Glossary

* Abandoned Option
Means a share option not exercised because the price is against the buyer
(or taker) on declaration day i.e., the situation has become unprofitable.
* Absolute Monopoly
Means the control of the entire output of a commodity or service, for whic
h there exists no substitute, by a single producer or supplier. This kind of sit
uation rarely arises in real life. It is also known as pure monopoly or pe
rfect monopoly.
* Accommodation Bill
A bill which is drawn, accepted or endorsed for the sole purpose of discou
nting it, no goods being given or received for it, thus offering short-term cash
accommodation.
* Account
Refers to a running record of transactions which are taking place between
two transactors, who may be in two departments of one business and a basic eleme
nt in all systems of recording business transactions. In retail trading it
refers to the credit facility which is automatically extended to a customer wit
h whom an accountis operated.
* Accountability
Accountability is a subordinate?s obligation to render an account or repor
t of his activities to his superior.
* Administered Prices
A price set not by the force of demand and supply but by some authority li
ke the government or a regulatory authority.
* Ad Valorem Tax
A duty, which is imposed on commodities in proportion to their value i.e.,
a duty, which is expressed as a percentage and not a flat amount.
* A.O.B.
Abbreviation of ?Any Other Business?, as an item on the agenda of a meetin
g.
* Appreciation
An increase in the value:
1. of stocks and shares when their prices rise on the stock exchange;
2. of a currency when its value increases in terms of other currencies;
3. of stocks held by manufacturers and merchants during a period of ris
ing prices.
* Arbritrage
It is a speculative activity. It seeks to make profit out of differences i
n prices of a security in two markets. If the price of a certain share is higher
in one market than in another, the speculator will purchase them in the c
heaper market and sell in the dearer market.
* Articles of Association
The Articles of Association prescribe a set of rules to govern the interna
l working of the company. They cover such things as the issue and transfer of th
e company?s shares, the procedure to be followed in calling general meetin
gs, shareholders? voting rights, and many other matters. Articles of Association
require to be registered with the Registrar of Companies.
* Asset
When the balance sheet of a business is drawn up, everything which it owns
at the time which has a money value is listed as an asset. They may be classifi
ed as:
1. Current Assets - consisting of cash, stock and book debts.
2. Fixed Assets - consisting of buildings, plant and machinery.
3. Intangible Assets - being the value of goodwill, patents.
* Asset / EmployeeRatio
Refers to a ratio which is used as an indication of the capital intensity
of a company.
* Authorised Capital
 When a new company is to be registered, its application for registration i
s accompanied by a statement indicating the amount of Capital with which it prop
oses to be registered. This is known as its nominal, registered, or author
ised capital.
* Authority
Authority may be defined as the force to command others, to act or not to
act in a manner deemed by the possess of the authority to achieve organisational
objectives. It creates a relationship between the superior and the subord
inate.
* Average Cost
Average cost is the cost per unit of output, where the cost of all inputs
(factors of production) are included.
* Average Revenue
Refers to revenue per unit output.
* Backward Integration
The expansion of a business which takes the form of acquiring control over
firms supplying it with its raw materials.
* Backward Linkage
Refers to the relationship between an industry or firm and the suppliers o
f its inputs. A change in the output of the industry willget transmitted backwar
ds to the suppliers of its inputs by changing in demand for inputs.
* Bad
Means a commodity or product which produces disutility for its consumer.
* Balanced Budget
A budget is said to be a balanced budget when current income equals to cur
rent expenditure.
* Balance Sheet
This is an ordered statement of
1. the economic resources or assets of a company or other business orga
nisation, each item having a value set upon it;
2. the financial claims of persons or organizations upon the value of t
hese assets.
* Balance of Payments
Refers to the relation between the payments of all kinds made from one cou
ntry to the rest of the world and its receipts from all other countries.
* Balance of Trade
Refers to the relationship between the values of a country?s imports and e
xports, i.e., the 'visible' balance. These items only form a part of the balance
of payments, which also get influenced by
1. 'invisible' items and
2. movement of capital.
* Bank Credit
Refers to the lending by the banking system, by whatever means: bank advan
ces, discounting bills or purchasing securities.
* Bandwagon Effect
Refers to the effect whereby as the price of the goods falls and demand by
some sections or individuals in the community expands, other individuals or sec
tions ?imitate? the reactions and expand their demand also.
* Bank Deposits
The funds deposited in bank accounts. In reality they are simply records o
f indebtedness of a bank to the depositor and they arise from the character of b
anks as financial intermediaries.
* Bank Note
A note issued by a bank for a sum of money which it promises to pay the be
arer on demand.
* Bankruptcy
A legal proceeding under which the property of an insolvent debtor is take
n for the benefit of his creditors generally.
* Barter
 Refers to the method of exchanging goods and services directly for other g
oods and services without employing a separate unit of account or medium of exch
ange.
* Bear
A bear is a speculator who sells securities in anticipation of a fall in p
rices of securities.
* Bid
The term used for an offer of payment which an individual or organization
makes for possession orcontrol of assets, input, goods or services.
