Financial Terms Main Page

This site contains comprehensive definitions for a wide range of terms that cover topics such as financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit...

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Backwardation

A market condition in which futures prices are lower in the distant delivery months than in
the nearest delivery month. This situation may occur in when the costs of storing the product until eventual
delivery are effectively subtracted from the price today. The opposite of contango.

Group of five (G5/G-5)

The five leading countries (France, Germany, Japan, United Kingdom, and the U.S.) that
meet periodically to achieve some cooperative effort on international economic issues. When currency issues
are discussed, the monetary authorities of these nations hold the meeting.

Mutually exclusive investment decisions

Investment decisions in which the acceptance of a project
precludes the acceptance of one or more alternative projects.

Organized exchange

A securities marketplace wherein purchasers and sellers regularly gather to trade
securities according to the formal rules adopted by the exchange.

Paper gain (loss)

Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of
current market price to original cost.

Residual claim

Related: equity claim

Residual losses

Lost wealth of the shareholders due to divergent behavior of the managers.

Unearned revenue

Money that has been paid by customers for work yet to be done or goods yet to be provided.

differentiation strategy

a technique for avoiding competition by distinguishing a product or service from that of competitors through adding sufficient value (including quality and/or features) that customers are willing to pay
a higher price than that charged by competitors

piece rate

a pay plan in which workers are paid a flat rate
for each unit of work accomplished

corporation

Business owned by stockholders who are not personally
liable for the business’s liabilities.

market risk

Economywide (macroeconomic) sources of risk that affect the overall stock market. Also called systematic risk.

Budget Deficit

The excess of government spending over tax receipts.

Interest

A charge for the use of money supplied by a lender.

Lessee

A person to whom a lease is granted; the user of the asset.