some basic concepts in a simple manner

1. 1 Dematerialization vs. Rematerialization
Dematerialization----The move from physical certificates to electronic book keeping. Actual stock
certificates are slowly being removed and retired from circulation in exchange for electronic recording.
Rematerialization is a compiler optimization which saves time by recomputing a value instead of loading
it from memory. It is typically tightly integrated with register allocation, where it is used as an alternative
to spilling registers to memory.
2 Venture Capital-seed companies?
Venture Capital
Money made available for investment in innovative enterprises or research, especially in high technology,
in which both the risk of loss and the potential for profit may be considerable. Also called risk capital.
3 Institutional investor
Institutional investor----A non-bank person or organization that trades securities in large enough share
quantities or dollar amounts that they qualify for preferential treatment and lower commissions.
Institutional investors face less protective regulations because it is assumed that they are more
knowledgeable and better able to protect themselves.
Foreign Institutional investor
An investor or investment fund that is from or registered in a country outside of the one in which it is
currently investing. Institutional investors include hedge funds, insurance companies, pension funds and
mutual funds.
4 Insider trading
Insider trading----The illegal buying or selling of securities on the basis of information that is unavailable
to the public.
5 P/E ratio
P/E ratio----In finance, the P/E ratio of a stock (also called its "earnings multiple", or simply "multiple" or
"PE") is used to measure how cheap or expensive share prices are. It is probably the single most
consistent red flag to excessive optimism and over-investment. It also serves, regularly, as a marker of
business problems and opportunities. By relating price and earnings per share for a company, one can
analyze the market's valuation of a company's shares relative to the wealth the company is actually
creating. A P/E ratio is calculated as:
Price per share/Earnings per share
6 Reverse merger or Reverse Takeover
A Reverse Takeover (RTO), also known as a back door listing, or a reverse merger, is a financial
transaction that results in a privately-held company becoming a publicly-held company without going the
traditional route of filing a prospectus and undertaking an initial public offering (IPO). Rather, it is

2. accomplished by the shareholders of the private company selling all of their shares in the private company
to the public company in exchange for shares of the public company.
A Reverse Merger is a transaction where by the private company shareholders may gain control of a
public company by merging it in with their private company. The private company shareholders receive a
substantial majority of the shares of the public company (normally 85% to 90% or more) and the control
of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the
private company becoming a public company. The transaction does not go through a review process with
state and federal regulators because the public company has already completed the process. The
transaction involves the private and shell company exchanging information on each other, negotiating the
merger terms, and signing a share exchange agreement. At the closing the public shell company issues a
substantial majority of its shares and the board control to the shareholders of the private company. The
private company shareholders pay for the shell and contribute their private company shares to the shell
company and the private company is now public.
7 Stock split
Stock split----The dividing of a company's existing stock into multiple shares. In a 2-for-1 split, each
stockholder receives an additional share for each share he or she holds.
Stock split refers to a corporate action that increases the shares in a public company. The price of the
shares are adjusted such that the before and after market capitalization of the company remains the same
and dilution does not occur. Options and warrants are included.
For example, a company has 100 shares of stock each with a price of $50. The market capitalization is
100 × $50 = $5000. The company splits its stock "2-for-1". There are now 200 shares of stock and each
shareholder holds twice as many shares. The price of each share has been adjusted to $25. The market
capitalization is 200 × $25 = $5000, the same as before the split.
Reverse stock split, or reverse split, is just the same but in reverse: a reduction in number of shares
and an accompanying increase in the share price. The ratio is also reversed: 1-for-2, or 1-for-3.
8 Contingent liabilities-accounting treatment?
Contingent liabilities----Liabilities that may or may not be incurred by a company and which depend on
the outcome of say a forthcoming event such as a court case. These are recorded in a company's accounts
as contingent liabilities.
9 Merchant banking
Merchant banking----A bank that deals mostly in (but is not limited to) international finance, long-term
loans for companies and underwriting. Merchant banks do not provide regular banking services to the
general public.
10 Can share holders offer its share price at premium during the IPO?
11 Who regulates/controls the price of the shares?
12 Form filed for Prospectus in SEC?
13 Share warrant