* Bill
A short-term debt instrument, which is in the form of a document ordering
the drawee (i.e., the debtor) to pay the drawer (the creditor) a stated sum at a
specified date, or 'at sight' which means on demand. Once it is accepted,
i.e., signed by the drawee (who may be an accepting house or bank) and ?endorse
d?, i.e., signed on the back by the acceptor, a bill becomes negotiab
le and may get discounted, i.e., sold at a discount on its face value, at a rate
which reflects current short term rates of interest.
* Bill of Exchange
A Bill of Exchange is an instrument in writing, containing an unconditiona
l order, signed by the banker,directing a certain person to pay a certain sum of
money only to or to the order of a certain person or to the bearer of the
instrument.
* Black Market
Any illegal market which has been established in a context where prices ha
ve been fixed at minimum or maximum level, usually by government. Thus, when max
imum prices have been fixed, trading may occur at prices above the maximum
.
* Blown Up Price
Descriptive of the final price of goods following a rise in the price of b
asic materials and fuel.
* Blue Chip
A consistently growing company both in terms of profit as well as market s
hare is called a blue-chip company.
* Blue Chip Rate
Refers to the lowest interest rate payable by borrowers having the highest
credit rate.
* Book Value
In its balance sheet a company may value assets in the form of asset inves
tments at the prices shown in its books, namely the prices at which they were
purchased, even though their current price on the stock exchange may be high
er or lower.
* Boom
Refers to a period of expansion of business activity. It is opposite of sl
ump or recession. A boom reaches a peak when the economy has been working at ful
l capacity.
* Brain Drain
Means the migration of educated and skilled labour from poorer to richer c
ountries.
* Brand
A brand is a name, term, sign, symbol, or design, or a combination of them
, intended to identify the goods or services of one seller or group of sellers a
nd todifferentiate them from those of competitors.
* Break-Even
Carrying on business in which neither profit nor loss is made.
* Broker
One who buys and sells bonds and other financial assets. He is employed by
other people on account of his knowledge of market conditions and procedures an
d because of his expert knowledge of the commodity dealt in. A Broker is u
sually paid commission for his services, known as 'brokerage'.
* Brokerage
 A fixed cost which is charged by the broker for cash of investment or enca
shment of bonds and other financial assets.
* Budget
A budget is a financial statement showing the estimates of receipts and ex
penditure. The budget is divided into two parts : (a) revenue budget and(b) capi
tal budget.
* Budget Deficit
Budget deficit is the difference between total revenues and total expendit
ure.
* Bull
A bull is a speculator who purchases securities in anticipation of a rise
in prices of securities.
* Bullion
Precious metals like gold or silver which have been held in bulk in the fo
rm of ingots or bars.
* Business Plan
A Business Plan is a formal document containing a mission statement, descr
iption of the firm?s goods or services, market analysis, financial projections a
nd a description of management strategies for attaining goals.
* Call Loan
A loan which may be terminated or called at any time by the lender or borr
ower.
* Call Money
Funds borrowed by discount houses from the clearing and houses banks in ma
ny countries, and which they employ in holding a portfolio of assets. A high pro
portion of these funds are borrowed literally ?at call.?
* Call ? Option
Refers to a contract giving the option for buying shares at a future date
within a prearranged time limit.
* Capacity
The term used for the estimated maximum level of production from a plant o
n a sustained basis,permitting all necessary shut - downs, holidays etc.
* Capacity Utilization
Refers to the ratio of actual output to potential output.
* Capital
Capital is one of the factors of production and has been defined as wealth
used in the production of further wealth. For business purposes, capital genera
lly has to be considered in terms of money.
* Capital Asset
The term used for an asset, which is not bought or sold as part of the eve
ryday running of a business. Examples include real estate, plant equipment.
* Capital ? Authorised, Nominal or Registered
Synonymous terms for capital fixed by the Memorandum of Association of a c
ompany.
* Capital Expenditure
Expenditure of a non-recurrent nature resulting in the acquisition of asse
ts.
* Capital Employed
The term used for the capital in use in a business; it consists of the tot
al assets minus the current liabilities.
* Capital Employed, Return On
The relation of profit to the estimate of average capital employed to yiel
d a ratio, commonly called the primary ratio, as follows:Primary ratio = Profit/
Capital
* Capital Gain
Refers to the difference between the purchase price of an asset and its re
sale price at some later date, where that difference has been positive.
* Capital Goods
Goods which are made for the purpose of producing consumer goods and other
capital goods, e.g. machinery of all kinds. This term is synonymous with 'produ
cers goods'.
* Capital Intensity
The ratio of capital to labour employed in production.
* Capital Market
A market comprising institutions which are involved in the purchase and sa
le of securities, e.g., the new issue market and the stock exchange.
* Capital Market Instruments
Financial instruments like company shares and bonds, long-term government
bonds, and local government bonds.
* Capital Output Ratio
Means the ratio of the amount of capital to the amount of output produced
by that capital.
* Cartel
Refers to a formal agreement between business firms to co-operate on agree
d norms relating to prices & output. Cartels mostly occur in oligopolies.
* Cash
Money in the form of bank notes and coins.
* Cash Crops
This term used for crops grown by peasant farmers specifically for sale in
the market as opposed to crops directly consumed for subsistence purposes.
