B-101 Introduction to Business

1. Relationship Era2. Productivity- A measure of the efficiency of a person, machine, factory, system, etc.,
in converting inputs into useful outputs.
3. Consumerism-

Organized-efforts

by individuals, groups,

protect consumers from policies and practices that

and governments to

infringe consumer

help

rights to

fair business practices.

4. Strategy- A method or plan chosen to bring about a desired future, such as achievement
of a goal or solution to a problem.
5. Business Plan- Set of documents prepared by a firm's management to summarize
its operational and financial objectives for the near future (usually one to three years)
and to show how they will be achieved.
6. B2C (Business to Consumer)- Selling individual products to individual buyers, usually
on cash payment basis; retailing.
7. Team Cohesiveness- Extent to which the members of a group find staying together to be
in mutual interest.
8. Business Incubators- Facility established to nurture young (startup) firms during their
early months or years. It usually provides affordable space, shared offices and services,
hand-on management training, marketing support

and,

often, access to

some form of financing.

9. Seed Capital- Comparatively small amount of capital contributed in the very beginning by
a

firm's

founder(s).It

is

investors because startup is

the

rarely

provided

riskiest stage in

by lenders or institutional
firm's life

cycle with

the

highest chance of failure. Also called front end money, front money, or startup capital.
10. Profit- The surplus remaining after total costs are deducted from total revenue, and the
basis

on

which tax is

computed

and dividend is

known measure of success in an enterprise.

B-102 Principles and Practices of Banking

paid.

It

is

the

best

1. Pledge- transfer or assignment of assets to secure payment of an obligation. Also called

a security interest . The borrower assigns an interest in the property to the lender, which
becomes a lien on the collateral. If the borrower offers stocks, bonds, or other securities
as collateral, the lender generally takes possession or is assigned ownership of the
collateral until the loan is paid.
2. Credit Card- plastic card issued by a bank, savings and loan, retail store, oil company, or
other credit grantor giving consumers the right to charge purchases and pay for them
later. Most credit cards offer a grace period of about 25 days, during which interest
charges do not accrue. After that, consumers pay nondeductible consumer interest on
the remaining balance until it is paid off. Some credit cards start charging interest from
the day the purchase is registered. Most credit cards also permit consumers to obtain
cash on their card in the form of a cash advance.
3. Demand Draft- written order directing that payment be made, on sight, to a third party.
The person writing the draft is called the drawee; the bank making the payment is the
drawer, or the payor bank. The beneficiary of a demand draft, the person receiving the
payment, is the payee. Drafts may be payable at some future date (time drafts) or on
sight (demand drafts). Demand drafts drawn on banks are known as checks .
4. Hundi- A hundi is a financial instrument that developed in Medieval India for use in trade
and credit transactions. Hundis are used as a form of remittance instrument to transfer
money from place to place, as a form of credit instrument or IOU to borrow money and
as a bill of exchange in trade transactions.
5. Acceptance- A short-term debt instrument issued by a firm that is guaranteed by a
commercial bank. Banker's acceptances are issued by firms as part of a commercial
transaction. These instruments are similar to T-Bills and are frequently used in money
market funds.
6. Lien- a right to keep possession of property belonging to another person until a debt
owed by that person is discharged.
7. Hypothecation- The established practice of a borrower pledging an asset as collateral for
a loan, while retaining ownership of the assets and enjoying the benefits therefrom. With
hypothecation, the lender has the right to seize the asset if the borrower cannot service
the loan as stipulated by the terms in the loan agreement. Hypothecation also refers to
securities in a margin account that an investor uses as collateral to borrow funds from a
brokerage.