3. Share warrant----A certificate, usually issued along with a bond or preferred stock, entitling the holder
to buy a specific amount of securities at a specific price, usually above the current market price at the
time of issuance, for an extended period, anywhere from a few years to forever. In the case that the price
of the security rises to above that of the warrant's exercise price, then the investor can buy the security at
the warrant's exercise price and resell it for a profit. Otherwise, the warrant will simply expire or remain
unused. Warrants are listed on options exchanges and trade independently of the security with which it
was issued. also called subscription warrant.
Share certificate - legal document that certifies ownership of a specific number of stock shares (or
fractions thereof) in a corporation.
14 Share Premium
Share Premium----The market value of shares in excess of their par value.
15 Proxy
Proxy----A representative; an agent; a document appointing a representative.
A proxy is a person who is designated by another to represent that individual at a meeting or before a
public body. It also refers to the written authorization allowing one person to act on behalf of another.
16 FI and FII
Foreign Institutional Investor - FII----An investor or investment fund that is from or registered in a
country outside of the one in which it is currently investing. Institutional investors include hedge funds,
insurance companies, pension funds and mutual funds.
17 BEP (Break Even Point)
18 What is Segmentation?
19 Pooling of Interest?
Pooling of Interest----An accounting method, used in mergers and acquisitions, where the balance
sheet items of the two companies are simply added together.
20 Joint Venture Vs Strategic Alliance Vs Partnership
Joint Venture----An association of two or more individuals or companies engaged in a solitary business
enterprise for profit without actual partnership or incorporation; also called a joint adventure.
A joint venture is a contractual business undertaking between two or more parties. It is similar to a
business partnership, with one key difference: a partnership generally involves an ongoing, long-term
business relationship, whereas a joint venture is based on a single business transaction.
A Strategic Alliance is a mutually beneficial long-term formal relationship formed between two or more
parties to pursue a set of agreed upon goals or to meet a critical business need while remaining
independent organizations.

4. Partnership----An association of two or more persons engaged in a business enterprise in which the
profits and losses are shared proportionally.
Consignment----The delivery of goods to a carrier to be shipped to a designated person for sale. A
bailment of goods for sale.
A consignment is an arrangement resulting from a contract in which one person, the consignor, either
ships or entrusts goods to another, the consignee, for sale. If the goods are transported by a carrier to the
consignee, the name of the consignor appears on the bill of lading as the person from whom the goods
have been received for shipment. The consignee's name appears on it as the person to whom delivery is
to be made. The consignee acts as an agent on behalf of the consignor, a principal, in selling the goods
and must take reasonable care of them while in his or her possession. The consignor does not give up
ownership of the goods until their sale.
21 shell company
Shell Company is a company that is incorporated but has no significant assets or operations. Shell
corporations are not in themselves illegal, and they may have legitimate business purposes. However,
they are a main component of underground economy, especially those based in tax havens.
Blank check Company
Blank check Company - A company in a developmental stage that either doesn't have an established
business plan or has a business plan that revolves around a merger or acquisition with another firm.
22 Reorganization Vs Restructuring
Reorganization----A process designed to revive a financially troubled or bankrupt firm. A reorganization
involves the restatement of assets and liabilities, as well as holding talks with creditors in order to make
arrangements for maintaining repayments.
Restructuring----A significant modification made to the debt, operations or structure of a company. This
type of corporate action is usually made when there are significant problems in a company, which are
causing some form of financial harm and putting the overall business in jeopardy. The hope is that
through restructuring, a company can eliminate financial harm and improve the business.
23 Spin off Vs Split-Off
Spin off----An independent company created from an existing part of another company through a
divestiture, such as a sale or distribution of new shares.
Split-off----The process whereby a parent corporation organizes a subsidiary corporation to which it
transfers part of its assets in exchange for all of the subsidiary's capital stock, which is subsequently
transferred to the shareholders of the parent corporation in exchange for a portion of their parent stock.
A split-off differs from a spin-off in that the shareholders in a split-off must relinquish their shares of stock
in the parent corporation in order to receive shares of the subsidiary corporation whereas the shareholders
in a spin-off need not do so.