* Cash Flow
Refers to the sum of retained earnings and depreciation provision made by
firms. As such it is the source of internally generated long ? term funds availa
ble to the company.
* Cash Market
The term used for a market for the immediate delivery of, and payment for,
commodity.
* Cash Reserve Ratio (CRR)
All banks must keep a certain percentage of their total time (like fixed d
eposits) anddemand (like savings accounts) liabilities with the RBI. The CRR is
fixed by the RBI and is hence variable. The upper limit of CRR is 15% whil
e there is no lower limit.
* Central Excise Duties
These duties are levied by the Central Government on commodities, which ar
e produced within the country. But commodities on which State Governments impose
excise duties (as for instance, on liquor and drugs) are exempted from Ce
ntral Excise Duties.
* Certificate of Deposit (CD)
A document, which is issued by a bank acknowledging a deposit of money wit
h it and constituting a promise to repay that sum, to the bearer, at a specified
future date. It is negotiable i.e., can be transferred.
* Cheap Money
A term used to describe a situation where bank rate and other rates of int
erest are low. A policy of cheap money may be adopted in a time of industrial
depression to stimulate recovery.
* Cheque
A cheque is a bill of exchange drawn on a specified banker and not express
ed to be payable otherwise on demand.
* C.I.F (Cost, Insurance and Freight)
Term used of goods shipped where the price includes shipping and insurance
charges. A C.I.F. quotation implies that the seller must ship the goods, meetin
g all charges upto ?on board? and paying insurance and freight.
* Closed Economy
A concept which is used mainly in theoretical models to describe an econom
y having no external trade, which is completely self-sufficient and insulated fr
om external processes.
* Collusion
Means an agreement between firms to co-operate so as to avoid mutually dam
aging rivalry.
* Commercial Banks
 A general term denoting those banks, which conduct a general rather than a
specialized type of business. They accept deposits, make advances, etc.
* Committee
A committee is a group of persons constituted to deal with specific issues
or problems of the organisation.
* Communication
The process by which people attempt at sharing meaning through the transmi
ssion of symbolic messages.
* Company
A joint stock company is a legal entity set up for the purpose of conducti
ng commercial or industrial operations, and with a capital divided into shares,
held by members.
* Company Savings
Refers to that part of firms' profits which have neither been paid out in
taxes nor distributed to shareholder as dividend.
* Consumer Credit
Refers to a loan, which is given to the consumer for a short period of tim
e, for the purchase of a specific commodity. This can take the form of hire purc
hase or be in the form of a personal loan from a bank.
* Consumer Durable
A commodity of relatively long life, like a refrigerator or a washing mach
ine, as distinct from, say foodstuffs.
* Consumer Goods
Products in the actual form in which they reach domestic consumers.
* Consumer?s Surplus
Means the excess of the price which a person would be willing to pay rathe
r than go without an article over that which he/one actually pays; it may be ter
med as consumer?s rent.
* Consumption
Means the act of using goods and services to satisfy current wants.
* Consumption Expenditure
Refers to aggregate expenditure on goods and services to satisfy current w
ants.
* Contango
A stock exchange term meaning carry-over. A broker who wishes to postpone
settlement of a transaction to the following account may do so on payment of int
erest on the sum due. The term ?Contango? is also used to mean the extra p
ayment itself.
* Control
?Control consists in verifying whether everything occurs in conformity wit
h the plans adopted, the instructions issued and principles established. It has
for its object to point out weaknesses and errors in order to rectify them
and prevent recurrence. It operates on everything, people, things, action?. (He
nry Fayol)
* Controlling
Controlling is the process of ensuring that the organisation is moving in
the desired direction and that progress is being made towards the achievement of
goals.
* Contract
An agreement, oral or written whereby one party undertakes to do or not to
do something for the other party to the contract.
* Convertibility
Refers to the freedom to exchange any currency for another currency at the
current exchange rate.
* Copyright
The sole right to reproduce a literary work or a musical composition. It g
ives the owner a monopoly of a particular piece of property, which like other pr
operty can be assigned in return for payment to another person or persons.
* Corporate Tax
Corporate tax is a tax on income of the companies.
 * Cornering
It is the condition of the market in which almost the entire supply of par
ticular security is held by an individual or a group of individuals. The specula
tor who corners the security will dictate his own price.
* Corporate Paper
Notes which are sold by large corporations in the money market as a means
of getting funds.
* Corporate Risk
The total risk involved in a business is termed as corporate risk. It comp
rises two types of risk. Financial risk which arises out of debt finance, and bu
siness risk i.e., the basic risk involved in the firm?s day to day operati
ons.
* Corporation
The term used for a contemporary form of business having two distinct char
acteristics: it is a legal entity separated from its owners,the stockholders; an
d it is usually on a scale much larger for the sole proprietor or partners
hip to manage or fund.
* Cooperation
Cooperation refers to the collective efforts of people who associate volun
tarily to achieve specified objective.
* Coordination
Coordination is the task of blending the activities of individual and grou
p efforts in order to maximise the contribution towards the accomplishment of co
mmon goals.
