Capital gain: A realised increase in the value of a capital/asset, as when a share is sold for more than the price at which it was purchased. Strictly speaking, the term refers to capital appreciation outside the normal course of business.
Captive: A company providing investment or other services that is owned by an institution offering related services, e.g. an insurance company or venture capital company owned by a bank, or a hire-purchase firm owned by a car manufacturer.
Decision-making unit (DMU): In organisations, the group of people who are responsible for buying, purchasing and procurement decisions.
Earn-out: Tying the purchase price paid for a company to future earnings. If the company performs less well than expected, for example, a final instalment on the purchase price may not fall due.
Flow production: A continuous production process, where a plant is set up to run continuously for days, weeks or even years. It offers the benefit of large economies of scale, but requires large-scale investment and has limited flexibility in terms of the product produced.
Giffen good: A product which consumers tend to buy more of, as its price rises. Giffen goods are those with a demand curve that is upward sloping.
Increasing return to scale: A situation in an industry where an increase in all the inputs into production leads to a more than proportionate increase in output, i.e. if you double the size of the factory, you more than double the output.
Institutional investor: An organisation, as opposed to an individual, that invests funds arising from its receipts from the sale of securities, from deposits and from other sources, i.e. insurance companies, investment trusts, unit trusts, pension funds and trustees.
Interest rate future: A futures contract on a bond, thus allowing the buyer to know exactly what rate of interest will be paid on that type of bond at some future date.
Source: Penguin Int’l Dictionary of Business & Finance
Compiled by Osman Kargbo: ousafrik@yahoo.com, +220 5221982/7345313
