply Angel. They can also be a group of individuals who pool their savings or funds to invest in start-ups. Angels come into picture when the business idea is in its inception stage. Business ideas that do not get much respect from banking sector can approach Angels. Angels also invest in an idea that has potential to get market's attention. Usually bank's risk appetite is lesser than Angels. Also they charge a little lower than banks. They do not invest in huge in a single project rather in a multi-portfolio to balance out their losses..
No comments:
Post a Comment