* Cost
The cost of producing a certain output of a commodity is the sum of all th
e payments to the factors of production engaged in the production of that commod
ity.
* Cost of Sales
The cost which is incurred in a manufacturing unit in converting raw mater
ials into a finished product: such costs include raw materials, labour, and fact
ory overheads.
* Cost of Production
Expenditure which is incurred by way of payments for rent, mortgages, inte
rest on loans, dividends, salaries and wages, buildings, plant and machinery and
raw materials, in the production of a commodity or a service, including d
evelopment and marketing costs.
* Countervailing Duty
A duty imposed on imported goods where there is evidence of an export subs
idy in the country of origin which may adversely affect the domestic producers i
n the importing country.
* Credit
A wide term which has been used in connection with operations or states in
volving lending, generally at short-term. To ?give credit? is to finance, direct
ly or indirectly, the expenditure of others against future repayment.
* Credit Card
A card which is issued by a bank or group of bodies or other agency which
provides the holder direct access to credit e.g., from a merchant location, hote
l etc., or, in the case of some cards issued by banks, to cash from the ba
nks operating the particular scheme.
* Credit Rating
Means an evaluation of the soundness of an individual or business firm as
a credit risk. It is usually based on
1. company?s track ? record
2. company?s current and prospective business
3. financial risk
4. quality of management.
* Crossing
This means drawing two parallel lines across the face of a cheque, the eff
ect of which is to make it necessary to pay it into a banking account.
* Cumulative Preference Share
A preference share which entitles the holder to receive not only the curre
nt dividend but also any unpaid arrears, before any dividend has been paid to or
dinary shareholders.
* Current Assets
Items such as cash, accounts receivable, marketable securities, and invent
ories ? assets that could be turned into cash at a reasonable predictable value
within a relatively short time period (typically, one year).
* Current Liabilities
Debts, such as accounts payable, short-term loans, and unpaid taxes, that
will have to be paid off during the current fiscal period.
* Current Ratio
Also known as the ?Acid-test? Ratio, it is the relation between the curren
t assets and the current liabilities of a business.
* Customs Duties
These are taxes on imports.
* Dated Security
Refers to any security, like a bond, which has a stated redemption date. S
uch securities are conventionally divided into short-dated, medium-dated and lon
g-dated securities depending on the length of time which has to elapse bef
ore they ?mature?.
* Dead Horse
Work which is paid for but is yet to be completed; a situation in which go
ods and services have been paid for in advance of production or performance.
* Dear Money
A period when rates of interest are high, so that borrowing is expensive.
* Debt
Refers to a sum of money, or quantity of goods or services, owned by one i
ndividual or body to another.
* Decision Making
The process of identifying and selecting a course of action to solve a spe
cific problem.
* Deed
A deed is a legal document or written agreement. There are different types
of deeds viz, deed of assignment, deed of partnership etc.,
* Deficit
Refers to a situation where outgoings exceed income on an ongoing basis, o
r where liabilities exceed assets at a specific point in time.
* Deficit Financing
Refers to a situation where expenditure exceeds income such that a deficit
is deliberately operated.
* Deflation
Means a situation, in which prices and money incomes have been falling, ac
companied by an increase in the value of the monetary unit.
* Del Credere Agent
An agent who, in return for a higher rate of commission, guarantees that h
is principal will receive payment for the goods he has sold on his behalf.
* Delegation
The act of assigning formal authority and responsibility for completion of
specific activities to a subordinate.
* Delegation of Authority
Authority is said to be delegated when a superior entrusts a part of his r
ights to his subordinate. In other words, to delegate means to extend authority
to a subordinate in certain defined areas and to make him responsible for
results.
* Demand
By demand is meant the quantity of a commodity that will be bought at a pa
rticular price and not merely the desire for a thing. Generally at a high price,
less will be bought than at a low price.
* Demand Draft
A Demand Draft is a Bill of Exchange and negotiable instrument.
* Demand Price
Refers to the price which buyers are prepared to pay for a given quantity
of goods or service.
* Departmentation
Departmentation may be defined as the process of grouping individual jobs
into departments. It is a means of dividing one large and complex organisation i
nto smaller and flexible administrative units.
* Departmentalization
Division of a company into departments that are similar and logically conn
ected.
* Depression
Means prolonged and severe slowing-down of economic activity exemplified b
y mass unemployment and a level of national income well below its potential leve
l. It is more severe and long-lasting than a recession.
* Derived Demand
Refers to the demand for a commodity not needed for its own sake, but its
contribution to the manufacture of another commodity.
* Devaluation
Refers to a fall in the external value (or exchange rate) of one currency
vis-?-vis other currency.
* Directing
Directing is the managerial function of guiding, supervising, motivating,
and leading people towards the attainment of planned targets of performance. It
is the executive of management because it is concerned with the execution
of plans and policies.
* Direct Tax
A tax levied directly on individuals or firms. These taxes are not transfe
rable. Some examples are income tax & capital gains tax.
* Discount
1. An inducement offered by a creditor to debtors to pay promptly. (Cas
h Discount).
2. A deduction from the catalogue price of an article generally allowed
by a wholesaler to a retailer, that is, trade discount.
