CONCEPTS BUILDER!!!

KARTIKRAITHATHA

New member
HELLO EVERYONE

THIS THREAD HAS BEEN OPENED WITH ONLY ONE INTENTION TO CLEAR CONCEPTS OF EVERYONE!!

ITS QUIET SIMPLE.THERE ARE A LOT OF CONCEPTS WHICH WE COME ACROSS IN OUR DAILY LIFE, BUT WE DONT KNOW WHAT EXACTLY DO THEY MEAN, OR WHAT DO THE TERMS STAND FOR.THIS IS THE PLACE WHICH ONE CAN MAKE THEM CLEAR.

JUST WE EVERY MEMBER NEED TO POST AT LEAST ONE CONCEPT EVERYDAY WHICH ONE THINK'S EVERY ONE OVER HERE SHOULD KNOW. IT CAN BE FROM ANY CATEGORY, ANY SUBJECT, ANY THING BELOW THE SUN!!!

JUST A CONCEPT FROM EVERY MEMBER A DAY WILL HELP TO CREATE A COMPLETE CONCEPTS DIARY AND EVEN MORE THAN THAT WILL ENRICH OUR KNOWLEDGE.AS WE ALL KNOW THAT IN AN INTERVIEW THE INTERVIEWER CAN ASK ANY THING FROM ANYWHERE. SO LETS START THE PREPARATION FROM TODAY!!
ITS JUST A CONCEPT A DAY.

ITS A REQUEST TO MEMBERS,NOT TO POST ANY THING EXCEPT THE CONCEPTS.KEEP IT CLEAN.PLZ.
ALSO REGARDING ANY RECTIFICATIONS IN THE POSTS, PLZ PM TO THE PERSON WHO POSTED IT FOR EDITING IT, IF POSSIBLE.

EXPECTING A VERY GOOD RESPONSE FROM THE MEMBERS.
THANK YOU.
 

KARTIKRAITHATHA

New member
IPO - INTITIAL PUBLIC OFFER : its the first offer of equity shares ,during the lifetime of the company, that a company makes for subscription to the pubilc.

FPO - FOLLOW ON PUBLIc OFFER : its every offer of equity shares made by company to the public for subscription after its inital public offering(ipo).
 

kartik

Kartik Raichura
Staff member
Dumping : Act in which one country sells his products at a rate lesser than home markets than in foreign markets .

Eg : Chinese company sells battery for Rs.2 in china and Rs.1 in India.
 

KARTIKRAITHATHA

New member
BOOK VALUE : it is the net value of an organisation.it is the total value of all the assets of the company, that shareholders would theoritically receive if a company were liquidated today.

DIVIDEND : dividend represents a distribution of corporate earnings to the company's shareholder's.the profits are distributed to shareholders.

INTERIM DIVIDEND : dividend declared and paid between two annual general meetings of a company.this is declared by the board of directors, shareholders approval not required.

ANNUAL / FINAL DIVIDEND : dividend declared at the annual general meeting of the company, after the preparation of book of accounts.this is declared by the board of directors, but need to be approved by the shareholders.
 

kartik

Kartik Raichura
Staff member
Six Sigma : Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in statistics) from mean.
It allows for only 3.4 defects per million opportunities for each product or service transaction. Basically, a very high unrivalled efficiency level .

BPO : Business Process Outsourcing. Confused by many as the call centre industry.. it means outsourcing of any business process in an organisation.

Management By Objectives : Process through which specific goals are set collaboratively for the organization as a whole and ever unit and individual within it; the goals are than used as a basis for planning, managing organization activities, and assessing and rewarding contribution.

Angel Financing : Angels refers to private individuals who contribute their skills and money to start-up companies. Typically successful entrepreneurs, these investors offer expertise, experience/ contacts that can be invaluable to the new venture.

E- Learning : Learning and education through computers . Eg: www.ManagementParadise.com
 

shrijit_s

Par 100 posts (V.I.P)
KPO - Knowledge Process Outsourcing (KPO) is a form of outsourcing. It can be said that KPO is one step ahead of Business Processing Outsourcing (BPO). KPO firms provide domain-based processes and business expertise, rather than just process expertise.

In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research, etc.
 

shrijit_s

Par 100 posts (V.I.P)
Greenshoe Option - Legally referred to as an over-allotment option, a provision contained in an underwriting agreement which gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected.

A greenshoe option can provide additional price stability to a security issue, since the underwriter has the ability to increase supply and smooth out price fluctuations if demand surges too high.

The term is derived from the fact that the Green Shoe Company was the first to issue this type of option.
 

milind20

Par 100 posts (V.I.P)
BONUS SHARES - In simple terms, a bonus share represents the extra or bonus number of shares that the existing shareholders are entitled to be given by the management of a company. A 3:1 bonus share allotment signifies 1 bonus share for every 3 shares held. After the bonus issue is done, the face value of the share remains unchanged but the market value goes down. Also the number of outstanding shares is increased.

