(0)Future Value= Sum to which today's investment(1) will grow by a specific future date, when compounded(2) at a given

interest rate(3). Conversely, the sum on a specific future date that will result in today's investment if discounted(4) at a given
discount rate(5).

(3)Interest Rate=The annualized cost of credit or debt-capital(6) computed as the percentage ratio of interest to the
principal(7).Each bank can determine its own interest rate on loans(8) but, in practice, local rates are about the same from bank to
bank. In general, interest rates rise in times of inflation(9), greater demand for credit(10), tight money(11) supply, or due to higher
reserve requirements for banks. A rise in interest rates for any reason tends to dampen business activity (because credit becomes
more expensive) and the stock market(12) (because investors can get better returns(13) from bank deposits or newly issued
bonds(14) than from buying shares(15))

(5)Discount Rate=a. Banking: Rate at which a bill of exchange(16) or an accounts receivable(17) is paid (discounted) before its
maturity date(18).
b. Commerce: Rate by which an invoice(19) amount is reduced when a condition is complied with, such as payment on delivery or
an order amount that exceeds a certain minimum figure.
c. Investment appraisal(20): Multiplier that converts anticipated returns from an investment project to their current market value
(present value(21)). It is always less than 1, and depends on the cost of capital(22) (current compound interest rate) and the time
interval between the investment date and the date when returns start to flow(23).

(2)Compound=Compute a charge, fee, or increment(24) on an amount to which another charge, fee, or increment has already
been added.

(4)Discount=1. Deduction from the face amount of an invoice, made in advance of its payment. See also rebate(25).2. Deduction
from the par value(26) of a financial instrument(27), made in advance of its sale. Opposite of premium(28).

(1)Investment=1. Money committed or property acquired for future income(29).

2. Two main classes of investment are:
(1) Fixed income investment such as bonds, fixed deposits(30)(31), preference shares(32),
(2) Variable income investment such as business ownership (equities(33)), or property ownership.
In economics, investment means creation of capital or goods capable of producing other goods or services. Expenditure on
education and health is recognized as an investment in human capital, and research and development in intellectual capital. Return
on investment (ROI)(34) is a key measure of an organization's performance.

(6)Debt Capital=That part of a firm's total capital which commonly comprises of loan-capital and short term bank loans such as
overdraft(35).

(7)Principal= Capital as distinct from the income (interest) derived from it.

(8)Loan=Written or oral agreement for a temporary transfer of a property (usually cash) from its owner (the lender(36))to a
borrower(37) who promises to return it according to the terms of the agreement, usually with interest for its use. If the loan is
repayable on the demand of the lender, it is called a demand loan. If repayable in equal monthly payments, it is an installment
loan(38). If repayable in lump sum(39) on the loan's maturity (expiration) date, it is a time loan(40). Banks further classify their
loans into other categories such as consumer loan(41), commercial loan(42), and industrial loans, construction loan(43) and
mortgage loans(44)(45), and secured and unsecured loans.

(9)Inflation=A sustained, rapid increase in prices, as measured by some broad index (such as Consumer Price Index(CPI)(46))
over months or years, and mirrored in the correspondingly decreasing purchasing power of the currency. It has its worst effect on
the fixed-wage earners, and is a disincentive to save.
There is no one single, universally accepted cause of inflation, and the modern economic theory describes three types of inflation:
(1) Cost-push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs(47), which leads to
demand for still higher wages (the wage-price spiral(48)), (2) Demand-pull inflation results from increasing consumer demand
financed by easier availability of credit; (3) Monetary inflation caused by the expansion in money supply (due to printing of more
money by a government to cover its deficits).

Deflation=1. Downturn in an economic cycle caused by circumstances, or brought about by government policies. Deflation is
opposite of inflation and is characterized by (1) increase in citizens' purchasing power(49) due to the falling prices, (2) decrease in
wages, or slowdown in their increase, due to falling levels of employment, (3) decrease in availability of credit due to higher
interest rates and/or restricted money supply, and (4) decrease in imports due to lack of demand. Governments cause deflation
usually to improve their balance of payments(50) position, and/or to prevent overheating(51) of the economy by an accelerating
rate of inflation(52).

(10)Credit=1. Accounting: An entry on the right-hand side of an account record in double entry bookkeeping. It has the effect of
decreasing an asset or expense account, or of increasing a capital, liability, or revenue account. See also debit.
2. Banking: Purchasing power created by banks through lending based on fractional reserve system.
3. Commerce: An agreement based largely on trust under which goods, services, or money is exchanged against a promise to pay
later. Also called commercial credit.
4. Short form of the term letter of credit.