8. Statutory reserves- State regulated reserve requirements. Statutory reserves are the
amount of liquid assets that firms must hold in order to remain solvent and attain partial
protection against a substantial investment loss.
9. Call Money- Money loaned by a bank that must be repaid on demand. Unlike a term
loan, which has a set maturity and payment schedule, call money does not have to follow
a fixed schedule. Brokerages use call money as a short-term source of funding to cover
margin accounts or the purchase of securities. The funds can be obtained quickly.
10. Pay Order- Payment order is an international banking term that refers to a directive to a
bank or other financial institution from a bank account holder instructing the bank to
make a payment or series of payments to a third party. It can be defined as, "Instructions
to transfer funds sent via paper and/or electronic means.

B-103 Communicative English and Report Writing

1. Communication Technology- the activity of designing and constructing and maintaining
communication systems.
2. Abstract- existing in thought or as an idea but not having a physical or concrete
existence
3. Business Communication- Business communication is the sharing of information
between people within an organization that is performed for the commercial benefit of
the organization. It can also be defined as relaying of information within a business.
4. Memorandum- a written message in business or diplomacy.
5. Feedback- information about reactions to a product, a person's performance of a task,
etc. which is used as a basis for improvement.
6. Report- give a spoken or written account of something that one has observed, heard,
done, or investigated.
7. Summery- a brief statement or account of the main points of something.
8. Brain Storming- Brainstorming is a group or individual creativity technique by which
efforts are made to find a conclusion for a specific problem by gathering a list of ideas
spontaneously contributed by its member(s).

9. Claim Letter- A persuasive letter sent by a customer to a business or agency to identify a

problem with a product or service.
10. Semantic Gap- The difference between the complex operations performed by high-level
language constructs and the simple ones provided by computer instruction sets.

B-104 Business Mathematics 1

1. Sinking Fund- a fund formed by periodically setting aside money for the gradual
repayment of a debt or replacement of a wasting asset.

2. Time Value of Money- The idea that money available at the present time is worth more
than the same amount in the future due to its potential earning capacity.

3. Compound Interest- Interest calculated on the initial principal and also on the
accumulated interest of previous periods of a deposit or loan.

4. Tabular method of Set Building5. Proper Subset- A proper subset of a set A is a subset of A that is not equal to A. In other
words, if B is a proper subset of A, then all elements of B are in A but A contains at least
one element that is not in B.

6. Amortization Schedule- A complete table of periodic blended loan payments, showing

the amount of principal and the amount of interest that comprise each payment so that
the loan will be paid off at the end of its term.

7. Effective Interest Rate- An investment's annual rate of interest when compounding

occurs more often than once a year.

8. Complex Number- A complex number is a number that can be expressed in the form a +
bi, where a and b are realnumbers and i is the imaginary unit, that satisfies the equation
x2 = 1, that is, i2 = 1. In this expression, a is the real part and b is the imaginary part of
the complex number.

9. Slope- In mathematics, the slope or gradient of a line is a number that describes both the
direction and the steepness of the line. Slopeis often denoted by the letter m. The
direction of a line is either increasing, decreasing, horizontal or vertical.

10. Quadratic Equation- In math, we define a quadratic equation as an equation of degree

2,meaning that the highest exponent of this function is 2. The standard form of
a quadratic is y = ax^2 + bx + c.

B-106 Fundamentals of Management

1. MBO( Management By Objectives)- MBO is a management practice which aims to
increase organizational performance by aligning goals and subordinate objectives
throughout the organization
2. Legitimate Authority- Legitimate authority is that which is recognized as legitimate and
justified by both the ruler and the ruled.
3. Decision Support System- a set of related computer programs and the data required to
assist with analysis and decision-making within an organization.
4. Work Place Deviance- Workplace deviance, in group psychology, may be described as
the deliberate (or intentional) desire to cause harm to an organization more specifically,
a workplace.
5. Management Theory Jungle- Focuses on the varying approaches to management theory
by discussing major schools of management theory. Management process school;
Empirical school; Human behavior school; Social system school; Decision theory school;
Mathematical school.
6. X Y Theory of motivation- Theory X and Theory Y are theories of human motivation
created and developed by Douglas McGregor at the MIT Sloan School of
Management in the 1960. Theory X and Theory Y have to do with the perceptions
managers hold on their employees, not the way they generally behave. It is attitude not
attributes. Theory X assumes that employees are naturally unmotivated and dislike
working, and this encourages an authoritarian style of management. According to this
view, management must actively intervene to get things done. Theory Y assumes that
employees are happy to work, are self-motivated and creative, and enjoy working with
greater responsibility.
7. Market Niche Strategy- A marketing approach for a good
or service with features that appeal to a particular minority market subgroup.
A typical product marketed using a niche strategy will be easily distinguished from
other products, and it will also be produced and sold for specialized uses within its
corresponding niche market.