3. With reference to a bill of exchange, to discount a bill means to ac
quire it by purchase for a sum less than its face value, the amount of this disc
ount depending partly on the length of the unexpired term of the bill and
partly on the amount of risk involved.
4. When a recently issued stock falls below its issue price it is said
to stand at a discount.
* Dishonour
A Bill of Exchange is dishonoured when the drawee has insufficient funds t
o discharge it when it falls due for payment. Similarly, a cheque is dishonoured
when the drawee has insufficient funds to meet it.
* Disinflation
A mild form of deflation. A policy adopted to check inflation by restricti
ng demand.
* Dissaving
A situation where consumption expenditure exceeds current income. In such
a case, consumption is financed through borrowing in anticipation of future inco
me.
* Dividend
In the case of limited companies, the rate of dividend is the amount of di
stributed profit as a percentage of the nominal value of the share capital to wh
ich it relates. Dividends are usually declared annually but many companies
pay something on account as an interim dividend.
* Dividend Warrant
A draft issued by a limited company and made payable to a shareholder for
the amount of dividend due to him for a stated period.
* Division of Labour
The breakdown of a complex task into components so that individuals are re
sponsible for a limited set of activities instead of the task in total. Sometime
s referred to as division of work.
* Dock Warrant
A receipt for goods stored in a warehouse; it entitles the holder to take
possession of the goods.
* Dumping
Means the sale of a good in a foreign market at a price below its marginal
cost.
* Duopoly
A form of imperfect competition where there are only two producers of a co
mmodity. Such a situation can be given to cut-throat competition of a particular
ly irrelevant type, and to prevent both parties being ruined by it, they m
ay agree to share the market, perhaps on a territorial basis, eachagreeing not t
o compete against the other in its share of the market.
* Duopsony
Refers to a market situation in which there are only two buyers of a parti
cular goods/service.

* Easy Money
Refers to a general state of ease and cheapness of borrowing in the financ
ial system. It may result from policy action to reduce interest rates, increase
liquidity of the banking system, release any non-price restrictions on lend
ing like credit ceilings and restrictive conditions on hire-purchase contracts.
* Economic Growth
The rate of expansion of the national income or total value of production
of goods and services of a country.
* Economies of Scale
Refers to the reduction in the average cost of a product in the long run,
resulting from an expanded level of output. They are also known as ?long run inc
reasing returns?.
* Elasticity
The degree of responsiveness of demand or supply to a change of price. Ela
sticity may be defined as a measure of the percentage change in one variable in
respect of a percentage change in another variable.
* Elasticity of Demand
Means the response of demand to a change in the price of commodity. If the
price rises, the amount demanded normally decreases.
* Elasticity of Supply
Means the response of supply to a change in the price of commodity. If the
price rises, the quantity demanded normally increases.
* Entrepreneur
The term used for the organizing factor in production. Entrepreneurs are r
esponsible for such economic decisions as what to produce, how much to produce a
nd what method of production to adopt.
* Equity
Another name for ownership; often used to describe a share in a company.
* Exchange
Exchange is the act of obtaining a desired product from someone by offerin
g something in return.
* Excise Duties
Taxes on home produced goods to raise revenue, as distinct from customs du
ties which are taxes on imports not primarily imposed to raise revenue. Excise d
uties may be imposed either to raise revenue or to check the consumption o
f the commodities on which they are imposed.
* Export
The term used for a goods/service which is produced in one country and sol
d to a consumer in another.
* Face Value
Means the nominal value, as distinct from the market value, of a security
(bond/share). The value written on a coin or a bank note is also termed as face
value.
* Factors of Production
The resources required for production. The four factors of production are
Land, Labour, Capital and Entrepreneur (Organization). Factors of production are
resources required for production.
* Factor Income
Income accruing to factors of production ? rent for land, wage for labour,
interest for capital, & profit for organizer.
* Fiat Money
Money which the State declares to be legal tender.
* Finance
The term is applicable to funds from almost any source which is used to un
dertake any kind of expenditure.
* Finished Goods
Refers to the goods, which are used for the purpose of consumption and not
utilized as inputs by the firms in the process of production.
* Fiscal Policy
Generally refers to the use of taxation and government expenditure for reg
ulating the aggregate level of economic activity.
* Fixed Assets
Includes the monetary value of the company?splant, equipment, property, pa
tents, and other items used on a continuing basis to produce its goods and servi
ces.
* Fixed Cost
Refers to the production costs which tend to be unaffected by variations i
n the volume of output.
* F.O.B. (Free on Board)
Term used of goods shipped where the price does not include shipping and i
nsurance charges; opposite to C.I.F. An F.O.B. quotation implies that the export
er will deliver the goods free on board a ship in accordance with the cont
ract at the port named; he pays all expenses up to that point. From there on, th
e buyer must take responsibility, paying for freight, insurance, and all s
ubsequent expenses
* Forward Market
A Forward market transaction involves a contract to buy or sell commoditie
s, or securities at a fixed future date at a price agreed in a contract.
* Franchise
A type of licensing arrangement in which an organization sells a package c
ontaining a trademark, equipment, materials, services owned by another organizat
ion.
