Tuesday, 17 March 2015

Financial Terms for NICL 2015 Exams

Some Financial terms for NICL AO Exam 2015:

Fiscal Year
A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual
("yearly") financial statements in businesses and other organizations. In many jurisdictions,
regulatory laws regarding accounting and taxation require such reports once per twelve months,
but do not require that the period reported on constitutes a calendar year (that is, 1 January through 31 December). Fiscal years vary between businesses and countries. The "fiscal year"
may also refer to the year used for income tax reporting.

Goodwill is an accounting concept meaning the value of an entity over and above the value of its
assets. The term was originally used in accounting to express the intangible but quantifiable
"prudent value" of an ongoing business beyond its assets, resulting perhaps from the reputation
the firm enjoyed with its clients.

Marginal cost and Marginal Revenue
In economics and finance, marginal cost is the change in total cost that arises when the quantity
produced changes by one unit. That is, it is the cost of producing one more unit of a good. If the
good being produced is infinitely divisible, so the size of a marginal cost will change with
volume, as a non-linear and non-proportional cost function includes the following:
1. variable terms dependent to volume,
2. Constant terms independent to volume and occurring with the respective lot size,
3. Jump fix cost increase or decrease dependent to steps of volume increase.
Marginal revenue (R') is the additional revenue that will be generated by increasing product sales
by 1 unit. It can also be described as the Unit Revenue the last item sold has generated for the
firm. More formally, marginal revenue is equal to the change in total revenue over the change in quantity when the change in quantity is equal to one unit. This can also be represented as a
derivative when the units of output are arbitrarily small:.

Mutual fund
Investment products offered by mutual fund companies. A mutual fund is a basket of shares.
Suppose you invest with mutual fund company ABC. ABC gets money from you and turns
around to invest the money in different shares. The type and proportion of shares to invest in are
up to the mutual fund companies to decide. But generally speaking, funds are specialized. For
example, a single mutual fund company (AGF, e.g.) can offer many specialized funds such as
fixed-income funds, equity funds, and Asia funds. A fixed-income fund would invest in only
fixed-income securities such as T-bills and bonds. Likewise, an Asia fund would invest in only
stocks in Asia (e.g., Hong Kong, Japan and Singapore). Since a mutual fund is a basket of
different securities, the fund value is more stable relative to a single share price.
A recession is two consecutive quarters of declining gross domestic product (GDP).
Example: Let's assume that there has been a significant decline in industrial production,
employment, and wholesale or retail trade. These things may cause GDP to decline for a threemonth
period (a quarter). If the situation continues in the next quarter, most economists will
declare that the economy is in a recession.
The probability that an actual return on an investment will be lower than the expected return is
called Risk.Example: Changes in interest rates will cause interest-bearing liabilities (deposits) to
reprice at a rate higher than that of the interest-bearing assets (loans).

A share is a single unit of proprietorship in a corporation, mutual fund, or other organization.
A Joint Stock company divides its capital into shares, which are offered for sale to raise capital,
termed as issuing shares. Thus, a share is an indivisible unit of capital, expressing the proprietary
relationship between the company and the shareholder. The denominated value of a share is its
face value: the total capital of a company is divided into number of shares.
The person who owns shares of a company is called shareholder or stakeholder.

An instrument that signifies an ownershipposition (called equity) in a corporation, and represents
a claim on its proportional share in the corporation'sassets and profits. Ownership in the
company is determined by the number of shares a personowns divided by the total number of
shares outstanding. For example, if a company has 1000 shares of stock outstanding and a person
owns 50 of them, then he/she owns 5% of the company. Most stock also provides voting rights,
which give shareholders a proportional vote in certain corporate decisions. Only a certain type of
company called a corporation has stock; other types of companies such as sole proprietorships
and limited partnerships do not issue stock. It’s also called equity or equity securities or
corporate stock.

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