The role of this glossary is to present brief definitions of most of the key concepts in economics and finance (in total 1064 names-definitions) as well as security markets (financial, capital, money) with aim the reader to be able to understand and become familiar with the terminology in the analyses that will present in the category economics.
Additionally, we hope that the reader by acquiring intimacy with the economic terminology, he will also love the science/art of economics, giving to it a significant part of his personal time.
In the following glossary we tried to include the most well-known definitions and terms in the field of Economics & Finance. If you still find that a term or definition is missing and you know that it can be included in this glossary, please do not hesitate to contact us via the contact form of our web-site (Contact Us) and the Liberal Globe will edit it and will include it.
Glossary Economics & Finance
There are currently 56 names in this directory beginning with the letter A.
Abnormal return
is the excess return that is earned in a financial asset which exceeds the normal return granted by this financial asset which is proportionate to the risk that this asset is making.
Absolute purchasing power parity
According to this theory, when the currencies of the countries acquire the same value (e.g. exchange value) or those countries acquire a common currency then the price levels in all these countries are harmonized.
Absorption (national)
are the total national expenditures-private and public-made for goods and services at a specific time.
Accelerated cost recovery system
this system is used for the determination of corporate income tax and calculates the rapid depreciation of the cost of certain fixed assets of companies in their estimated useful life.
Accelerator
is the accelerator-rate that increases the proportion of investments due to GDP growth in the country.
Accomodating policy
is the implementation of an active policy which seeks to achieve a high degree of employment.
Account executive
is called the responsible employee of a brokerage company whose main responsibility is to serve the accounts of individual investors.
Accounting (Reported) earnings
are the revenues of a company minus its expenses. It is also the change in the company's bank value of own funds (equity) plus dividends paid to shareholders.
Accounting beta
is an accounting index that measures the sensitivity of an enterprise’s accounting profits due to changes in the accounting profits of the market portfolio.
Accounting identities
are named the purchase (acquisition) of a company/enterprise by another company.
Active management
is the investment management method in which during its implementation take place purchases and sales of financial assets in order the investment portfolio to acquire adjusted positive risk returns.
Active position
is called the difference that arises between the percentage of the portfolio of an investor invested in a financial asset and the percentage of a reference-benchmark portfolio invested in the same asset.
Activist
is called an economist who implements an active, mandatory policy with aim to eliminate the percentage of high unemployment in the economy whenever it develops.
Actual margin
is named the remaining capital maintain by the investor in his margin account and expressed as a percentage of the total market value of the account (and is used for margin purchases) or total debt (for short-term sales).
Adaptive expectations
are named those expectations of a variable that is the average of the previous values of the variable.
Adjusted beta
is named the estimate of a security's future beta which is calculated using initially historical data of that estimates, but in continuity this estimate is revised based on the assumption that the security's true beta estimate has the tendency with the passage of time to move toward the market average of 1.0
Adverse selection
is called the problem in which are drastically increased the chances of a trader taking part in a transaction to accept the most undesirable trader for his interests in the order part of the transaction. This problem is created because before the transaction there is asymmetric information about the other part of the transaction.
Aggregate demand
it is the total sum of all the components-accounts of the primary current account. Analytically, it is the sum of all the planned consumption, investment, governmental purchases of goods and services, the net export of goods and services of the economy. In other words, the total quantity of output in the economy at different price levels.
Aggregate demand curve
is named the graphical relationship between the level of prices and the quantity of total production required when the markets of goods and money are in equilibrium.
Aggregate demand function
shows the connection among aggregate output and aggregate demand. This function depicts the quantity of aggregate output demanded for each level of aggregate demand.
Aggregate production function
is named the relationship which associates the total output with all the factors of production and the employed resources i.e. capital, labour etc.
Aggregate supply
is named the total volume of goods and services (output) supplied by the economy at different price level.
Aggregate supply curve
is named the graphical relationship between the quantity of total production provided in the short-term and the price level, i.e. an upward sloping curve, links inflation to aggregate production provided by enterprises.
Aggregation (grouping)
is named the procedure that take place in regression analysis where we use either group of sums or group means instead of individual observations. Because there are different grouping rules the researchers must give great attention on which basis the grouping is undertaken since different rules give different results and the grouping can cancel out errors in measurement.
Alpha
indicates the size of the difference between security's expected return and the security's equilibrium expected return.
Alternative minimum tax
according to this tax, the taxpayers should add to their regular taxable income some of the discounts they achieve from tax deductions. In this case if the resulting income amounts to a higher tax rate than the normally calculated tax, this alternative tax must be paid.
American Depository Receipts (ADR's)
are financial assets issued by US banks representing indirect ownership of a certain number of shares of a foreign company. ADRs are held in a bank in the company's country of origin.
Amortization
is named the method that used to depreciate certain intangible assets of companies for corporate income tax purposes.
Analogy principal
is named the process by which statistical samples are used to estimate population parameters which have the same value in the sample as the parameters have in the population. The adjustment of this principal creates the OLS (Ordinary Least Squares) estimates.
Animal spirits
this term is used to indicate the optimism and willingness of entrepreneurs-we call them bullish-to undertake investment projects.
Annual percentage rate
this term describes the yield-to-maturity of the loan. It is computed using the most frequent time between payments as the compounding interval.
Appreciation (i.e. in exchange rate)
describes the situation where the value of a currency increases.
Approved list
is named an approved list of securities that an investment organization considers worthy of accumulation in a portfolio. Since, this list exists in an investment organization, portfolio managers does not need additional authorization to buy and place them in their portfolios.
Arbitrage
is named the procedure where a trader can earn a profit without risk-taking when he simultaneously executes a purchase and sale trades in assets of similar characteristics. We have three categories of arbitrage: yield arbitrage: is characterized the situation when are arises different asset returns. spatial arbitrage: the situation when are presented deviating asset prices across different market locations. triangular arbitrage: the situation when three asset prices are not mutually consistent.
Arbitrage Pricing Theory (APT)
is an equilibrium model of asset pricing which mention that the expected return on an asset is a linear function of the asset's sensitivity to several common factors.
Ask price
is called the price at which a market-maker is preparing to sell a specified quantity of a specified asset.
Asset allocation
is called that process in which it takes place the determination of the optimal division of the investor's portfolio into the various available asset classes.
Asset class
is a broadly defined and generally accepted group of financial assets i.e. stocks or bonds.
At the money option
is an option whose exercise price is closely equal to the market price of its underlying asset.
Automated bond system
is named a computerized system introduced by the New York Stock Exchange to facilitate the marketing of inactive bonds.
Automatic stabilizer
is called that economic mechanism which automatically complements the impacts of exogenous changes in aggregate demand through the impact of income on saving decisions.
Autonomous consumer expenditure
is named the amount of consumer spending that is independent of disposable income.
Average cost method
is the method which is used to value inventories which assumes that equal numbers of old and new goods are sold.
Average return on investment
is named the total income which is won from an investment in an asset and expressed as a percentage of the total investment in the asset.
Average tax return
is named the amount of taxes that paid and expressed as a percentage of the total income taxed.
