Guide to Analysing Companies

particular contract or market and its liquidity.
Open-market operations
Dealing in the money markets by a country’s central bank
in order to adjust the amount of money and credit circulating
in the economy. Central banks buy or sell government securi-
ties, which has the effect of contracting or expanding the
money supply. This, in turn, affects the level of banks’ re-
serves, causing a knock-on effect on the supply of credit and
therefore on economic activity generally. The difficulty for
central banks, of course, is that there is a lag between what they
do in the money markets and its effect on the economy gener-
ally. Open-market operations are only one of several tools at the
disposal of an independent central bank in executing mone-
tary policy.
Open outcry
A way of trading in commodities or securities in which
traders stand on the floor of an exchange and shout out their
orders. Once they have attracted each other’s attention, buyers
and sellers then get together to finalise a deal. Such noisy and
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colourful scenes (traders often wear bright jackets to distinguish
one firm of traders from another) are fast vanishing from the
floors of futures and options exchanges. Most dealing in
such instruments is now done via computer screens by traders
seated at desks.
Money doesn’t talk; it shouts.
Bob Dylan
Open position
A net long or short position in a financial instrument.
The situation that arises when an investor has a commitment to
buy (or sell) more shares than he or she is committed to sell (or
buy). The two obligations are balanced and effectively can-
celled out when an investor closes his or her position.