5. Reverse split
24 Takeover
Takeover----Acquiring control of a corporation, called a target, by stock purchase or exchange, either
hostile or friendly.
Takeover----The act or an instance of assuming control or management of or responsibility for something,
especially the seizure of power, as in a nation, political organization, or corporation.
25 Divestiture
Divestiture----The sale, liquidation, or spinoff of a corporate division or subsidiary.
Disposition or sale of an asset by a company. A company will often divest an asset which is not performing
well, which is not vital to the company's core business, or which is worth more to a potential buyer or as a
separate entity than as part of the company
26 Corporate Governance
Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way
a corporation is directed, administered or controlled. Corporate governance also includes the relationships
among the many players involved (the stakeholders) and the goals for which the corporation is governed.
The principal players are the shareholders, management and the board of directors. Other stakeholders
include employees, suppliers, customers, banks and other lenders, regulators, the environment and the
community at large.
http://www.answers.com/corporate%20governance
27 Dividend
A share of profits received by a stockholder or by a policyholder in a mutual insurance society.
28 Prime Lending Rate
Prime rate----The lowest rate of interest on bank loans at a given time and place, offered to preferred
borrowers. Also called prime interest rate.
29 Convertible Debentures
Any type of debenture that can be converted into some other security.
30 Certificate of Incorporation Vs Certificate of merger
31 AGM Vs EGM

6. AGM---- A mandatory yearly meeting of shareholders that allows stakeholders to stay informed and
involved with company decisions and workings.
EGM---- A meeting other than the annual general meeting between a company's shareholders, executives
and any other members. An EGM is usually called on short notice and deals with an urgent matter.
Liquidation----When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay
creditors. Any leftovers are distributed to shareholders.
Dissolution---- Act or process of dissolving; termination; winding up. In this sense it is frequently used in
the phrase dissolution of a partnership
The dissolution of a corporation is the termination of its existence as a legal entity.
35 Bankruptcy
Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay
their creditors.
36 Winding Up
A process that entails selling all the assets of a business entity, paying off creditors, distributing any
remaining assets to the principals, and then dissolving the business.
37 Anti Dumping Vs Dumping
Dumping, selling goods at less than the normal price, usually as exports in international trade. It may be
done by a producer, a group of producers, or a nation. Dumping is usually done to drive competitors off
the market and secure a monopoly, or to hinder foreign competition. To counterbalance international
dumping, nations often resort to flexible tariffs. In international trade, acute competition from foreign
producers often leads to charges of dumping. A policy of dumping depends for its effectiveness on the
possibility of maintaining separate domestic and foreign markets, on monopolistic influences maintaining a
high price in the home market, on export bounties, or on low import duties in the foreign market.
Dumping disturbs those markets that receive dumped goods, and it may drive local producers out of
business. Governments may condone, or even sponsor, dumping in other markets for either political
reasons or to achieve a more favorable balance of payments.
Anti Dumping----Intended to discourage importation and sale of foreign-made goods at prices
substantially below domestic prices for the same items.
38 CFO Vs CEO
Chief Financial Officer – CFO----This is the senior manager who is responsible for overseeing the
financial activities of an entire company. This includes signing checks, monitoring cash flow, and financial
planning.
Chief Executive Officer----The highest-ranking executive in a company or organization, responsible for
carrying out the policies of the board of directors on a day-to-day basis.

