helping to quiet down the voices in my head . . .
The layman's finance crisis glossary
via BBC
Here is a guide to many of the business terms currently cropping up regularly, as well as some of the more exotic words coined to describe some of the social effects of the credit crunch.
A-C
The best credit rating that can be given to a corporation's bonds, effectively indicating that the risk of default is negligible.
A rescue mechanism for UK companies in severe trouble. It allows them to continue as a going concern, under supervision, effectively to try to trade out of difficulty.
A firm in administration cannot be wound up without permission from a court.
Things that have earning power or some other value to their owner.
Fixed assets (also known as long-term assets) are things that have a useful life of more than one year, for example buildings and machinery; there are also intangible fixed assets, like the good reputation of a company or brand.
Current assets are the things that can easily be turned into cash and are expected to be sold or used up in the near future.
One hundred basis points make up a percentage point, so an interest rate cut of 25 basis points might take the rate, for example, from 3% to 2.75%.
In a bear market, prices are falling and investors, anticipating losses, tend to sell. This can create a self-sustaining downward spiral.
A debt security - or more simply an IOU. The bond states when a loan must be repaid and what interest the borrower (issuer) must pay to the holder. Banks and investors buy and trade bonds.
A bull market is one in which prices are generally rising and investor confidence is high.
The wealth - cash or other assets - used to fuel the creation of more wealth. Within companies, often characterised as working capital or fixed capital.
Used of the stock markets, the point when a flurry of panic selling induces a bottoming out of prices.
Typically, the borrowing of currency with a low interest rate, converting it into currency with a high interest rate and then lending it. One common carry trade currency is the yen, as traders seek to benefit from Japan's low interest rates. The element of risk is in the fluctuations in the currency market.
The term for bankruptcy protection in the US. It postpones a company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business, for example.
A collateralised debt obligation is a financial structure that groups individual loans, bonds or assets in a portfolio, which can then be traded.
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