(11)Tight Money=Money that can be borrowed only at high interest rates, usually because of tight monetary policy or some other
cause of low liquidity in the financial system. Also called dear money, it is the opposite of easy money.

(12)Stock Market=a place where shares are bought and sold, i.e. a stock exchange Example: stock market price or price on the
stock market

(13)Return=Yield generated by an investment, expressed usually as a percentage of the amount invested.

 (14)Bond= written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition.
All documented contracts and loan agreements are bonds.

(15) Share=A unit of ownership that represents an equal proportion of a company's capital. It entitles its holder (the shareholder)
to an equal claim on the company's profits and an equal obligation for the company's debts and losses.Two major types of shares
are (1) ordinary shares (common stock), which entitle the shareholder to share in the earnings of the company as and when they
occur, and to vote at the company's annual general meetings and other official meetings, and (2) preference shares (preferred
stock) which entitle the shareholder to a fixed periodic income (interest) but generally do not give him or her voting rights.

(16)Bill of exchange= A written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum,
either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received. The drawee accepts
the bill by signing it, thus converting it into a post-dated check and a binding contract.
A bill of exchange is also called a draft but, while all drafts are negotiable instruments, only "to order" bills of exchange can be
negotiated. According to the 1930 Convention Providing A Uniform Law For Bills of Exchange and Promissory Notes held in
Geneva (also called Geneva Convention) a bill of exchange contains: (1) The term bill of exchange inserted in the body of the
instrument and expressed in the language employed in drawing up the instrument.
(2) An unconditional order to pay a determinate sum of money. (3) The name of the person who is to pay (drawee). (4) A
statement of the time of payment. (5) A statement of the place where payment is to be made. (6) The name of the person to whom
or to whose order payment is to be made. (7) A statement of the date and of the place where the bill is issued. (8) The signature of
the person who issues the bill (drawer). A bill of exchange is the most often used form of payment in local and international trade,
and has a long history- as long as that of writing.

(17)Accounts Receivable=Sales made but not paid-for by the customers (trade debtors). Accounts receivables are shown as
current (short-term) assets in a balance sheet and are, in fact, unsecured promises by customers to pay in the future. These sums
are a key factor in determining a firm's liquidity and may be discounted used in raising a short-term bank loan, or sold to a factor.
A provision is usually made in the accounts of a firm to offset uncollectible accounts receivable (bad debts) as losses.

(18) Maturity Date= Date on which a contractual agreement, financial instrument, guaranty, insurance policy, loan, or offer
becomes due for settlement. Also called redemption date for investments. Used also as a synonym for settlement date.

(19) Invoice=A nonnegotiable commercial instrument issued by a seller to a buyer. It identifies both the trading parties and lists,
describes, and quantifies the items sold, shows the date of shipment and mode of transport, prices and discounts (if any), and
delivery and payment terms.
In certain cases (especially when it is signed by the seller or seller's agent), an invoice serves as a demand for payment and
becomes a document of title when paid in full. Types of invoice include commercial invoice, consular invoice, customs invoice,
and pro forma invoice. Also called a bill of sale or contract of sale.

(20) Appraisal= 1. Impartial analysis and evaluation conducted according to established criteria to determine the acceptability,
merit, or worth of an item.
2. Evaluation by a qualified appraiser to (1) assess the current market value of a property, (2) estimate the extent of damage to an
insured property and cost of repairs, or (3) determine if a total loss occurred. A written appraisal is usually a key requirement
when a property is bought, sold, insured, or mortgaged. It is required also when a claim is filed for compensation for damage or
destruction of the insured property. See also appraisal value.
3. Alternative term for valuation.

(21)Present Value=Estimated current value of a future amount to be received or paid out, discounted (see discounting) at an
appropriate rate, usually at the cost of capital rate (the current market interest rate). PV provides a common basis for comparing
investment alternatives. Also called present worth. See also net present value, discounted cash flow, and future value.

(22)Cost of Capital=1. Opportunity cost of funds employed in a business; the rate of return investors could earn if an alternative
investment avenue (usually time deposit) was chosen.
2. Cost of debt and equity capital acquired from different sources. See also composite cost of capital.

(23)Flow=1. General: Measurement of change over time. A quantity (such as expense, investment, or usage) takes meaning only
when time is taken into account.
2. Lean production: Movement of goods or services along the value stream from raw materials to the customer without backflow,
stoppages, or waste.