7. 39 Hedging
Hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to
minimize any losses caused by price fluctuations.
It is generally used by traders on the commodities market. Typically, hedging involves a trader contracting
to buy or sell one particular good at the time of the contract and also to buy or sell the same (or similar)
commodity at a later date. In a simple example, a miller may buy wheat that is to be converted into flour.
At the same time, the miller will contract to sell an equal amount of wheat, which the miller does not
presently own, to another trader. The miller agrees to deliver the second lot of wheat at the time the flour
is ready for market and at the price current at the time of the agreement. If the price of wheat declines
during the period between the miller's purchase of the grain and the flour's entrance onto the market,
there will also be a resulting drop in the price of flour. That loss must be sustained by the miller. However,
since the miller has a contract to sell wheat at the older, higher price, the miller makes up for this loss on
the flour sale by the gain on the wheat sale. Hedging is also employed by stock and bond traders, export-
import traders, and some manufacturers.
40 IPO
Initial Public Offering-IPO
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger
companies seeking capital to expand, but can also be done by large privately-owned companies looking to
become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of
security to issue (common or preferred), best offering price and time to bring it to market.
IPOs generally involve one or more investment banks as "underwriters." The company offering its shares,
called the "issuer," enters a contract with the underwriters to sell its shares to the public. The
underwriters then approach investors with offers to sell these shares.
Primary markets and secondary markets
Primary markets----The market in which investors have the first opportunity to buy a newly issued
security
The Primary Market is that part of the capital markets that deals with the issuance of new securities.
Companies, governments or public sector institutions can obtain funding through the sale of a new stock
or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new
issues to investors is called underwriting. In the case of a new stock issue, this sale is called an initial
public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though
it can be found in the prospectus.
secondary markets----A market on which an investor purchases an asset from another investor rather
than an issuing corporation.

8. The Secondary Market is the financial market for trading of securities that have already been issued in
an initial private or public offering. Alternatively, secondary market can refer to the market for any kind of
used goods. The market that exists in a new security just after the new issue, is often referred to as the
aftermarket. Once a newly issued stock is listed on a stock exchange, investors and speculators can
easily trade on the exchange, as market makers provide bids and offers in the new stock.
Red herring prospectus
This is an initial prospectus to be submitted by a company which is planning to have an IPO. This
prospectus has to be filed with SEC. It contains all the information about the company except for the offer
price and the effective date, which aren't known at that time. There are several additions and edits to this
document before the final prospectus is released.
The reason it is called a Red herring is due to a section of the document colored in red which explicitly
states that the issuing company is not attempting to sell its shares before it has been given official
approval.
"Red Herring Prospectus" is a prospectus which does not have details of either price or number of shares
being offered or the amount of issue. This means that in case the price is not disclosed, the number of
shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the
issue size and the number of shares are determined later.
41 Book Building
The process by which an underwriter attempts to determine at what price to offer an IPO based on
demand from institutional investors.
42 Shareholders and Stake Holders.
Shareholders----Any person, company, or other institution that owns at least 1 share in a company. A
shareholder may also be referred to as a stockholder.
stake holders----
43 Capital Budgeting
Capital budgeting is the planning process used to determine a firm's long term investments such as new
machinery, replacement machinery, new plants, new products, and research and development projects.
Net Present Value - NPV ----The difference between the present value of cash inflows and the present
value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or
project.
The internal rate of return (IRR) is defined as the discount rate that gives a net present value (NPV) of
zero. The NPV is calculated from an annualized cash flow by discounting all future amounts to the present.
The length of time required to recover the cost of an investment.

9. Cost of the project/Annual cash flows
44 Gross Working Capital Vs Net WC
45 Ratios
46 Leverage Financing
50 Franchise, Examples of Franchise Vs Affiliate
Franchise----A privilege granted or sold, such as to use a name or to sell products or services. In its
simplest terms, a franchise is a license from the owner of a trademark or trade name permitting another
to sell a product or service under that name or mark. More broadly stated, a franchise has evolved into an
elaborate agreement under which the franchisee undertakes to conduct a business or sell a product or
service in accordance with methods and procedures prescribed by the franchisor, and the franchisor
undertakes to assist the franchisee through advertising, promotion, and other advisory services.
51 Royalty
Royalty----A payment to an owner for the use of property, especially patents, copyrighted works,
franchises or natural resources.
52 Leasing Vs Hire Purchase
A lease or tenancy is an interest in personal property or real property given by a lessor to another person
(usually called the lessee or tenant) for a fixed period of time, and the lessee obtains exclusive possession
of the property in return for paying the lessor a fixed or determinable consideration.
Hire Purchase----Purchase of a commodity on an installment plan.
53 Chapter 7
A bankruptcy proceeding where a company stops all operations and goes completely out of business. A
trustee is appointed to liquidate (sell) the company's assets, and the money is used to pay off debt.
54 Debtors in Possession
A company that continues to operate while under the Chapter 11 bankruptcy process.
55 Financial Value of a company
56 Mutual Funds (open ended Vs closed ended)