8. Charisma Power and Expert Power- A managers ability to charm, to persuade, to

hypnotize people solely with the power of personality.
Expert power is power based upon employees' perception that a manager or some other
member of an organization has a high level of knowledge or a specialized set of skills
that other employees or members of the organization do not possess.
9. Discretion Vs. Rule- Latitude or power, but not an obligation, to exercise a right or to do
or not do something.
Rule means authoritative statement of what to do or not to do in a specific situation,
issued by an appropriate person or body.
10. Standing Vs. Single Use Plan- Standing plans are often policies, procedures and
programs developed to ensure the internal operations of a given business are operating
smoothly. Standing plans are often developed once and then modified to suit the
business' needs as required.
A single-use plan in a business environment refers to plans developed for a one-time
project or event that has one specific goal or objective. The length of a single-use plan
differs greatly depending on the project in question, as a single event plan may only last
one day while a single project may last weeks or months. Single-use plans consist of
budgets, programs and a description of the employees who will be contributing to the
single-use plan in question.

B-107 Financial Accounting

1. Going Concern Concept- Currently operating business that is expected to continue
to function as such and remain viable in the foreseeable future.
2. Work Sheet- Informal document in which
an accountant or auditor records the information for (1) adjusting trial balances prior to
preparing financial statements, or to (2) substantiate his or
her opinion regarding an account balance or a transaction.
3. Accrual Basis of Accounting- A system of accounting based on the accrual principal,
under which revenue is recognized (recorded) when earned, and expenses are
recognized when incurred.

4. Operating Profit- Income resulting from a firm's primary business operations,

excluding extraordinary income and expenses. Also called earnings before interest and
taxes (EBIT)
5. Chart of accounts- System of accounting records developed by every organization to be
compatible with its particular financial structure, and in agreement with the amount of
detail required in its financial statements. It consists of a list of ledger
account names and numbers showing classifications and sub-classifications,
and serves as an index to locate a given account within the ledger.
6. Accounting Equations- The most fundamental equation of double-entry
bookkeeping system, it expresses the relationship between what is owned and what is
owed by an entity.
7. Accelerated Depreciation- Technique of computing depreciation at a rate that is faster
than the rate of straight line depreciation. Two main methods employed in accelerated
depreciation are (1) Declining balance depreciation and (2) Sum of the years' digits
depreciation.
8. Closing Entry- Final bookkeeping entries made at the end of an accounting period to
reduce all nominal (temporary) accounts to zero. Balances of these accounts are
transferred to the income summary account, and drawings are transferred to
the owners' capital account.
9. Contingent Liabilities- Hypothetical liability which depends on a possible (but hardly
likely) event or situation to occur before becoming an actual liability.
10. Suspense Account- Temporary account (one not included in financial statements)
created to record (1) disbursements or receipts associated with yetunconcluded transactions until their conclusion, or (2) discrepancies between totals of
other accounts until their rectification or correct classification.