(24)Increment=An increase in quantity or size; commonly used to refer to the development of large subdivisions in phases.

(25)Rebate= Return of a portion of a purchase price by a seller to a buyer, usually on purchase of a specified quantity, or value, of
goods within a specified period. Unlike discount (which is deducted in advance of payment), rebate is given after the payment of
full invoice amount. See also refund.

(26)Par Value=Apparent worth or the nominal value shown on the principal ('face' or 'head') side of a bill of exchange, currency,
security (stock/share, bond), or other type of financial instrument. The par value of a loan stock (bond, preferred stock/preference
share) is the value at which it will be redeemed. Some jurisdictions allow shares to be issued with no par value (see no par value
share). Par value is typically different from the market price. If the market price is higher than the par value, the difference is
called a 'premium;' if it is lower, the difference is called a 'discount.' Also called face value, nominal value, or redemption value.

(27) Financial Instrument=A document (such as a check, draft, bond, share, bill of exchange, futures or options contract) that
has a monetary value or represents a legally enforceable (binding) agreement between two or more parties regarding a right to
payment of money. See also debt instrument, equity instrument, and financing instrument.

(28)Premium=1. General: Excess over apparent worth.

2. Banking: Fee charged for advancing a loan (see points).
 3. Commerce: Merchandise offered free or at reduced price to make a combined offer (see bundling) more attractive to the
customer.
4. Mutual funds: Closed-end mutual fund's market price above its net asset value.
5. Securities: Amount by which a security is selling at above its par value.

(29)Income=1. The flow of cash or cash-equivalents received from work (wage or salary), capital (interest or profit), or land
(rent).
2. Accounting: (1) An excess of revenue over expenses for an accounting period. Also called earnings or gross profit. (2) An
amount by which total assets increase in an accounting period.
3. Economics: Consumption that, at the end of a period, will leave an individual with the same amount of goods (and the
expectations of future goods) as at the beginning of that period. Therefore, income means the maximum amount an individual can
spend during a period without being any worse off.

(30) Deposit=1. Funds placed into an account at a depository institution to increase the credit balance of the account.
2. Down payment given in advance to support the intention to complete a commercial transaction.

(31) Fixed Deposit=A deposit of money that pays higher interest than a savings account but imposes conditions on the amount,
frequency, and/or period of withdrawals. Also called time deposit.

(32)Preference Shares=shares, often with no voting rights, which receive their dividend before all other shares and are repaid
first at face value if the company goes into liquidation.

(33)Equity=1. Fairness and impartiality towards all concerned, based on the principles of evenhanded dealing. Equity implies
giving as much advantage, consideration, or latitude to one party as it is given to another. Along with economy, effectiveness, and
efficiency, Equity is essential for ensuring that extent and costs of funds, goods and services are fairly divided among their
recipients. See also equitable.
2. Accounting: (1) Ownership interest or claim of a holder of common stock (ordinary shares) and some types of preferred stock
(preference shares) of a company.
3. Common stocks (ordinary shares) traded in a securities market.

(34)Return on Investment=The earning power of assets measured as the ratio of the net income (profit less depreciation) to the
average capital employed (or equity capital) in a company or project.Expressed usually as a percentage, return on investment is a
measure of profitability that indicates whether or not a company is using its resources in an efficient manner. For example, if the
long-term return on investment of a company is lower than its cost-of-capital, then the company will be better off by liquidating its
assets and depositing the proceeds in a bank. Also called rate of return, or yield.

(35)Overdraft=1. Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against
which a current (checking) account customer can write checks or make withdrawals. The most common form of business
borrowing, an overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged
only on the daily overdraft (debit) balance. It is, however, also a demand loan: the facility can be cancelled (and entire outstanding
amount 'called') at any time by the lender at its discretion, without any warning notice or explanation. If the overdraft is secured by
an asset or property, the lender has the right to foreclose on the collateral in case the account holder does not pay.

(36)Lender=Entity that advances cash to a borrower for a stated period and for a fixed or variable rate of interest, with or without
a security other than the borrower's signatures.

Secured Lender= Lender who holds a fixed and/or a floating charge on a borrower's assets or property. In case of the liquidation
sale of the borrower's property following a default, the secured lenders are paid before the unsecured ones who are paid before the
stockholders (shareholders). Investors in the debt securities (bonds, debentures, notes) of a firm have the same precedence over the
firm's stockholders as the lenders.

(37)Borrower= An individual, organization or company that is using funds, materials or services on credit.

