Base rate (UK): The rate of interest that forms the basis for the charges for bank loans and overdrafts and the deposit rates of the commercial banks.
Blue chip: Share in leading quoted company that can be easily bought and sold without influencing its price (liquidity) and regarded as a low-risk investment.
Cap: It is an abbreviation for capitalization, as in small cap stocks. It also means a limit or ceiling, usually setting the maximum interest that may be charged on a loan. Where there is also a ‘floor’ or lower limit to protect the lender, the arrangement may be described as a ‘collar’.
Day order: An order placed in a commodity market for execution in the same trading session, or in the same day, following which the order lapses.
Management buy-out (MBO): When managers of a business buy the necessary number of shares (share capital) to gain control of it. Usually this occurs when a business is struggling and the owners are considering selling or closing the business.
Small cap stock (US): Shares in smaller quoted companies which have a low market capitalization compared with blue chip issues and mid-cap stocks.
Uncertainty: A condition where the number and nature of possible events can be quantified, and therefore distinct from risk, where possible outcomes can be predicted on the basis of past experience.
Venture capital: Finance provided by a specialised institution to an entrepreneur, start-up or developing business, where a fairly high degree of risk is involved. The term is also used in a wider sense to include the provision of finance for management buy-outs and refinancings. In this wider sense the correct term is private equity.
Wage drift: The difference between wage rates set by national agreements and the total earnings received by workers, which includes overtime pay, special bonuses and commissions.
Source: Penguin Int’l Dictionary of Business & Finance
Compiled by Osman Kargbo: ousafrik@yahoo.com, +220 5221982/7345313