B-108 Business Statistics

1. Standard Deviation- a quantity expressing by how much the members of a group differ
from the mean value for the group.
2. Coefficient of Correlation- A measure that determines the degree to which two variable's
movements are associated.
3. Chebysevs Theorem-

4. Inter-quartile Range- The interquartile range (IQR) is a measure of variability, based on

dividing a data set into quartiles
5. Coefficienta statistic measuring the degree of correlation between two variables as by dividing their
covariance by the square root of the product of their variances. The closer the correlation
coefficient is to 1 or -1 thegreater the correlation; if it is random, the coefficient is zero.
6. Hypothesis- An assumption about certain characteristics of a population. If it
specifies values for every parameter of a population, it is called a simple hypothesis; if
not, a composite hypothesis. If it attempts to nullify the difference between
two sample means (by suggesting that the difference is of no statistical significance), it is
called a null hypothesis.
7. Trend- A pattern of gradual change in a condition, output, or process, or
an average or general tendency of a series of data points to move in a certain
direction over time, represented by a line or curve on a graph.
8. Cross-sectional data- Widely dispersed data (such as per capita income) relating to
one period, or without respect to variance due to time. In contrast, time series data is
drawn from regularly spaced intervals.
9. Frequency- . Rate of repetition of a cyclical or regular event, measured in 'hertz' or cycles
per second.
10. Outlier- Statistical data which is extremely different from the others in the same sample,
or a person who lives or works far away from the majority of the population.

B-109 Computer Application in Banking

1. Circuit Board- a thin rigid board containing an electric circuit; a printed circuit.
2. Object linking3. Open Source Software- Open source software is software whose source code is
available for modification or enhancement by anyone.

4. File Compression- This kind of compression can reduce a text file to 50% of its original
size. Compression is performed by a program that uses a formula or algorithm to
determine how to compress or decompress data.
5. Cynicism- an inclination to believe that people are motivated purely by self-interest;
skepticism.
6. Multitasking- Multitasking, in an operating system, is allowing a user to perform more
than one computer task (such as the operation of an application program) at a time. The
operating system is able to keep track of where you are in these tasks and go from one
to the other without losing information.
7. BIOS- the built-in software that determines what a computer can do without accessing
programs from a disk.
8. Dumb Terminal- A display monitor that has no processing capabilities. A dumb terminal
is simply an output device that accepts data from the CPU.
9. Distributed Processing- Distributed processing is a phrase used to refer to a variety of
computer systems that use more than one computer (or processor) to run an application.
10. Virtual Reality- An artificial environment created
with computer hardware and software and presented to the user in such a way that it
appears and feels like a real environment. To "enter" a virtual reality, a user dons special
gloves, earphones, and goggles, all of which receive their input from the computer
system.

B-110 General Science and Environment

1.

Velocity- the speed of something in a given direction.

2.

Sterilization- Sterilization (or sterilisation) is a term referring to any process that

eliminates (removes) or kills all forms of life, including transmissible agents (such as
fungi, bacteria, viruses, spore forms, etc.) present on a surface, contained in a fluid, in
medication, or in a compound such as biological culture media.

3.

Gravitation- movement, or a tendency to move, towards a centre of gravity, as in the

falling of bodies to the earth.

4.

Nuclear Fission- a nuclear reaction in which a heavy nucleus splits spontaneously or on

impact with another particle, with the release of energy.

5.

Environment- the surroundings or conditions in which a person, animal, or plant lives or

operates.

6.

Electric Field- a region around a charged particle or object within which a force would be
exerted on other charged particles or objects.

7.

Energy- the strength and vitality required for sustained physical or mental activity.

8.

Motion- the action or process of moving or being moved.

9.

Ultrasonic wavea sound wave transmitted at a frequency greater than 20,000 per second, or beyond the
normal hearing range of humans.The specific wavelength is equal to the velocity divided
by the frequency.

10.

Amorphous Solid- any noncrystalline

solid in which the atoms and molecules are notorganized in a definite lattice pattern. Suc
h solids include glass, plastic, and gel.

B-201 Microeconomics
1. Cross Elasticity of Demand- Proportionate change in the demand for one item
in response to a change in the price of another item.
2. Duopoly- Market situation in which only sellers supply a particular commodity to
many buyers. Either seller can exert some control over the output and prices, but must
consider the reaction of its sole competitor
3. Factor Pricing- the price of something that you need to make a product,
for example buildings, materials, or labor
4. IS and LM Curve5. Equi-Marginal Utility- A person can get maximum utility with his given income when it is
spent on different commodities in such a way that the marginal utility of money spent on
each item is equal.