* Free Market
Refers to a market in which there is an absence of intervention by governm
ent and where the process of demand and supply are permitted to operate freely.
* Functional Organisation
In a functional organisation, the enterprise is divided into a number of f
unctional departments. Every functional department servesthe rest of the organis
ation. For example, the purchase department handles purchases on behalf of
the entire organisation.
* Goal
The purpose that an organization strives to achieve. Organizations often h
ave more than one goal.
* Good
This term is used of any commodity or service for which there is a demand,
irrespective of whether it is in any sense ?good? or ?bad?.
 * Hedge
Any action taken by a buyer / seller to protect his interest by spreading
/ lowering risk due to a change in price.
* Hierarchy
The line of authority in an organization that runs in order of rank from t
op management to the lowest level of the enterprise.
* Horizontal Integration
With reference to the structure of an industry it is the tendency to speci
alize in single processes instead of undertaking the entire production of the co
mmodity from start to finish.
* Hot Money
Money that moves across country/borders in response to interest rate diffe
rences and that, which moves away when the interest rate differential disappears
.
* Hypermarket
A hypermarket is a multi-brand, multi-department store under one roof mean
t to offer cost-effective shopping for household requirements.
* Hypothecation
Refers to the pledging of securities as collateral; for example to secure
the debit balance in a margin account.
* Idle Money
An inactive money that does not contribute to productive assets in an econ
omy. It results from what Keynes called ?Liquidity Preference? i.e.; the desire
to hold money rather than risk it on interest-earning assets, or goods whi
ch may have little utility.
* Income Tax
Personal income tax is levied on individuals by the Central Government and
the proceeds are shared between the Centre and the States. The income tax is
progressive; that is, the tax rate is not uniform but rises progressively wi
th the rise in money income.
* Infrastructure
Services which are regarded as essential for the creation of a modern econ
omy; e.g.; power, transport, housing, education, health services.
* Insolvent
Means the state of being unable to pay one?s debts.
* Interest
A payment by a borrower for the use of a sum of money for a period of time
. It is the reward for the use of capital in the process of production.
* Intermediate Goods
The goods which find use at some point in the production process of other
goods, rather than final consumption.
* Inventory
The raw materials, work in progress and finished goods in organization mai
ntained to meet its operational needs. A term used for the quantity of stock hel
d by a business.
* Invoice
A document used in business giving a complete summary of a transaction inv
olving the sale of goods.
* Issued Capital
The actual amount of capital issued by a company and allotted in shares to
investors. It may be the same or less than the authorised capital.

* Jobber
A jobber is an independent dealer in securities. He purchases and sells se
curities in his own name. He is not allowed to deal with non-members directly.
* Labour
 All human resources which are available to society for use in the process
of production.
* Labour?Costs Per Unit of Output
Refers to the cost of the labour in real terms which is involved in making
each unit of output.
* Laissez-Faire
Refers to a policy of non-interference by the State in economic affairs.
* Lateral Communication
Communication between departments of an organization that generally follow
s the work flow rather than the chain of command, and thus provides a direct cha
nnel for coordination and problem solving.
* Lateral Integration
This occurs when a firm branches or absorbs other businesses engaged in pr
oducing commodities related in same way to its own main products.
* Lease
The term used for an agreement in which one agent obtains the right of use
of some property owned by another agent for a given period of time in return fo
r an agreed fixed charge (which is generally paid in periodic instalments)
.
* Letter of Credit
A document which is issued by a bank on behalf of a customer which guarant
ees payment by the bank of cheques drawn by the customer, or more commonly today
of bills drawn on that customer by parties from whom he has bought goods.
Letters of Credit are used largely in association with bills of exchange, to wh
ich they give added security in the financing of foreign trade.
* Letter of Hypothecation
The term used for a letter from an exporter to his bank authorizing it, in
the event of the importer failing to accept or pay a bill of exchange, to sell
the goods exported and remit the proceeds less expenses.
* Liabilities
Refers to any claims, actual or potential, of an individual or institution
. The term usually refers to financial liabilities of which the commonest form h
as been a debt of any kind. Thus, some deposits, which are banker's debts,
are commonly termed as 'deposit liabilities'.
* Lien
Means a claim against property. A bond is usually secured by a lien agains
t specified property of the company.
* LIFO (Last In, First Out)
This is a method of costing adopted by firms which carry many items of sto
ck of the same kind bought at different times and at different prices as shown i
n the books. Under the more common FIFO system, it is assumed that wheneve
r an item is sold it was the first to be purchased, whereas under the LIFO syste
m it is assumed to have been purchased last.
* Limited Liability
Means the restriction of an owner?s loss in a business to the extent of th
e capital that he has invested in it.
* Line Organisation
Line organisation refers to a direct chain of command from top to bottom.
Here, the lines of direction are straight and vertical. Every superior has compl
ete command over his subordinates and every subordinate is directly accountable
to only one superior immediately above him.
* Liquid Assets
Means assets either in the form of money or which can be quickly converted
into money.
* Liquidation (Winding? Up)
Refers to the process where-by the existence of a company gets terminated,
its property having been realized and distributed among its creditors and in th
e event of a surplus, among its members.