STOCK SPLIT - A stock split basically means reduction in the face value of the share. For example, a share with face value of Rs 10 is now split into two with the face value now being Rs 5 each. This means that the total net worth of the company remains unchanged, but the number of outstanding shares increases and also the market value of the shares goes down.
 

vengabeats

Par 100 posts (V.I.P)
American Depositary Receipts (ADRs)


An American Depositary Receipt (ADR) is a share of stock of an investment in shares of a non-US corporation. The shares of the non-US corporation trade on a non-US exchange, while the ADRs, perhaps somewhat obviously, trade on a US exchange. This mechanism makes it straightforward for a US investor to invest in a foreign issue. ADRs were first introduced in 1927.

Two banks are generally involved in maintaining an ADR on a US exchange: an investment bank and a depositary bank. The investment bank purchases the foreign shares and offers them for sale in the US. The depositary bank handles the issuance and cancellation of ADRs certificates backed by ordinary shares based on investor orders, as well as other services provided to an issuer of ADRs, but is not involved in selling the ADRs.

To establish an ADR, an investment bank arranges to buy the shares on a foreign market and issue the ADRs on the US markets.

For example, BigCitibank might purchase 25 million shares of a non-US stock. Call it Infosys Technologies Limited (INFOSYS). Perhaps INFOSYS trades on the Paris exchange, where BigCitibank bought them. BigCitibank would then register with the SEC and offer for sale shares of INFOSYS ADRs.
 

shrijit_s

Par 100 posts (V.I.P)
White Knight - In business, a white knight may be a corporation, a private company, or a person that intends to help another firm. There are many types of white knights.

The first type refers to the friendly acquirer of a target firm in a hostile takeover attempt by another firm. The intention of the acquisition is to circumvent the takeover of the object of interest by a third, unfriendly entity, which is perceived to be less favorable. The knight might defeat the undesirable entity by offering a higher and more enticing bid, or strike a favorable deal with the management of the object of acquisition.

In short, if Company T (target) is going to be acquired by Company H (hostile firm), but Company A (acquirer) can acquire ownership of Company T, then Company A would be acting as the white knight.

The second type refers to the acquirer of a struggling firm that may not necessarily be under threat by a hostile firm. The financial standing of the struggling firm could prevent any other entity being interested in an acquisition. The firm may already have huge debts to pay to its creditors, or worse, may already be bankrupt. In such a case, the knight, under huge risk, acquires the firm that is in crisis. After acquisition, the knight then rebuilds the firm, or integrates it unto itself.

In case of Arcelor-Mittal deal, Severstal has entered as the White Knight. Lets c how that saga ends...
 

shrijit_s

Par 100 posts (V.I.P)
A friendly takeover consists of a straight buyout of a company, and happens frequently. The shareholders receive cash or (more commonly) an agreed-upon number of shares of the acquiring company's stock.

A hostile takeover occurs when a company attempts to buy out another whether the management of the target company likes it or not. A hostile takeover can usually occur only through publicly traded shares, as it requires the acquirer to bypass the board of directors and purchase the shares from other sources. This is difficult unless the shares of the target company are widely available and easily purchased (i.e., they have high liquidity). A hostile takeover may presage a corporate raid.

A reverse takeover can occur in different forms:
  • a smaller corporate entity takes over a larger one.
  • a private company purchases a public one.
  • a method of listing a private company while bypassing most securities regulations, in which a shell public company buys out a functioning private company whose management then controls the public company.
 

shrijit_s

Par 100 posts (V.I.P)
Poison Pill - In business, poison pills (usually known by their more formal name, "shareholder rights plans"), are often used to avoid takeover bids. These are attempts by a potential acquirer to obtain a control block of shares in a target company, and thereby gain control of the board and, through it, the company's management. There are several types of "poison pills" that can be planned by a company that thinks it may be the target of a takeover by a potential acquirer, but the conventional poison pill is now generally as follows:

The target issues rights to acquire a large number of new securities, usually common stock or preferred stock, to existing shareholders. These new rights usually allow holders (other than an acquirer) to convert the right into a large number of common shares if anyone acquires more than a set amount of the target's stock (typically 10-20%). This immediately dilutes the percentage of the target owned by the acquirer, and makes it more expensive to acquire control of the target. This form of poison pill is sometimes called a shareholder rights plan because it is intended to give management (and possibly shareholders) the right to approve an acquisition, potentially requiring the acquirer to pay a premium for control of the target. Because the board of directors of the company can redeem or otherwise eliminate a standard poison pill, a standard poison pill does not typically block or impeded a proxy fight or other takeover not accompanied by an acquisition of a significant block of the company's stock.
"Poison pill" is also used more broadly to describe other types of takeover defenses that involve the target taking some action that harms both target and bidder:

The target adds to its charter a provision which gives the current shareholders the right to sell their shares to the acquirer at an increased price (usually 100 % above recent average share price), if the acquirer's share of the company reaches a critical limit (usually one third). This kind of poison pill cannot stop a determined acquirer but ensures a high price for the company.