6. Consumers Surplus- In economics, the satisfaction (utility) consumers receive for which
they do not have to pay for. Or, in other words, amount of money by which
consumers value a good or service over and above its purchase price.
7. Giffen Goods- Consumer item having the paradoxical quality of being in
greater demand when its price rises, and lower in demand when the price falls.
8. Supply Function- The mathematical function explaining the quantity supplied in terms of
its various determinants, including price; thus the algebraic representation of the supply
curve.
9. Monopoly Market- Market situation where one producer (or
a group of producers acting in concert) controls supply of a good or service, and where
the entry of new producers is prevented or highly restricted. Monopolist firms (in their
attempt to maximize profits) keep the price high and restrict the output, and show little or
no responsiveness to the needs of their customers.
10. Budget Line- A graphical depiction of the various combinations of two
selected products that a consumer can afford at specified prices for the products given
their particular income level.

B-202 Accounting For Financial Institution

1. Capital Lease- Fixed-term (and usually non-cancelable) lease that is similar to a loan
agreement for purchase of a capital asset on installments.
2. Cash Shares3. Incremental Borrowing Rate- Interest rate a lessee would have to pay if, instead
of leasing, he or she finances the purchase of the same asset.
4. Off-Balance Sheet Item- Accounting category not shown (recorded) on a balance sheet,
such as an operating lease or a deferred or contingent asset or liability which is shown
only when it becomes 'actual.'
5. Guaranteed Residual Value- The financial accounting term guaranteed residual value
refers to an additional payment made by a lessee in property, cash, or both when a lease
terminates. Guaranteed residual values are financial commitments made by the lessee,
and factor into the calculation of the minimum lease payment.

6. Actuary Science- It is the discipline that applies mathematical and statistical methods to
assess risk in insurance, finance and other industries and professions.
7. Rebate on Bills Discounted8. Statutory Reserve- Minimum amount of money that financial institutions such
as banks, building societies, credit unions, and insurance
companies are required by law to keep as security.
9. Hire Purchase System- A system by which a buyer pays for a thing in regular
installments while enjoying the use of it.
10. Non-Banking Assets-

B-203 Bank Marketing

1. High Contact Services- High-contact customer service offers the customer an
opportunity, if needed, to speak to employees higher up the chain of command.
2. Bank Marketing Environment3. Stimulus Response Model- Sales approach which emphasizes saying the right thing at
the right time (on the basis of a carefully scripted presentation) by guiding
the prospect along a standard question-answer (stimulus-response) sequence.
4. Market Forecast A component of marketing analysis that provides anticipated figures and
calculations based upon market research. The forecast may include projections for
a product type, company, sector, industry, demographic type or overall population.
5. Cash Cow- Well established brand, business unit, product, or service, that generates a
large, regular, predictable, and positive cash flow.
6. 80-20 Rule of Service- A rule of thumb that states that 80% of outcomes can be
attributed to 20% of the causes for a given event. In business, the 80-20 rule is used to
help managers identify problems and determine which operating factors are most
important and should receive the most attention based on an efficient use of resources.
Resources should be allocated to addressing the input factors have the most effect on a
company's final results.

7. Value Delivery Network- A set of connections between organizations and/or individuals

interacting with each other to benefit the entire group. A value network allows members
to buy and sell products as well as share information. These networks can be visualized
with a simple mapping tool showing nodes (members) and connectors (relationships).
8. Hyper Competitive Market- Hyper competition is rapid and
dynamic competition characterized by unsustainable advantage.
9. CSR- A companys sense of responsibility towards
the community and environment (both ecological and social) in which
it operates. Companies express this citizenship (1) through
their waste and pollution reduction processes, (2) by contributing educational and
social programs, and (3) by earning adequate returns on the employed resources.
10. Internal Customer- An employee who receives goods or services produced elsewhere in
an organization as inputs to his or her work.