* Liquidity
The term indicates availability of cash, and of assets readily convertible
 into cash (called liquid assets), to meet immediate obligations; a volume of re
serves plus credit facilities, reflected in an ability to meet current financial
liabilities in cash.

* Management
The process of planning, organizing,leading, and controlling the work of m
embers of an organization and of using all available organizational resources to
reach stated organizational goals.
* Manpower
In ordinary language, manpower means the working population of a country.
In economics, manpower means the organisation of work force for its utilization
in different sectors of the economy.
* Market
A market consists of all the potential customers sharing a particular need
or want who might be willing and able to engage in exchange to satisfy that nee
d or want. In non-marketing terms the function of a market is to enable an excha
nge of goods or services to take place, a means by which buyers and sellers are
brought into contact with one another.
* Marketing
Marketing is a social and managerial process by which individuals and grou
ps obtain what they need and want through creating, offering and exchanging prod
ucts of value with others.
* Market Economy
Means an economy in which crucial economic decisions and choices are made
in a decentralized manner by private individuals and firms operating through a f
ree price-and-market mechanism. Equilibrium of prices and quantities are determi
ned in a market economy through the laws of supply and demand.
* Market Forces
Refers to pressures by the free play of market supply and demand, which in
duce adjustment in prices and / or quantities traded.
* Market Price
Means the price determined by the equilibrium between demand and supply in
a market period (or very short period).
* Matched Order
Its purpose is to create an impression in the market that a security is ve
ry active. For this purpose, two sets of brokers are employed - one for buying a
nd the other for selling at prices determined in advance by the speculator.
* Matrix Structure
An organizational structure in which each employee reports to both a funct
ional or division manager and to a project group manager.
* Maturity
Means the date on which a loan or bond or debenture becomes due and is to
be paid off i.e., the capital refunded.
* Merger
Means a union of two or more firms in a transaction by which one absorbs t
he other(s), or a new firm gets created utilising the assets of the absorbed fir
ms.
* Mortgage
Refers to the conveyance of property by a debtor (mortgager) to a creditor
(mortgagee) as security for a debt, with a condition that the property will hav
e to be reconveyed on payment of the debt.
* MNC (Multi National Corporation)
A large corporation with operations and decisions spread over several coun
tries but controlled by a central headquarters.
* Near Money
Assets which are readily convertible into money e.g. deposit accounts, dep
osit with savings banks and building societies, and certain short-term agreement
securities.
 * Negotiable Instrument
A claim, the title to which passes by delivery. Examples of such claims in
clude bills of exchange,cheques, promissory notes, dividend warrants and debentu
res payable to bearer. Transfer is by delivery only. A bill of exchange payable
to a certain person ?only? is not a negotiable instrument. Neither is a cheque w
ith ?not negotiable? written on it. Bill of Lading, Dock Warrants, and Postal Or
ders are not negotiable.
* NAV (Net Asset Value)
The value of a fund?s investment. For a mutual fund, the net asset value p
er share usually represents the fund?s market price.
* Net Book Value
A statement of the value of fixed assets which is used in accounting. The
appropriate amount of depreciation is deducted from the original cost of purchas
e of the asset to give its net book value.
* Net Profit
Means gross profit minus deduction of tax payments and depreciation provis
ions.
* Open Economy
An economy, which is engaged in international trade. The degree of opennes
s of an economy is appreciated by the rise of its foreign trade sector relative
to its gross domestic product.
* Operating Budget
Budget indicating the goods and services that an organization expects to c
onsume within a budget period.
* Opportunity Cost
Means the real cost of satisfying a want. It is expressed in terms of the
cost of the sacrifice of alternative activities.
* Organising
Organising is the process of establishing harmonious authority?responsibil
ity relationships among the members of the enterprise. It is the function of cre
ating a structure of duties and responsibilities.
* Organization
Two or more people who work together in a structured way to achieve a spec
ific goal or set of goals.
* Organizational Structure
The way, in which an organization?s activities are divided, organized and
coordinated.
* Overdraft
Refers to a system of bank lending, by which the borrower is permitted to
draw cheques beyond the credit balance in his account, up to an agreed limit, an
d to pay interest only on the daily amounts by which the account is overdrawn.
* Overheads
Costs which are not directly chargeable to any unit produced. They include
rent of premises, salaries of salesmen, research, etc.,
* Paid-Up Capital
That part of the issued capital, which is paid up by the shareholders. The
actual amount of capital that shareholders have subscribed. It may be less than
the authorised capital.
* Paid?Up Shares
Shares are fully paid ? up when the full amount has been paid. Sometimes s
hares are only partly paid ? up, the company being able to call for the balance
to be paid whenever it requires this additional capital.
* Paper Note
A general term which is used for money in the form of bank notes.
* Paradox of Value
Means paradox on which an essential to life item, such as water is normall
y valued little, but a luxury item, such as diamonds, carry a high price.
* Par Value
 Means the nominal or face value of a share or security.
* Pass Book
A book supplied to customers by a bank, in which entries are made of all d
eposits and withdrawals.
* Planned Economy
An economy where crucial economic processes are determined to a large exte
nt not by market prices, but by an economic planning body.
