Economic and Political Terms

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Asymmetric Information is where one party in a transaction has less information than the other. 

Balance of Payment is the summation of imports and exports made between one countries and the other countries that it trades with. 

Balance of trade: The difference in value over a period of time between a country's imports and exports. 

Barter system: System where there is an exchange of goods without involving money. 

Base year: In the construction of an index, the year from which the weights assigned to the different components of the index is drawn. It is conventional to set the value of an index in its base year equal to 100.

Bear: An investor with a pessimistic market outlook; an investor who expects prices to fall and so sells now in order to buy later at a lower price. A Bear Market is one which is trending downwards or losing value.

Bid price: The highest price an investor is willing to pay for a stock. 

Bill of exchange: A written, dated, and signed three-party instrument containing an unconditional order by a drawer that directs a drawee to pay a definite sum of money to a payee on demand or at a specified future date. Also known as a draft. It is the most commonly used financial instrument in international trade. 

Birth rate: The number of births in a year per 1,000 population. 

Bond: A certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the bondissuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal. Bonds guide. 

Boom: A state of economic prosperity, as in boom times.

Break even: This is a term used to describe a point at which revenues equal costs (fixed and variable). 

Bretton Woods: An international monetary system operating from 1946-1973. The value of the dollar was fixed in terms of gold, and every other country held its currency at a fixed exchange rate against the dollar; when trade deficits occurred, the central bank of the deficit country financed the deficit with its reserves of international currencies. The Bretton Woods system collapsed in 1971 when the US abandoned the gold standard. 

Budget: A summary of intended expenditures along with proposals for how to meet them. A budget can provide guidelines for managing future investments and expenses. 

The budget deficit is the amount by which government spending exceeds government revenues during a specified period of time usually a year. 

Bull: An investor with an optimistic market outlook; an investor who expects prices to rise and so buys now for resale later. ABull Market is one in which prices are rising. [pic]
c.i.f., abbrev: Cost, Insurance and Freight: Export term in which the price quoted by the exporter includes the costs of ocean transportation to the port of destination and insurance coverage. 

Call money: Price paid by an investor for a call option. There is no fixed rate for call money. It depends on the type of stock, its performance prior to the purchase of the call option, and the period of the contract. It is an interest bearing band deposits that can be withdrawn on 24 hours notice. 

Capital: Wealth in the form of money or property owned by a person or business and human resources of economic value.Capital is the contribution to productive activity made by investment is physical capital (machinery, factories, tools and equipments) and human capital (eg general education, health). Capital is one of the three main factors of production other two are labour and natural resources. 

Capital account; Part of a nation's balance of payments that includes purchases and sales of assets, such as stocks, bonds, and land. A nation has a capital account surplus when receipts from asset sales exceed payments for the country's purchases of foreign assets. The sum of the capital and current accounts is the overall balance of payments.

Capital budget: A plan of proposed...
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