10. A fund, in the form of an investment company, in which shareholders combine their money to invest in a
variety of stocks, bonds, and money-market investments such as U.S. Treasury bills and bank certificates
of deposit.
57 Intellectual Property
Intellectual property describes a wide variety of property created by musicians, authors, artists, and
inventors. The law of intellectual property typically encompasses the areas of copyright, patent, and
trademark law. It is designed to encourage the development of art, science, and information by granting
certainproperty rights to all artists, which include inventors in both the arts and the sciences. These rights
allow artists to protect themselves from infringement, or the unauthorized use and misuse of their
creations.
Copyright The legal right granted to an author, composer, playwright, publisher, or distributor to
exclusive publication, production, sale, or distribution of a literary, musical, dramatic, or artistic work.
Patent A government license that gives the holder exclusive rights to a process, design, or new invention
for a designated period of time.
Trade mark - A name, symbol, or other device identifying a product, officially registered and legally
restricted to the use of the owner or manufacturer.
58 Independent Director
Independent Director: In order for a director to qualify as an "independent director," the Board must
affirmatively determine that the director has no material relationship with Occidental (either as a partner,
stockholder or officer of an organization that has a relationship with Occidental) that would preclude that
nominee from being an independent director. For the purpose of such determination, an "independent
director" is a director who:
--Has not been employed by Occidental within the last five years;
--Has not been an employee or affiliate of any present or former internal or external auditor of Occidental
within the last three years;
--Has not received more than $60,000 in direct compensation from Occidental, other than director and
committee fees, during the current fiscal year or any of the last three completed fiscal years;
--Has not been an executive officer or employee of a company that made payments to, or received
payments from, Occidental for property or services in an amount exceeding the greater of $1 million or 2
percent of such other company's consolidated gross revenues during the current fiscal year or any of the
last three completed fiscal years;
--Has not been employed by a company of which an executive officer of Occidental has been a director
within the last three years;
--Is not affiliated with a not-for-profit entity that received contributions from Occidental exceeding the
greater of $1 million or 2 percent of such charitable organization's consolidated gross revenues during the
current fiscal year or any of the last three completed fiscal years;
--Has not had any of the relationships described above with an affiliate of Occidental; and
--Is not a member of the immediate family of any person described above. An "immediate family
member" includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and
daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares
such person's home.

11. 59 Audit Committee
An Audit Committee is an operating committee of a publicly-held company. Committee members are
normally drawn from members of the Company's board of directors. An audit committee of a publicly
traded company in the United States is composed of independent or outside directors.
60 Quorum
In law, a quorum is the minimum number of members of a deliberative body necessary to conduct the
business of that group.
61 EPS
The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an
indicator of a company's profitability.
Net income-Dividends on preferred stocks/Average outstanding stocks
62 what are Liquid assets
Cash, or property immediately convertible to cash, such as securities, notes, life insurance policies with
cash surrender values, U.S. savings bonds, or an account receivable.
63 Treasury Stock (shares buy back)
Corporate stock that is issued, completely paid for, and reacquired by the corporation at a later point in
time.
Treasury stock or shares may be purchased by the corporation, or reacquired through donation, forfeiture,
or some other method. It is then regarded as the personal property of the corporation and part of its
assets. The corporation can sell the stock for cash or credit, for par value or market value, or upon any
terms that it could be sold by a stockholder. Shares that the corporation has not issued in spite of its
authority to do so are ordinarily not regarded as treasury shares but are merely unissued shares.
64 Listed and Unlisted Company
65 Public Company Vs Private Company
A company that has issued securities through an initial public offering and which are traded on at least
one stock exchange or over-the-counter market.
66 Index (Stock index)

