Back-up credit: A credit guarantee provided by a bank or a syndicate of banks underpinning a Euronote facility or note issuance facility. The credit is operated where some or all of the notes fail to find a purchaser.
Callable bond: A bond which is redeemable by the issuer with notice at the time of the issuer’s choice.
Day-trading: The practice of rapid buying and selling of securities, using sophisticated communications facilities, in order to take advantage of short-lived price changes.
Euronote facility: A form of note issuance facility (NIF) for the issue of Euronotes managed by a group of banks, or syndicate, and guaranteed by the latter. A front-end fee and a commitment fee are charged by the syndicate to the issuer.
Economic rent: Term used by economists to refer to profits or returns from an activity over and above those that would just be necessary to induce the participant into that activity.
Fair value: The practice of valuing assets and liabilities in company accounts at the amount at which they could be exchanged in an arms length transaction between informed and willing parties.
Hot money: Short-term flows of speculative capital, across national borders. Primarily aimed at drawing profit from possible changes in the exchange rate of different countries, hot money can be a problem for policymakers as it can destabilize the exchange rate in the process.
Incomplete contract: A contract which does not have provisions setting out obligations or entitlements for all possible situations. Most contracts are obviously incomplete, unable as they are to list all possible states of the world and, hence, many problems that arise in contract enforcement occur when unforeseen contingencies emerge.
Market power: The degree to which a firm exercises influence over the price and output in a particular market. Under intensely competitive conditions - such as under the paradigm of perfect competition - all firms are assumed to have zero market power: they have to take the going price and cannot hope to alter it on their own.
Source: Penguin Int’l Dictionary of Business & Finance
Compiled by Osman Kargbo: ousafrik@yahoo.com, +220 5221982/7345313
