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The demystification of financial jargon

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  1. Introduction
  2. GDP
  3. Stock
    1. Stock derivatives
    2. IPO (Initial Public Offering)
    3. Stock market index
  4. Mutual fund
  5. QIP (Qualified Institutional Placement)
  6. GDR (Global Depository Receipt)
  7. ADR (American Depository Receipt)
  8. Dividends
  9. Debentures
  10. Bond
  11. Money market
  12. Commodity market
  13. Derivatives market
  14. Conclusion
  15. Bibliography

?Finance? is a very broad term that encompasses a whole gamut of micro and macro domain specific definitions, usage and applications. As a subject, it is very critical from the societal perspective as it influences our everyday existence and has far reaching implications on the lives and times of the great, the ordinary, the poor and the rich. The endeavor here is to bring certain terminologies that freely float around on the internet, business articles, business news and financial analysis' out into the public domain, strip them of their esoteric existence and make them as real as hamburger or sausage. Finance, after all, is a topic that deals with what we all work for?hard money. So, we have a right to know what lies behind the veils of all these financial jargons.

[...] A Depository Bank term often associated with the US financial sector), is a bank located in the US that provides all kinds of services in terms of stock transfer and allied services pertaining to a depository receipt program. ADR (American Depository Receipt) ADR (American Depository Receipt) is a certificate that signifies the ownership of shares of a company based outside the US but listed on the US stock exchanges. A lot of non-US based companies' trade in the US financial market through American Depository Receipts. [...]


[...] Debentures A Debenture, also known as a note if they are unsecured borrowing instruments, is a certificate issued by a corporation in recognition of the money that has been borrowed and the interest that is being paid for the same. Debentures are long term debt instruments that are used by large corporations to raise funds. There is an advantage for the companies in issuing debentures as opposed to issuing secured corporate bonds because the company is not liable to allocate a certain amount of income or assets that would act as guarantees in case the company defaults on payment of the principal at maturity. [...]


[...] A derivative is essentially a financial instrument that has been derived or one that has been borne out of some other value, asset or condition, also referred to as ?underlying?. Instead of trading in the underlying the derivatives traders enter into contracts and agreements to deal with assets or cash over a certain period of time calculated according to the underlying involved. A Futures Contract is a case in point, where the traders enter into an agreement to trade in the underlying at a date in the future. [...]

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