12. A statistical indicator providing a representation of the value of the securities which constitute it. Indices
often serve as barometers for a given market or industry and benchmarks against which financial or
economic performance is measured.
67 Sensex
An abbreviation of the Bombay Exchange Sensitive Index (Sensex) - the benchmark index of the Bombay
Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE.
Initially compiled in 1986, the Sensex is the oldest stock index in India.
68 Nifty
69 BSE
The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of 30 scrips, with
the base April 1979=100. The set of companies which make up the index has been changed only a few
times in the last 20 years. These companies account for around one-fifth of the market capitalization of
the BSE.
70 Joint Stock Company Vs Joint venture
Joint Stock Company----A company which has some features of a corporation and some features of a
partnership. The company sells fully transferable stock, but all shareholders have unlimited liability.
Joint Stock Company----A business whose capital is held in transferable shares of stock by its joint
owners.
Joint venture----A contractual agreement joining together two or more parties for the purpose of
executing a particular business undertaking. All parties agree to share in the profits and losses of the
enterprise.
Joint venture----An association of two or more individuals or companies engaged in a solitary business
enterprise for profit without actual partnership or incorporation; also called a joint adventure.
71 Going concern
Going concern A going concern describes a business that functions without the intention or threat of
liquidation for the foreseeable future.
71 Form S-1 (A registration statement used in the IPO of securities.)
72 Restructuring
A significant modification made to the debt, operations or structure of a company. This type of corporate
action is usually made when there are significant problems in a company, which are causing some form of

13. financial harm and putting the overall business in jeopardy. The hope is that through restructuring, a
company can eliminate financial harm and improve the business.
73 Disinvestment
1. The action of an organization or government selling or liquidating an asset or subsidiary. Also known as
"divestiture".
2. A reduction in capital expenditure, or the decision of a company not to replenish depleted capital goods
74 Underwriter
1. A person or firm engaged in the insurance business.
2. An insurance agent who assesses the risk of enrolling an applicant for coverage or a policy.
3. One that guarantees the purchase of a full issue of stocks or bonds.
A company or other entity that administers the public issuance and distribution of securities from a
corporation or other issuing body. An underwriter works closely with the issuing body to determine the
offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's
distribution network.
75 Insurance Vs Reinsurance
Insurance----A contract whereby, for a specified consideration, one party undertakes to compensate the
other for a loss relating to a particular subject as a result of the occurrence of designated hazards.
Reinsurance----The contract made between an insurance company and a third party to protect the
insurance company from losses. The contract provides for the third party to pay for the loss sustained by
the insurance company when the company makes a payment on the original contract.
76 Preferred Stock
Preferred stock
A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying
additional rights above and beyond those conferred by common stock.
Rights
Unlike common stock, preferred stock usually has several rights attached to it.
----The core right is that of preference in dividends. Before a dividend can be declared on the common
shares, any dividend obligation to the preferred shares must be satisfied.
----The dividend rights are often cumulative, such that if the dividend is not paid it accumulates in arrears.
----Preferred stock has a par value or liquidation value associated with it. This represents the amount of
capital that was contributed to the corporation when the shares were first issued.
----Preferred stock has a claim on liquidation proceeds of a stock corporation, equivalent to its par or
liquidation value. This claim is senior to that of common stock, which has only a residual claim.

14. ----Almost all preferred shares have a fixed dividend amount. The dividend is usually specified as a
percentage of the par value or as a fixed amount. For example Pacific Gas & Electric 6% Series A
preferred.
----Variable preferreds are rare exceptions: their changing dividends depend on prevailing interest rates,
or varying as a percentage of net income.
----Some preferred shares have special voting rights to approve certain extraordinary events (such as the
issuance of new shares or the approval of the acquisition of the company) or to elect directors, but most
preferred shares provide no voting rights associated with them.
----Usually preferred shares contain protective provisions which prevent the issuance of new preferred
shares with a senior claim. This results in corporations often having several series of preferred shares that
have a subordinate relationship.
77 VAT
Value added Tax
78 GDP
GDP----The total market value of all the goods and services produced within the borders of a nation during
a specified period.
79 Option and its Types
Option----A privilege, for which a person has paid money that grants that person the right to purchase or
sell certain commodities or certain specified securities at any time within an agreed period for a fixed
price.
80 OTC Over-the-Counter
Over-The-Counter, method of buying and selling securities outside the organized stock exchange.
81 NASDAQ (National Association of securities Dealers Automated Quotation system)
Nasdaq Stock Market, Inc. (Nasdaq) is a provider of securities listing, trading and information products
and services.
82 Negotiable Instrument
A commercial paper, such as a check or promissory note, that contains the signature of the maker or
drawer; an unconditional promise or order to pay a certain sum in cash that is payable either upon
demand or at a specifically designated time to the order of a designated person or to its bearer.
Negotiable instrument, bill of exchange, check, promissory note, or other written contract for payment
that may serve as a substitute for money.
1. The promise or order to pay must be unconditional;