The target takes on large debts in an effort to make the debt load too high to be attractive--the acquirer would eventually have to pay the debts.
The company buys a number of smaller companies using a stock swap, diluting the value of the target's stock.

The target grants its employees stock options that immediately vest if the company is taken over. This is intended to give employees an incentive to continue working for the target company at least until a merger is completed instead of looking for a new job as soon as takeover discussions begin. However, with the release of the "golden handcuffs", many discontent employees may quit immediately after they've cashed in their stock options. This poison pill may create an exodus of talented employees. In many high-tech businesses, attrition of talented human resources often means an empty shell is left behind for the new owner.

Peoplesoft guaranteed its customers in June 2003 that if it were acquired within two years, presumably by its rival Oracle Corporation, and product support were reduced within four years, its customers would receive a refund of between two and five times the fees they had paid for their Peoplesoft software licenses. The hypothetical cost to Oracle was valued at as much as US$1.5 billion. The move was opposed by some Peoplesoft shareholders who believed the refund guarantee flagrantly opposed their interests as shareholders. Peoplesoft allowed the guarantee to expire in April 2004.
 

shrijit_s

Par 100 posts (V.I.P)
BSE Sensex - The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base April 1979 = 100. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE.

The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-SENSEX is 1978-79.

At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.
 

KARTIKRAITHATHA

New member
SMALL-CAP STOCK : Small-cap is a term that refers to a company with a market capitalization (calculated by taking a firm's current share price and multiplying that figure by the total number of shares outstanding) near the low end of the publicly traded spectrum. Small-cap firms have market values larger than micro-cap companies, but smaller than those in the mid-cap sector. The boundaries that separate these classifications are not clearly defined and can vary according to the source. Generally, though, the term "small-cap" is used to describe
 

shrijit_s

Par 100 posts (V.I.P)
Equity Value - Equity value is a market-based measure of the value of a firm. It accounts for all the ownership interest in a firm including the value of unexercised stock options and securities convertible to equity. Equity value differs from market capitalization in that it incorporates all equity interests in a firm whereas market capitalization only reflects those common shares currently outstanding.

Enterprise Value - Enterprise value (sometimes Total enterprise value, or TEV) is a market-based measure of a company's value. It's mainly market cap + debt. If you buy the company you buy the debt load.

Enterprise value = market capitalization + debt + minority interest + preferred equity - cash and cash equivalents
 

KARTIKRAITHATHA

New member
BASIS POINTS :A basis point is the smallest measure used in quoting yields on fixed income products. You will also hear basis points mentioned when the financial media releases reports on interest rates. The important thing to understand is that one basis point is equal to one one-hundredth of one percentage point (0.01%). Therefore, 100 basis points would be equivalent to one full percent.
 

KARTIKRAITHATHA

New member
JUNK BOND : A junk bond is a fixed-income security that is rated below investment grade by one or more of the major bond ratings agencies. Bonds often receive this type of low rating when the corporation, municipality or other entity that issued the bond is facing financial trouble. In these cases, the credit risk on the bonds is fairly high -- in other words, there is a relatively decent chance that the junk bond issuer will have trouble fulfilling its repayment obligations (including interest and principal).
 

shrijit_s

Par 100 posts (V.I.P)
Convertible Bond - A convertible bond is type of bond that can be converted into shares of stock in the issuing company, usually at some pre-announced ratio. A convertible bond will typically have a lower coupon rate for which the holder is compensated for by the value of the holder's ability to convert the bond into shares of stock. In addition, the bond is usually convertible into common stock at a substantial premium to its market value.

Other convertible securities include exchangeable bonds -where the stock underlying the bond is different from that of the issuer, convertible preferred stock (similar valuation-wise to a bond, but lower in seniority in the capital structure), and mandatory convertible securities (short duration securities, generally with high yields, that are mandatorily convertible upon maturity into a variable number of common shares based on the stock price at maturity).
 

shrijit_s

Par 100 posts (V.I.P)
Bull market
A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of further capital gains. The longest and most famous bull market was in the 1990s when the U.S. and many other global financial markets grew at their fastest pace ever.

In describing financial market behavior, the largest group of market participants is often referred to, metaphorically, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also described as a bull run. Dow Theory attempts to describe the character of these market movements.

Bear market
A bear market tends to be accompanied by widespread pessimism. Investors anticipating further losses are motivated to sell, with negative sentiment feeding on itself in a vicious circle. The most famous bear market in history was the Great Depression of the 1930s.

Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. By one common definition, a bear market is marked by a price decline of 20% or more in a key stock market index from a recent peak over at least a two-month period. However, no consensual definition of a bear market exists to clearly differentiate a primary market trend from a secondary market trend.
 
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