Guide to Analysing Companies
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FINANCE Essencial finance
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- Bargain A deal done at a good price. Also any transaction in stocks and shares on the london stock exchange. B 42 BANKRUPTCY
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BANK OF ENGLAND 41 01 Essential Finance 10/11/06 2:21 PM Page 41 is also responsible for the stability of the UK’s financial system, including the city of London, the world’s largest centre for in- ternational finance. It does so by working closely with the Trea- sury, which is a government department, and the financial services authority. Bankers are just like anybody else, except richer. Ogden Nash Bankruptcy The condition of a bankrupt, that is, a person (or organisation in some jurisdictions) who has been adjudged by a court to be unable to pay his or her debts. A bankrupt is deprived of many powers; for example, he or she cannot be a director of a company for a number of years. A bankrupt’s property passes into the hands of a trustee, who is authorised to divide it among the creditors. Since the 1970s, legislation in many developed countries has been made more flexible with the aim of giving individuals and companies a chance to recover when they find themselves in- solvent and in danger of bankruptcy. A model is the US Bankruptcy Reform Act of 1978 (itself remodelled in 1984). Its Chapter 11 enables insolvent companies to remain in control of their businesses so that they can trade their way out of in- solvency. Chapter 11 greatly increases management’s room for manoeuvre mainly because it temporarily gives a company protection from its creditors (and thus frees it from the burden of having to pay interest on its debt). Continental Airlines found Chapter 11 so appealing that it has entered, and left, twice. Bargain A deal done at a good price. Also any transaction in stocks and shares on the london stock exchange. B 42 BANKRUPTCY 01 Essential Finance 10/11/06 2:21 PM Page 42 Here’s the rule for bargains: “do other men, for they would do you”. Charles Dickens, Martin Chuzzlewit Barter Paying for goods or services with other goods or services. Barter is at least as old as the Asian silk road, and often just as tortuous. It enjoyed a renaissance with the opening-up of the former Soviet Union and eastern Europe, regions with a huge demand for imports (particularly of capital goods) but with little foreign exchange to pay for them. In Argentina, the col- lapse of the economy in 2001 and the scarcity of currency of any kind forced people to resort to barter. Financial organisations are not too keen on barter since it threatens to reduce the need for their services. However, recog- nising that it is here to stay, some institutions have set up spe- cialist barter departments to make money out of complicated trades, which they prefer to call countertrade. Barter is growing fastest among small businesses, which join exchanges that deal in surplus goods and services. Some 400 such exchanges exist in the United States alone. Some even offer credit: for example, a barterer who owns a roofing company and can work only during the milder summer months draws on credit to get his vehicle repaired during the winter and pays for it in kind when the weather im- proves. Hotel rooms or unoccupied office space are easily swapped over the internet for other goods and services. At a local level, babysitting may be offered in exchange for other services. Basis There are several meanings, as follows. The difference between the forward price of an option or futures contract and the current (or cash) price of the underlying asset; for example, the difference Download 1.1 Mb. Do'stlaringiz bilan baham: |
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