|Balance Sheet: A financial report of a
company that shows what a company has (its
assets), what the company owes (its liabilities)
and the difference which is called its equity or
|Bait and Switch Pricing: An illegal
sales tactic used by unscrupulous companies.
Customers are lured into a store with advertising
promises of low prices for an item. However, when
the customer arrives at the store, the item is
reported unavailable and an alternate, often
higher-priced or lower-quality product, is
recommended in its place.
|Balance of Trade: The difference
between the amount of goods a country exports and
imports. When the value of exports exceeds
imports, the balance is positive. In the reverse,
the balance is negative.
|Balance Sheet: An overview of a
company's assets, liabilities, and owner's equity
at a specific point in time.
|Balloon Payment: The term for the last
payment on a loan if it is substantially larger
than the previous series of payments. Generally, a
balloon payment is negotiated when a large sum of
money is anticipated before the payoff date,
making such a payment possible.
|Bankruptcy: When a company or person has
extreme financial difficulty and so seeks the
protection of the bankruptcy laws.
- Chapter 11 Bankruptcy: A business is
protected from creditors for 2 years while it
works out a plan for partial payment of debts.
- Chapter 7 Bankruptcy: Total
liquidation of a company. It is rare for holders
of common stock to receive anything since
creditors, bondholders, and preferred
shareholders are first in line. When an
individual declares chapter 7 bankruptcy, the
law allows him to keep many assets, while
eliminating most or all of his debt.
- Chapter 13 Bankruptcy: Similar to
Chapter 11, but for individuals.
|Barter: An agreement between two
individuals or firms where products or services of
equal value are exchanged, with no cash changing
|Basis Point: 1/100 of a percent or
.01%, not 1%
|Bear Market: When the value of the
stock markets are going down over several months.
Opposite of bull market.
|Bearer Bond: A bond that is payable to
the person having possession.
|Beneficiary: The person entitled to
collect the benefits of an insurance policy or for
whose benefit property is held in trust.
|Beta: A measure of a stock's volatility
or changes in price, as compared with changes in
other stocks. Stocks with a high beta are more
likely to change dramatically.
|Bid Price: What an investor or market
maker is willing to pay for a security. The
current price you can sell at.
|Big Eight: Originally, the eight
largest accounting firms in the U.S. Through
mergers, they are now the Big Five: Arthur
Andersen, Ernst & Young, Deloitte & Touche, KPMG
Peat Mar-wick, Price Waterhouse, Coopers &
|Binding Letter of Intent: Letter of
intent that a court of law would uphold as the
actual leasing of space, regardless of whether a
lease document exists.
|Blue Chip: Shares of older, established
companies such as General Motors or IBM. Most
blue-chip companies pay regular dividends.
|Blue-sky laws: State laws that require
issuers of securities to register their offerings
with the state before they can be sold to its
|Bond Discount: The difference between
the face value of a bond (what it will pay at a
specified future date) and its current lower
|Board of Directors: A group of advisors
elected by stockholders to oversee the management
of a public company. The Chief Executive Officer
receives direction from the board.
|Book Value: 1. The value of an asset
calculated by subtracting cumulative depreciation
from the original purchase price. 2. Net value of
a business, assets less all liabilities and
|Brand: The name, symbol, packaging, and
promotional theme surrounding a product that
create an identity for that product, separate from
the parent company's name and identity.
|Breach: The failure to perform certain
duties as outlined in a contract, so that the
contract is not fulfilled.
|Break-even: The point at which revenues
from a product exactly equal the cost to produce
it. This calculation is frequently used to assess
whether it is worth producing a product.
Broker: A licensed person who acts as
an agent for an investor to buy and sell
securities such as stocks, bonds, and mutual fund
shares. He is paid a commission for this service.
|Bridge Loan: A short-term loan provided
while longer-term financing is being finalized.
Allows for business to proceed uninterrupted.
|Bubble: When the price of stocks rise
to a level way far beyond any reasonable value,
and speculators are buying at crazy prices and
actually finding other fools to pay even more than
they did. When the market then crashes, the bubble
is said to have burst.
|Bucket Shop: A brokerage firm that
accepts customer buy and sell orders, but does not
immediately execute them as the SEC requires.
Instead, the firm waits until the price has
increased or decreased to the point of allowing
the firm to buy or sell the stock and pocket the
difference. In extreme cases, the firm just takes
the money, with no intention of executing the
order. Such practices are illegal.
|Bull Market: When the value of the
stock markets are going up over several months.
Opposite of a bear market.
|Bylaws: The rules for running a company
which are drafted when the business is
incorporated. Items covered include the election
of a board of directors, their responsibilities,
and other committees to be established to assist
in man- aging the company.
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