B-204 Business Finance

1. Trade Credit- Open-account, short-term (usually 30 to 90 days) deferred
payment terms offered by a seller to a buyer as a standard trade practice or to
encourage sales. In some trades such as jewelry business, the credit may extend to 180
days or even longer.
2. Annuity due- Periodic payments (such as rent) that are due at the beginning of a period.
3. Expected Return- The process of determining the average expected probability of
various different rates of return that are possible on a given asset. Factors in this
determination include different market conditions as well as an asset's beta.
4. Systematic Risk- Probability of loss or failure common to all members of
a class or group or to an entire system.
5. Agency Problem- A conflict arising when people (the agents) entrusted to look after
the interests of others (the principals) use the authority or power for their
own benefit instead.
6. Perpetuity- A constant stream of identical cash flows with no end.

7. Term Loan- Asset based short-term (usually for one to five years) loan payable in a fixed
number of equal installments over the term of the loan.
8. Capital Market- A financial market that works as a conduit for demand and
supply of debt and equity capital.
9. Bond indenture- Blanket, unconditional contract between the bond issuer and the
bond purchaser (bondholder) that specifies the terms of the bond.
10. Compensating balance- A financial institutions can use money to pay for
an outstanding loan.

B-205 Business Ethics and Legal Environment of Business

1. Ultra Virus Transaction2. Trade Union and CBA- An organization whose membership consists of workers and
union leaders, united to protect and promote their common interests.
CBA is an acronym more often used to refer to the collective bargaining agreement, or
the union contract. Because collective activity is a function of organized labor, the
collective bargaining agent is the labor union that the union workers elected to represent
their interests.
3. Coercion- Improper use (or threat of improper use) of authority, economic power,
physical force, or other such advantage, by a party to compel another to submit to the
wishes of its wielder.
4. Warranty- Expressed or implied undertaking that a certain fact regarding the subject
matter of a contract is, or will be, true.
5. Revocation- Cancellation, withdrawal, or termination of a act, offer, or power (such
as power of attorney). Variant: revoke (verb).
6. Offer and Acceptance- Offer and acceptance are elements required for the formation of a
legally binding contract: the expression of an offer to contract on certain terms by one

person (the "offeror") to another person (the "offeree"), and an indication by the offeree
of its acceptance of those terms.
7. Implied Contract- A legally enforceable agreement that arises from conduct, from
assumed intentions, from some relationship among the immediate parties, or from the
application of the legal principle of equity.
8. Charter Party- Hire or lease contract between the owner of a vessel (aircraft or ship),
and the hirer or lessee (charterer). Under a charterparty, a vessel is rented (in full or in
part) for one or more voyages (voyage charter) or for a fixed period (time charter).
Normally, the vessel owner retains rights of possession and control while the chartrer
has the right to choose the ports of call. Also called charter agreement or charter
contract, and written also as charter party.
9. Common Carrier- 'For hire' transporter that
(1) serves all customers without discrimination, (2) provides scheduled service to
designated points or within a designated area, (3) carries only the type of cargo for which
it is certified, and (4) is named as the carrier in the contract of carriage. See
also contract carrier.
10. Morality and Ethics- Conformance to a recognized code, doctrine, or system of rules of
what is right or wrong and to behave accordingly.
The basic concepts and fundamental principles of decent human conduct.
11. Agency by holding out- Legally binding agency relationship that may arise where, in fact,
no formal agency agreement is in effect. A principal may give an appearance of agency
relationship by, for example, furnishing his or her firm's call cards or other stationery to
the agent.
12. Extraordinary General Meeting- Any formal meeting of shareholders, held between
two annual general meetings (AGM), called by the directors or shareholders
cumulatively holding ten-percent or more of the voting rights.

B-206 The Comparative Banking

1. Bank run- A bank run is typically the result of panic, rather than a true insolvency
on the part of the bank; however, the bank does risk default as more and more
individuals withdraw funds - what began as panic can turn into a true default
situation.

