Guide to Analysing Companies

5 The poor state of economic intelligence at the time. The gov-
ernment made decisions that were contrary to the best interests
C
90
COVERED WARRANT
01 Essential Finance 10/11/06 2:21 PM Page 90

---

of the economy, and too little was known about the true state of
the economy.
Putting these and other failings right has done much to
prevent similar falls occurring. But, as Black Monday in 1987
shows, anything can happen if investors lose confidence in the
markets. The decline in share prices from 2001 onwards was
painful – share prices on most major stock exchanges
halved in value – but it was not a crash.
In ’29 when the banks went bust
Our coins still read “In God We Trust”.
E.Y. Harburg
Credit
A loan or the ability to raise a loan, as in “he bought the
washing machine on credit” and “her credit at the bank is good”.
The term covers all forms of loans, bonds, obligations on
charge cards and credit cards, as well as letters of
credit and other forms of standby commitment from banks.
Credit card
A rectangular piece of plastic that empowers its owner to buy
goods and services, and to buy them on credit. The use of
credit cards, which should not be confused with charge
cards, has grown rapidly in recent years. Most credit cards are
issued by banks and retailers. The business is dominated by
two powerful brand names, Visa and Mastercard. These are
marketing organisations to which the banks that issue cards are
affiliated. Most credit cards offer a grace period (usually 25
days) during which interest charges do not accrue. Thereafter,
a holder pays interest on the remaining balance until it is paid
off. Most credit cards also allow their holders to obtain a cash
advance; some charge a fee for this service, and interest is gen-
erally payable from the date of the advance until it is repaid in