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Economic/ Business Cycle:
Predictable long term pattern changes in national income. Traditional business cycles undergo four stages: expansion
Nasdaq (National Association of Security Dealers
A computer system established by the NASD (National Association of Security Dealers) by providing dealers with current bid and ask price quotes on over the counter stocks and some listed stocks. Unlike the AMEX and the NYSE
Letter of Intent
A letter from one comapny to another acknowledging a willingness and ability to do business. A letter of intent is most often issued as acknowledgement of the fact that a merger between companies or an acquisition is being considered seriously. In other cases
Economics
A social science that studies how individuals
Keynesian Economy
Believes that markets react very slowly to changes in equilibrium (special changes in prices) and that active government intervention is sometimes the best method to get the economy back into equilibrium.
Neoclassical economics
An approach to economics that relates supply and demand to an individual\\\'s rationality and his or her ability to maximize utility or profit. It also increased the use of mathematical equations in the study of various aspects of the economy.Positive Economics
(Objective)
Study of economics based on objective analysis. Most economists today focus on positve economic analysis
Xample: A positive economics statement would be: \\\" Increasing interest rates will encourage people to save\\\". This is considered a positive economic statement because it does not contain value judgments and its accuracy can be tested.
Most of the information that we hear in the media today is a combination of positive and normative economics statement or theories. Because of this investors should always be careful to separate out what is objective and what is subject analysis.
Normative Economics
(Subjective) Economic perspective that incorporates subjectivity within its analyses. Is the study or presentation of \\\"what it ought to be\\\" rather than what it actually is. It deals heavily in value judgments and theoretical scenarios (opposite of positive economics).
Normative statements are often heard in the media because they tend to represent a theory or opinion rather than objective analysis. It is a great way to establish goals and generates ideas
but it should not be used as a basis for policy decisions.
Xample: \\\" We should cut taxes in haalf to increase disposable income levels\\\". On the other hand a positive/ objective economic observation would be
\\\" Big tax cuts would help many people
Microeconomics
Branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular
Microeconomics looks at the smaller pictureand focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who hav any desire to start their own buinsess or who want to learn the rationale behind the pricing of particualr products and seervices would be more interested in this area.
Macroeconomics
Field of economics that studies the behavior of the aggregate economy. It examines economy-wide phenomena such as changes in: 1.unemployment 2.national income 3.rate of growth 4.gross dometic product 5.inflation and price levels
.
Macroeconomics is focused on the movement and trends in the economy as a whole
while in microe the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other
Mortgage Bond
A bond secured by a mortgage on a property. Mortgage bonds are backed by real estate or physical equipment that can be liquidated. These are usually considered high-grade
Futures Contract
A standardized
Zero sum-game
Situation or interaction in which one participant\\\'s gains result only from another\\\'s equivalent losses.
Classical Economics
School of economic thought which stresses that economies function most efficiently if everyone is allowed to pursue his or her self interest
Mercantilism
Body of economics thought popular during the mid 16th and late 17th centuries. It held that money was wealth accumulation of gold and silver was the key to properity
Balance of trade (BOT)
Largest component of a country\\\'s current account in its balance of payments (BOP) accounts
Market Economy
An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country\\\'s citizens and businesses and there is little goverment intervention or central planning. This is the opposite of a centrally planned economy Production Possibility Frontier (PPF).
See investopedia for charts.
A curve that compares the trade offs between two goods produced by an economy in order to demonstrate the efficient use of resources. Points along the curve are considered efficient and obtainable
Secured Bond
Bond backed by collateral
Leveraged Loan
Loans extended to companies or individuals that already have considerable amounts of debt. Lenders consider leveraged loans to carry a higher risk of default and
Leveraged loans for companies or individuals with debt tend to have higher interest rates than typical loans. These rates reflect the higher level of risk involved in issuing the loan. In business
leveraged loans are also used in the leveraged buy-outs (LBOs) of other companies.
Accounts receivable financing
The selling of a company\\\'s accounts receivable
Fed\\\'s Fund Rate
The interest rate that banks charge each other for the use of Fed funds. It changes daily and is a sensitive indicator of general interest rate trends. The Fed funds rate is one of the two interest rates set by the Fed
G20- Definition
The G-20 (more formally
The G-20 is a forum for cooperation and consultation on matters pertaining to the international financial system. It studies
reviews
G20 Member countries
Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
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