* Planning
Planning, a primary function of management, implies looking ahead and deci
ding in advance what to do, when to do it, how to do it and who is to do it.
* Power
The ability to exert influence i.e. the ability to change the attitudes or
behavior of individuals or groups.
* Predatory Pricing
Means the practice of diminishing prices down to unprofitable levels for a
period, so as to weaken or eliminate existing competitors.
* Premium
Securities are said to be 'at a premium' when they stand above par on the
stock exchange.
* Price
Refers to the value of a commodity or service in terms of money. Also it i
s the amount of money that has to be paid for a commodity or service.
* Price Discrimination
Refers to the charging of different prices to different groups of individu
als for the same goods or services for reasons not associated with difference in
costs.
* Primary Industry
Refers to the production of goods from agriculture, forestry and fishing,
mines that constitute the natural wealth of a nation.
* Probation
Probation is a period when a new worker is being tested before getting a p
ermanent job.
* Procedure
A standing plan that contains detailed guidelines for handling organizatio
nal actions that occur regularly.
* Producers? Goods
Refers to goods made for the purpose of producing consumer goods and other
capital goods e.g. machinery of all kinds. This is synonymous with capital good
s.
* Product
A product can be defined as anything that can be offered to satisfy a need
or want. The term ?Product? can be used to cover both 'goods and services'.
* Productivity
Means output per unit of input employed.
* Profit Margin
Refers to profit per unit of output which is expressed as a percentage of
price.
* Pro Forma
An invoice sent to a buyer before the goods are sent, so that payment can
be made or business documents can be produced.
* Program
A single use plan that covers a relatively large set of organizational act
ivities and specific major steps, their order and timing, and the unit responsib
le for each step.
* Programme
A programme is a concrete scheme of action designed to accomplish a given
task. It specifies the steps to be taken, resources to be used, time limits for
each step, and assignments of task.
* Programmed Decisions
Solutions to routine problems determined by rule, procedure, or habit.
 * Project
A project is a distinct cluster of functions and facilities for a definite
purpose. It is defined in terms of capital investment,specific objective and in
terdependence of tasks.

* Rate of Return
Refers to the basis of earnings from the investment of capital, where earn
ings are expressed as a proportion of the outlay.
* Rate of Turnover
The number of times the value of the average stockof a business is sold du
ring a period.
* Repo
Repo is a short term for repurchase agreement for RBI selling a government
security at a competitive rate in the market to absorb what it considers is exce
ss liquidity. The buyers are either banks or registered primary dealers.
* Rules
Rules are rigid and definite plans that specify what is to be done or not
done in a given situation. A rule provides no scope for discretion and judgment.
* Sandwich Boards
Boards carried in front of and behind a person to carry advertisements
* Sandwich Man
A man who carries sandwich boards to carry advertisements.
* Scab (also called blackleg)
A scab is a worker who goes on working when there is a strike.
* Schedule
A schedule specifies time limits within which activities are to be complet
ed. It is the process of establishing a time sequence for the work to be done.
* Scientific Management
?It is the art of knowing exactly what you want men to do and then seeing
that they do it in the best and cheapest way?. (F.W. Taylor)
* Span of Control
The number of subordinates reporting directly to a given superior. Also ca
lled span of management control.
* Staffing
Staffing is the process of filling all positions in the organisation with
adequate and qualified personnel. It consists of manpower planning, recruitment,
selection, training, compensation, integration and maintenance of employe
es.
* Stag
A speculator who buys a large amount of a new issue of shares or stock if
he thinks the price is likely to rise above the offer price when dealings in it
begin on the stock exchange, so that he hopes to sell soon at profit.
* Start-Up
Business founded by individuals intending to change the environment of a g
iven industry by the introduction of either a new product or a new production pr
ocess.
* Stock Exchange
A highly organised market for dealings in stocks and shares. Only members
are admitted and business is transacted according to a prescribed set of rules.
An investor who wishes to sell or buy securities must act through a broker
.
* Strategy
A strategy may be defined as an administrative course of action designed t
o achieve success in the face of difficulties.
* Strategic Planning
Strategic planning is long term in nature. Strategic planning is formulate
d mainly at the top level of management. It has mainly an external focus as it i
s designed to achieve the organisational objectives in the face of challen
ges and opportunities.
* Synergy
The situation in which the whole is greater than its units. In organizatio
nal terms, synergy means the departments that interact cooperatively are more
productive than they would be if they operated in isolation.

* Turnover
Total sales of a business during a particular period.
* VAT (Value Added Tax)
A tax levied on the value of each of the processes carried out by a busine
ss.
* Variable Costs
Expenses that vary directly with the amount of work being performed.
* Wash Sales
It is a transaction in which a speculator sells a security and then buys i
t at a higher price through another broker. This will create an impression that
there is great demand for that security. As a result, people may be induce
d to purchase them at a very high price.
* Wear and Tear
The depreciation of the value of a thing as a result of ordinary usage as
distinct from damage resulting from negligence or accidental causes.
* Wind Up
To bring a limited company to an end either voluntarily or by order of the
court.
* Yield
The return on a security, based on its current earnings in relation to its
current price on the stock exchange. Money produced as a return on an investmen
t.