Englisch II

Bonds are a way of financing for a government or large company. To borrow a large sum of money, the government or large company issues a bond and receives the money as a loan from the institution or individual who buys it, i.e. the bondholder. The original amount, i.e. the principal, is then paid back over a fixed period of time, i.e. the maturity, term of the loan. The bondholder receives interest, i.e. the coupon.

The term shares includes both stocks and privately held stakes in small firms that are not publicly traded.

Dividends are being paid to the shareholders. There is a dividend for each share, albeit there might be no dividend due to bad performance of the company.

Capital growth is an increase in value of an asset or investment over time. It is measured on the basis of the current value of the asset or investment, in relation to the amount originally invested in it.

Stock exchange is the place where stocks are bought and sold. Sometimes this is a physical location. Other times there is none.

The bond market is the place where bonds are bought and sold. It is about ten times bigger than the stock market.

High-risk bonds, i.e. the company might go bankrupt or default on its repayments, are called junk bonds.

Price elasticity shows how sensitive a company’s sales are to changes in prices.

Hedging is a term associated with risk management. It means having a second position in a market, so that if the market moves against your first position your losses are minimised.

Endowment is used to generate an income for non-commercial purposes, in particular to run a university or provide for charity.

When a country exports more than it imports, it has a trade surplus.