(38) Installment Loan=Consumer or business loan (such as for a vehicle, vacation, or equipment) in which the principal and
interest are repaid in equal installments at fixed intervals (usually every month). These loans are commonly secured by the item
purchased or by the personal property (excluding real estate) of the borrower. Also called installment credit.

(39)Lump sum= 1. Single large amount; not consisting of several smaller amounts or installments.
2. Price of an entire lot, or group of goods or services, where no breakdown is give for individual items.

(40)Time Loan=Short-term (usually between one to six months) asset based business loan payable usually in one installment on
the maturity date. Time loans are commonly used to finance revenue generating assets (such as inventory) which provide the funds
to pay back the loan. These loans differ from the demand loans in that (1) the borrower has to pay the full interest up front when
the loan is advanced, and (2) the lender cannot demand the repayment (call the loan) before the loan's maturity date.

(41)Consumer Loan=An amount of money lent to an individual (usually on a nonsecured basis) for personal, family, or
household purposes. Consumer loans are monitored by government regulatory agencies for their compliance with consumer
protection regulations such as the Truth in Lending Act. Also called consumer credit or consumer lending.

(42)Commercial Loan=Loan advanced to a business instead of to a consumer. Commercial loans are usually for a short-term
(from 30 days to one year), secured (backed by a collateral) or unsecured, and are often advanced for financing equipment,
machinery, or inventory. Banks usually require the commercial borrowers to submit monthly and annual financial statements, and
to maintain insurance cover on the financed item.

(43) Construction Loan=Short-term (usually 3 years) real estate financing secured by a mortgage on the property being financed.
This loan is meant to cover the cost of land development and building construction, and is disbursed (1) as needed, (2) as each
stage is completed, (3) according to a prearranged schedule, or (4) when some condition is met. Construction loans are paid off
 from the proceeds of permanent financing (usually for 20 to 30 years), which in turn is repaid from the cash flow generated by the
completed building, and is arranged before the construction loan is disbursed. Also called building loan, construction mortgage, or
development loan.

(44) Mortgage= A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the
mortgagor) to a lender (the mortgagee) as security for a loan. The lender's security interest is recorded in the register of title
documents to make it public information, and is voided when the loan is repaid in full.
Virtually any legally owned property can be mortgaged, although real property (land and buildings) are the most common. When
personal property (appliances, cars, jewelry, etc.) is mortgaged, it is called a chattel mortgage. In case of equipment, real property,
and vehicles, the right of possession and use of the mortgaged item normally remains with the mortgagor but (unless specifically
prohibited in the mortgage agreement) the mortgagee has the right to take its possession (by following the prescribed procedure) at
any time to protect his or her security interest.
In practice, however, the courts generally do not automatically enforce this right when it involves a dwelling house, and restrict it
to a few specific situations. In the event of a default, the mortgagee can appoint a receiver to manage the property (if it is a
business property) or obtain a foreclosure order from a court to take possession and sell it. To be legally enforceable, the mortgage
must be for a definite period, and the mortgagor must have the right of redemption on payment of the debt on or before the end of
that period. Mortgages are the most common type of debt instruments for several reasons such as lower rate of interest (because
the loan is secured), straight forward and standard procedures, and a reasonably long repayment period. The document by which
this arrangement is effected is called a mortgage bill of sale, or just a mortgage.

(45) Mortgage Loan= Installment loan advanced against real property secured under a mortgage agreement.

(46)Consumer Price Index (CPI)=A measure of changes in the purchasing-power of a currency and the rate of inflation. The
consumer price index expresses the current prices of a basket of goods and services in terms of the prices during the same period
in a previous year, to show effect of inflation on purchasing power. It is one of the best known lagging indicators. See also
producer price index.

(47)Labor Cost=The cost of wages paid to workers during an accounting period on daily, weekly, monthly, or job basis, plus
payroll and related taxes and benefits (if any).

(48) Wage-Price Spiral=Inflationary spiral=Self-sustaining upward trend in general price levels fueled by the reinforcing
feedback of a vicious circle. Wage price spiral is a typical example of an inflationary spiral: high cost of living prompts demands
for higher wages which push production costs up forcing firms to increases prices, which in turn trigger calls for fresh wage
increases ... and so on. Such situations continue until radical measures (such as incomes policy) are instituted to break the cycle,
otherwise the currency is rendered almost worthless as a medium of exchange (as it happened in Germany in the 1920s, in Brazil
in the 1980s, and in Argentina in the 1990s) and has to be replaced with new monetary units (currency).