2. Keiretsu- A Japanese term describing a loose conglomeration of firms sharing

one or more common denominators. The companies don't necessarily need to
own equity in each other
3. Dual Capacity Dealing- Ability of a person or firm to act both as
an agent and principal, or by a person to hold two positions.
4. CARAMEL- This is used for measuring the riskiness of insurance and Is based
upon seven indicators
C- Capital Adequacy
A- Asset Quality
R- Reinsurance
A- Actual Variations and Technical Reserves
M- Managements quality
E- Earnings
L- Liquidity
5. Glass-Steagull Act- An act the U.S. Congress passed in 1933 as the Banking Act,
which prohibited commercial banks from participating in the investment banking
business.
6. Universal Bank- A universal bank participates in many kinds of banking activities
and is both a commercial bank and an investment bank as well as providing other
financial services such as insurance.
7. Chain Banking- Conceptually a form of bank governance that occurs when a
small group of people control at least three banks that are independently
chartered. Usually, the controlling parties are majority shareholders or the heads
of interlocking directorates.
8. Capital Deficiency- Capital deficiency is the excess of a partner's share on losses
over his capital.

9. Financial DisciplineA discipline concerned with determining value and making decisions. The finance
function allocates resources, including theacquiring, investing, and managing of r
esources.
10. Basel III- A comprehensive set of reform measures designed to improve the
regulation, supervision and risk management within the banking sector.

B-207 Financial Management

1. Security Market Line- Security market line (SML) is the representation of the capital
asset pricing model. It displays the expected rate of return of an individual security as a
function of systematic, non-diversifiable risk.
2. Market Efficiency- The degree to which stock prices reflect all available, relevant
information.
3. Modified Internal Rate of Return- the modified IRR assumes that positive cash flows are
reinvested at the firm's cost of capital, and the initial outlays are financed at the firm's
financing cost.
4. Stock Split- Division of already issued (outstanding) shares of a firm into a larger number
of shares, to make them more affordable and thus improve their marketability while
maintaining the current stockholders' proportional ownership of the firm.
5. Bird-in-the-hand theory- A theory that postulates that investors prefer dividends from a
stock to potential capital gains because of the inherent uncertainty of the latter.
6. Cross-over rates- Crossover rate is the cost of capital at which the net present values of
two projects are equal. It is the point at which the net present value profile of one project
crosses over (intersects) the net present value profile of the other project.
7. Investment Opportunity Schedule- A ranking of investment possibilities from best
(highest returns) to worst (lowest returns).
8. Capital Lease- Fixed-term (and usually non-cancelable) lease that is similar to a loan
agreement for purchase of a capital asset on installments.

9. Mutually Exclusive Project- A project that is mutually exclusive means that its acceptance
is dependent upon another project.
10. Financial Risk- The probability of loss inherent in financing methods which may impair
the ability to provide adequate return.

B-208 Risk Management and Insurance

1. Underwriting Risk- The risk of loss borne by an underwriter. Underwriting risk generally
refers to the risk of loss on underwriting activity in the insurance or securities industries.
2. Third Party Insurance- If the beneficiary of a policy is someone other than the two parties
involved in the contract, it is called 'third-party' cover.
3. Loss Prevention- Loss Prevention is the concept of establishing policies, procedures and
business practice to prevent the loss of inventory or monies in a retail environment.
4. Moral Hazard- Circumstance that increases the probability of occurrence of a loss, or a
larger than normal loss, because of a change in an insurance
policy applicant's behavior after the issuance of policy.
5. Coinsurance & Reinsurance- Type of policy (such as automobile or medical insurance)
under which the insured must bear a fixed sum of loss in case of a claim.
Practice where an insurance company (the insurer) transfers a portion of its risks to
another (the reinsurer).
6. Valued and Unvalued Policy- Insurance contract (such as a life insurance policy)
that pays a specified amount irrespective of the extent of loss, and
without making any allowance for appreciation or depreciation.
An unvalued policy is a policy which does not specify the value of the subject matter
insured, but subject to the limit of the sum insured. It leaves the insurable value to be
ascertained by specified means in advance.
7. Insurance and Assurance- an arrangement by which a company or the state undertakes
to provide a guarantee of compensation for specified loss, damage, illness, or death in
return for payment of a specified premium.
Insurance cover against an eventuality that (sooner or later) must occur; death of
the person covered under a life insurance policy being the common one.

