MUST-READ: Here Are Terms Used In Business You Should Know
The usage of terminology is one of the factors that makes many people not to be interested in investing in a particular business. To be a successful businessman in any niche of business, you must first learn some of the basic terminologies used in the industry. We'll look at some of the key terminology used in business and what they signify in today's topic. This is something you don't want to miss!
1. Annuity
An annuity is basically a series of future cash payments made regularly. Payments can be in any quantity, but they must be made regularly - commonly monthly, quarterly, or annually. Annuities are sold by financial institutions in exchange for a one-time payment or a series of payments, with the bank returning your money, plus interest, at a later date.
2. Business Cycle
The natural fluctuation of business growth that occurs throughout time is referred to as the business cycle. The period of a business cycle is the time it takes for one expansion and one recession to occur in succession. There are four phases to a whole business cycle: expansion, peak, contraction, and trough. They don't happen at regular intervals or for long periods, but they do have telltale signs.
3. Balance Of Payment
The Balance of Payments, or BOP, is a statement that tracks all monetary transactions between citizens of a country and the rest of the globe over a specified period. This definition means that all financial transactions are made to the government or businesses, and also fasten the progress of finances for economic growth. A country's Balance of Payments statement shows if it has a fund surplus or deficit, i.e. when a country's exports exceed its imports, the BOP is said to be in surplus. The BOP deficit, on the other hand, implies that the country's imports exceed its exports.
4. Bank Draft
A bank draft, also known as a bank check, is a form of payment that entails a document issued by a bank that guarantees that the amount mentioned on the certification will be paid to the document's recipient. A bank draft is a sort of check that is more dependable than a paper check since it is guaranteed by the bank on behalf of the payer, ensuring that the money is delivered to the person to whom the draft is addressed. These drafts are frequently used as a form of payment for real estate transactions or the purchase of secondhand vehicles.
5. Carry Trade
A strategy of investing in which an investor borrows funds at a low interest rate to purchase an investment that is anticipated to yield a significantly larger profit. Carry trades are frequently employed by foreign currency investors. If you're investing in a currency with a high interest rate and borrowing with a low interest rate, this works in your favor. On the foreign exchange market, this money is widely used.
6. Demutualization
The process of converting a consumer mutual organization (mutual) or cooperative to a joint-stock company is known as demutualization. It is also known as stocking or privatization. As part of the demutualization process, members of a mutual frequently get a "windfall" dividend, in the form of shares in the successor firm, a cash payment, or a mixture of both.
7. Mortgage
A mortgage is a loan from a bank or a mortgage lender that allows a person to buy a house or other property. The home that is acquired serves as collateral for the money that is lent to buy the home.
8. Externalities
Any positive or bad effect of an economic activity that impacts those who aren't involved in business or industry is referred to as an externality. Externalities emerge when a business or industry has an impact on those who are not involved in the production or consumption of products and services. Pollution or waste products that hurt public health are examples. This is one of the reasons why the government is becoming increasingly involved in company regulation to reduce negative externalities.
9. Futures
Futures are contracts to buy or sell a particular quantity of stock, investment, or commodity at a predetermined price on a future date. These contracts, which are short for "futures contracts," are legally binding. Physical delivery or financial settlement must be used to fulfill them.
That's all in this article. Bye for now
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