15. 2. The payment must be in a specific sum of money, although interest may be added to the sum;
3. The payment must be made on demand or at a definite time;
4. The instrument must be payable to bearer or to order.
83 NOW (Negotiable Order of Withdrawal)
In the United States, a Negotiable Order of Withdrawal account (NOW account) is a deposit account that
pays interest, on which checks may be written. Authorized on a national scale in 1981, these accounts
typically pay a relatively small return, although some banks offer high-interest NOW accounts in order to
attract depositors. Unless your interest rate is high, the balances in NOW accounts should be kept at the
minimum necessary to provide needed funds without incurring service charges.
84 Merchant bank
Merchant bank----A bank that deals mostly in (but is not limited to) international finance, long-term loans
for companies and underwriting. Merchant banks do not provide regular banking services to the general
public.
85 Going private
Going Private
A company "goes private" when it reduces the number of its shareholders to fewer than 300 and is no
longer required to file reports with the SEC.
A number of transactions can result in a company going private, including:
 Another company or individual makes a tender offer to buy all or most of the company’s publicly
held shares;
 The company merges with or sells the company’s assets to another company; or
 The company can declare a reverse stock split that not only reduces the number of shares but also
reduces the number of shareholders. In this type of reverse stock split, the company typically gives
shareholders a single new share in exchange for a block—10, 100, or even 1,000 shares—of the old
shares. If a shareholder does not have a sufficient number of old shares to exchange for new
shares, the company will usually pay the shareholder cash based on the current market price of the
company’s stock.
While SEC rules don't prevent companies from going private, they do require companies to provide
information to shareholders about the transaction that caused the company to go private. The company
may have to file a merger proxy statement or a tender offer document with the SEC. In addition, if the
transaction is initiated by an affiliate (an insider) of the company, Rule 13e-3 of the Securities Exchange
Act of 1934 requires the affiliate to file a Schedule 13E-3 with the SEC.
The filing of a Schedule 13E-3 is also required when affiliated transactions result in a company’s publicly
held securities no longer being traded on a national securities exchange or an inter-dealer quotation
system, such as Nasdaq.
The Schedule 13E-3 requires a discussion of the purposes of the transaction, any alternatives that the
company considered, and whether the transaction is fair to all shareholders. The Schedule also discloses

16. whether and why any of its directors disagreed with the transaction or abstained from voting on the
transaction and whether a majority of directors who are not company employees approved the
transaction.
Going private transactions require shareholders to make difficult decisions. To protect shareholders, some
states have adopted corporate takeover statutes that provide shareholders with dissenter's rights. These
statutes provide shareholders the opportunity to sell their shares on the terms offered, to challenge the
transaction in court, or to hold on to the shares. Once the transaction is concluded, remaining
shareholders may find it very difficult to sell their retained shares because of a limited trading market.
http://www.sec.gov/answers/gopriv.htm
86 Futures
Futures----Contracts that promise to purchase or sell standard commodities at a forthcoming date and at
a fixed price.
This type of contract is an extremely speculative transaction and ordinarily involves such standard goods
as rice or soybeans. Profit and loss are based upon promises to deliver—as opposed to possession of—the
actual commodities.
87 Exit strategy
Exit Strategy
1. The method by which a venture capitalist or business owner intends to get out of an investment that he
or she has made in the past. In other words, the exit strategy is a way of "cashing out" an investment.
Examples include an initial public offering (IPO) or being bought out by a larger player in the industry.
Also referred to as a "harvest strategy" or "liquidity event".
2. In the context of an active trader, a plan as to when a trade will be closed out.
88 EOQ (Economic Order Quantity)
89 Monopoly
Exclusive control by one group of the means of producing or selling a commodity or service
90 MRTP Monopoly & Restrictive Trade Practices Act
91 Inflation Vs Deflation
Inflation
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of
money, caused by an increase in available currency and credit beyond the proportion of available goods
and services.