8. Proximate Cause- Active, direct, and efficient cause

of loss in insurance that sets in motion an unbroken chain of events which bring
about damage, destruction, or injury without the intervention of a new
and independent force. Also called direct cause.
9. Law of Large Number- Statistical concept that larger the sample population (or the
number of observations) used in a test, the more accurate the predictions of
the behavior of that sample, and smaller the expected deviation in comparisons of
outcomes.
10. Over and Under Insurance- Situation where an insured has bought so
much coverage that it exceeds the actual cash value (or the replacement cost) of
the risk or property insured.
A situation wherein the owner of a property or the person suffering
a health condition does not have enough insurance to cover the value of the item or
the health care costs.

B-209 Macroeconomics
1. Inflationary Gap- A description of a condition that arises in an economy of the difference
between a country's real gross domestic product (GDP) and the level of GDP with full
employment in the economy.

2. National Income- the total amount of money earned within a country.

3. Velocity of Money- The rate at which money is exchanged from one transaction to
another, and how much a unit of currency is used in a given period of time.

4. Consumer Price Index- an index of the variation in prices for retail goods and other
items.

5. Stagflation- It is an economic anomaly where high unemployment (due to economic

stagnation) is accompanied by high inflation (instead of low inflation due to
falling demand).

6. Wage Curve- A graph that illustrates and compares the local rate of unemployment in a
geographical region on a horizontal axis, and the local wage rate of that same region, on
a vertical axis.

7. Tariff- a tax or duty to be paid on a particular class of imports or exports.

8. Economic Growth- Increase in a country's productive capacity, as measured by
comparing gross national product (GNP) in a year with the GNP in the previous year.

9. VAT- A type of consumption tax that is placed on a product whenever value is added at a
stage of production and at final sale.

10. Disposable Income- Gross income of an individual or firm from which direct taxes (such
as PAYE, income tax) have been deducted.

B-210 Bank Information Systems and E-Banking

1. Knowledge Based Economy- The knowledge based economy is an expression coined
to describe trends in advanced economies towards greater dependence on knowledge,
information and high skill levels, and the increasing need for ready access to all of these
by the business and public sectors.
2. Enterprise Systems- Enterprise systems (ES) are large-scale application software
packages that support business processes, information flows, reporting, and data
analytics in complex organizations.
3. Core Competency- Core competencies are the combination of pooled knowledge and
technical capacities that allow a business to be competitive in the marketplace.
Theoretically, a core competency should allow a company to expand into new end
markets as well as provide a significant benefit to customers.
4. Encrypted File- Encryption is the most effective way to achieve data security. To read
an encrypted file, you must have access to a secret key or password that enables you to
decrypt it
5. Profiling- the recording and analysis of a person's psychological and behavioural
characteristics, so as to assess or predict their capabilities in a certain sphere or to
assist in identifying categories of people.

6. Self Healing- self-healing describes any device or system that has the ability to perceive
that it is not operating correctly and, without human intervention, make the necessary
adjustments to restore itself to normal operation.
7. Wireless Application Protocol- Wireless Application Protocol (WAP) is a technical
standard for accessing information over a mobile wireless network.
8. High Availability Computing- In information technology, high availability refers to a
system or component that is continuously operational for a desirably long length of time.
9. E-Tender- An internet based process wherein the complete tendering process;
from advertising to receiving and submitting tender-related information are done online.
10. Call Centre- an office in which large numbers of telephone calls are handled, especially
one providing the customer services functions of a large organization.