Ahad, November 23, 2008

Talking About Business and Investments

Here's another most common words used in business and investments. In order to be rich, you must know the vocabulary of the rich people, right?

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Investment banks have a role in the provision of finance for businesses and advice on takeovers. Retail banks provide overdraft facilities for individuals.
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The underlying cash for a large spot transaction is usually not available until two business days have elapsed.
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Share ownership brings certain benefits including voting rights, dividends and capital growth. Ordinary shareholders do not have priority in the assets of the company if it is wound up.
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The primary market is where companies raise money by issuing shares or bonds to investors for the first time. The secondary market provides the trading environment for shares, bonds and gilts.
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The main advantages of listing are generally seen as:
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capital - the IPO provides the possibility of raising capital, and once listed further offers of shares are much easier to make;
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takeovers - a listed company could use its shares as payment to acquire the shares of other companies. For example, J. Smith plc (a listed company) could issue new shares in itself to provide payment in a takeover of R. Brown plc. Shareholders in R. Brown could either keep the new J. Smith shares or sell them in the market;
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status - being a listed company should help the business in marketing themselves, to customers, suppliers and potential employees;
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employees - stock options to key staff are a way of providing incentives and retaining employees, and when they are options to buy listed company shares that are easily sold in the market they are even more attractive.
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Liquidity risk
is the risk that shares may be difficult to trade at a reasonable price. Price risk is the risk that share prices in general may fall and issuer risk is the risk that the issuing company collapses and the shares become worthless.
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A put option
is where the buyer or holder has the right to sell the underlying asset at the exercise price. Upon exercise by the buyer, the seller or writer is obliged to take delivery and pay the exercise price.
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Traditional hedge funds seek to eliminate or reduce market risk and attempt to profit regardless of the general movements of the market by carefully selecting a combination of asset classes.


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