(49)Purchasing Power=1. General: Extent to which a person, firm, or group has available funds to make purchases.
2. Economics: (1) Money and credit available for spending and consumption of goods and services. Demand and prices cannot
rise beyond the available purchasing power. Also called buying power. (2) Exchange rates: Value of money (currency) measured
by the quantity and quality of goods and services it can buy.

(50) Balance of Payments(BOP)=Set of accounts that record a country's international transactions, and which (because double
entry bookkeeping is used) always balance out with no surplus or deficit shown on the overall basis. A surplus or deficit, however,
can be shown in any of its three component accounts: (1) Current account, covers export and import of goods and services, (2)
Capital account, covers investment inflows and outflows, and (3) Gold account, covers gold inflows and outflows. BOP
accounting serves to highlight a country's competitive strengths and weaknesses, and helps in achieving balanced economic-
growth.

(51)Overheating=Situation where the aggregate demand is increasing so fast that it cannot be met by the economy's productive
capacity and is, thus, liable to cause or fuel inflation. It is the condition of 'too much money chasing too few goods.'

(52)Rate of Inflation=This measurement is influenced by how high or low the prices of goods and services move throughout the
economy.

Plant=A building capable of manufacturing goods of all sizes in large quantities to be sold by a business. Plants can be
considered either a long term asset if owned by the firm, or both a long term liability if leased or rentedd.

Journal Entry=The recording of financial data (taken usually from a journal voucher) pertaining to business transactions in a
journal such that the debits equal credits. Journal entries provide an audit trail and a means of analyzing the effects of the
transactions on an organization's financial position. See also journalizing.

Audit Trail=Paper or 'electronic' trail that gives a step by step documented history of a transaction. It enables an examiner to trace
the financial data from general ledger to the source document (invoice, receipt, voucher, etc.). The presence of a reliable and easy
to follow audit trail is an indicator of good internal controls instituted by a firm, and forms the basis of objectivity.

Cash Flow Statement=A summary of the actual or anticipated incomings and outgoings of cash in a firm over an accounting
period (month, quarter, year).It answers the questions:Where the money came (will come) from?Where it went (will go)?

Income Statement=A summary of a management's performance as reflected in the profitability (or lack of it) of an organization
over a certain period. It itemizes the revenues and expenses of past that led to the current profit or loss, and indicates what may be
done to improve the results.
In contrast to a balance sheet, an income statement depicts what happened over a month, quarter, or year. It is based on a
fundamental accounting equation (Income = Revenue - Expenses) and shows the rate at which the owners equity is changing for
better or worse. Along with balance sheet and cash flow statement it forms the basic set of financial information required to
manage an organization.
 Balance Sheet=A condensed statement that shows the financial position of an entity on a specified date (usually the last day of an
accounting period).Among other items of information, a balance sheet states (1) what assets the entity owns, (2) how it paid for
them, (3) what it owes (its liabilities), and (4) what is the amount left after satisfying the liabilities. Balance sheet data is based on
a fundamental accounting equation (assets = liabilities + owners' equity), and is classified under subheadings such as current
assets, fixed assets, current liabilities, Long-term Liabilities. With income statement and cash flow statement, it comprises the set
of documents indispensable in running a business.

Debt=A duty or obligation to pay money, deliver goods, or render service under an express or implied agreement. One who owes,
is a debtor or debitor; one to whom it is owed, is a debtee, creditor, or lender.Use of debt in an organization's financial structure
creates financial leverage that can multiply yield on investment provided returns generated by debt exceed its cost. Because the
interest paid on debt can be written off as an expense, debt is normally the cheapest type of long-term financing.

Net Present Value (NPV)=The difference between the present value of the future cash flows from an investment and the amount
of investment. Present value of the expected cash flows is computed by discounting them at the required rate of return.For
example, an investment of $1,000 today at 10 percent will yield $1,100 at the end of the year; therefore, the present value of
$1,100 at the desired rate of return (10 percent) is $1,000. The amount of investment ($1,000 in this example) is deducted from
this figure to arrive at net present value which here is zero ($1,000-$1,000). A zero net present value means the project repays
original investment plus the required rate of return.

Bear Market=Period in which prices of securities or commodities fall by 20 percent or more. During such periods (1) investment
interest is generally limited, (2) concerns about the state of the economy abound, and (3) dealers or speculators are more inclined
in selling their investment portfolios than to increase their risk by holding.

Bull Market=Securities or commodities market in which prices are rising, bulls are trading in high volumes, investment interest is
high, and the public views the economy as strong and getting stronger. Some US bull markets (like the one that ended in the year
2000) have lasted for more than 15 years.