17. 92 Vertical market Vs Horizontal market
93 Vertical merger Vs Horizontal merger
94 Redemption
95 Lead manager
96 Depreciation Vs Obsolescence Vs Depletion
97 Bull Vs Bear
98 Spread
99 ADR Vs GDR
100 Primary Vs Secondary Listing
101 supply chain management - SCM
102 SEDAR Vs Edgar
103 Real Estate Investment Trust - REIT
104 Exchange-Traded Fund - ETF
105 Reallowance
106 Reflation
Affiliate----A company in which another company has a minority interest.
A Patent is a set of exclusive rights granted by a state to a person (the patentee, usually the inventor) for
a fixed period of time in exchange for the regulated, public disclosure of certain details of a device,
method, process or composition of matter (substance) (known as an invention) which is new, inventive,
and useful or industrially applicable.
A Copyright is a law that gives the creator of a document, musical piece, book, etc. the right to their
creation and the control of its distribution. This protects the creators ability to sell their work. Once
copyrighted, a work can only be copied at the creator's disposal. By having copyright laws, our
government is encouraging the formation of new ideas and concepts by securing the creator's reward for
their hard work and great consumption of time.
Red herring prospectus
This is an initial prospectus to be submitted by a company which is planning to have an IPO. It contains all
the information about the company except for the offer price and the effective date, which aren't known at
that time. There are several additions and edits to this document before the final prospectus is released.
The reason it is called a Red herring is due to a section of the document colored in red which explicitly
states that the issuing company is not attempting to sell its shares before it has been given official
approval by the SEC.
Book Building is a process of fixing the share price based on the demand at various price levels.
CRISIL----Credit Rating Information Services of India Limited
Portfolio Management
The science of making decisions about investment mix and policy.
SEDAR----System for Electronic Document Analysis and Retrieval
EDGAR----Electronic Data Gathering Analysis and Retrieval

18. Spread----difference between bid and offer prices; also, difference between high and low prices of a
particular security over a given period.
BID----An offer or proposal made by an investor or broker to buy a security.
Offer---- A proposal or offer made by an investor or broker to sell a security.
Merchant Bank
A bank that deals mostly in (but is not limited to) international finance, long-term loans for companies and
underwriting. Merchant banks do not provide regular banking services to the general public.
Write short notes on the following:
1) Debentures
2) Convertible debentures
3) Difference between public company and private company
4) Difference between director and promoter
5) Difference between Authorized and issued Capital
6) Debt equity ratio
7) Margin of safety
8) Break even point
9) Put option
10) Call option
11) Redeemable shares
12) Intangible assets/tangible assets
13) Rights issue
14) Employee stock option
15) Articles of association
16) Cash flow statement
17) Memorandum of association
18) Insider trading
19) Venture Capital
20) Seed Capital
21) Bridge finance
22) Mutual funds
23) Contingent liabilities
24) Stock split
25) Reverse merger
26) Discounted bonds
27) Merger
28) Fictitious assets
29) Factoring
30) Capital budgeting
31) Underwriting
32) Business diversification
33) Annual report
34) Annual general meeting

19. 35) Subsidiary company
36) Price Earning Ratio
37) Return on Investments
38) Debt to Equity Ratio
39) Market Capitalization
40) Bankruptcy
41) Capital Reserves
42) Share Premium
43) Contingent liabilities
44) Derivatives
45) EPS and DPS
46) Pledge and hypothecation
47) Zero based budget
Write essay on any one of the following
1) Women reservation bill
2) Globalization
3) Effect of movies on youth
4) Education system in India
5) Role of the media in the society
6) Can the film stars become good administrators?
7) Importance of small states
8) Impact of western culture on Indian culture
9) Most unforgettable/favorite movement
10) Role model
11) Is Hyderabad a hi-tech city?
12) BPO and KPO