15. MARKET TERMS
· 1. Arbitrage: P.U.2004
The purchase of securities and stocks from one market for an immediate resale in another market in order to earn profit from the difference in price is called ‘Arbitrage.’
Explanation: It is possible that different prices may exist in different markets for the same commodity at the same time. A clever businessman may buy a thing where its price is low and sell at the same time where its price is high. In order to earn profit, due to the difference in price, he needs two things.
1. Quick transport of goods from the place of buying to the place of selling.
2. Comparison of prices at both the markets (The place of buying and the place of selling)
· 2. Arrivals: P.U.2004, 2006
Fresh stock that is brought to the market in a given period of time is called ‘Arrivals.’
Explanation: Arrivals can never be used for old stock. It produces a negative effect in the market.
a. The supply of the things increases and the demand decreases comparatively.
b. Arrivals can be indicated both in number and quantity, depending upon the nature of goods and commodities. In wheat, they are indicated by number of bags, while in sugar by mounds.
· 3.Bear P.U. 2006, P.U.2009
A bear is a speculative businessman. He sells his bills and securities when the price is high. He buys in future when the price is low.
Bear Operator:
As a speculator, the bear is also known as a “Bear Operator”.
Short or Short Dealer:
In America, a speculator person is called “Short or Short Dealer”.
Explanation: A speculator neither takes the prices nor makes delivery of goods. He just makes a contract. When his speculations prove right, he earns a lot of profit. But if his speculations go wrong, he suffers loss because he has already sold his bills and securities and buys them in future when the prices are high.
· 4. Bearish: P.U.2004, 2005
The downward trend in market is called bearish.
Explanation: There is a general expectation of fall in price in future. Every bear tries to sell at present in order to make profit as a result of fall in future. This trend of depression is rewarding for a bear. He sells his stock now and buys in future due to the depression in a market.
· 5. Boom: P.U.2007
The expansion both in prices and volume of business is called “Boom Period of the Market”.
Explanation: By expansion both in prices and volume of business, we mean a period of good trade in which all the economic activities increase suddenly and reach the maximum possible level.
Here prices, wages production, employment and investment are at their peak. A boom tends to break suddenly when government action is not sufficiently strong.
· 6. Bull: P.U.2001
A bull is just opposite to a bear. He buys bills and securities when the prices are low and sells when the prices are high.
Explanation: Like a Bear, a Bull neither takes actual delivery of the goods nor makes any payment till the date of settlement. He makes profit by speculation.
· 7. Bull Campaign (Bulling the Market): P.U.2004, 2009
A bull expects increase in price in future. But when there is no increase in prices according to his wish, he spreads rumours to influence the market to sell his commodities to gain profit. This effort by a bull is known as “Bull Campaign or bulling the market”.
· 8. Bull Activity or Bull Support:
When the bulls make heavy purchase in the hope of increase in prices, it is called “Bull Activity”.
Explanation: Sometimes, a market has an impression of depression. The Bulls make heavy purchase in the hope of rise in prices. As a result, the prices and the volume of business increase.
· 9. Demurrage: P.U.2004, 2005, 2008
The detention of a ship or other cargo-conveyance for loading and unloading beyond the scheduled time of departure is called “Demurrage”.
Explanation: When the goods reach a port, they are required to be unloaded or cleaned within a fixed period of time. But, if for some reason, they are not unloaded at the fixed time, the defaulter company is fined per day. This fine is called Demurrage. This fine is also charged by the railway for over detention of goods.
· 10. Depression:
It is a period of decline in business as well as prices. There are neither the buyers nor the sellers.
Explanation: Depression is a period of time when there is drastic stagnation in business activity. This period is too long. It is marked with unemployment, fall of prices and close of industry. During this period, the investors have to face great loss. They do not get anything out of their investment.
· 11. Dips: P.U.2007
A deep and abrupt fall in prices of commodities in a market is known as ‘Dips.’
Explanation: In a market, at one time there is sudden increase in price of a commodity and at the other time there is sudden and abrupt decrease in the price of a commodity. When there is sudden increase, it is called ‘Dips.’
· 12. Dumping: P.U.2006
It means to place goods at very low rates even blow the cost of production in foreign countries. Its purpose is to acquire monopoly in foreign countries.
Explanation: Every country wishes to export its products to other countries to earn foreign exchange and to get monopoly in the markets of those countries. To attract the foreign markets, they keep the prices low and increase their sale in foreign countries.
Remedy: The country affected by dumping may impose taxes and duties on imports in order to protect the home market.
· 13. Easy or Easier:
The term ‘Easy’ indicates that the market is favourable for the buyers. In this market, the prices of things are low for them. The supply of a commodity is higher than demand. A commodity comes to a market and soon it is bought. It creates a need for more sale of that commodity. The market becomes favourable for the investors too. A market which is favourable for the investors and buyers is called “An Easy Market.”
· 14. Ex-Ship Prices: P.U.2009
The prices charged by the seller to deliver the goods at seaport or dock.
Ex-Ship Sales:
A business transaction in which goods are delivered to the buyers at the dock or seaport is termed as “Ex-Ship Sale”.
Explanation: This term is mostly used in import and export affairs. The price is generally determined by the following formula.
Cost+Direct Expense+Owner’s Profit+Dealer’s Commission= Whole Sale Price
· 15. Flat:
A market is flat when the prices are low.
Explanation: In this type of market, there are more sellers than buyers. As a result of it, the prices of different goods become very low or weak. In such a state, the traders become inactive in their transactions. The sellers are more hit than the buyers.
· 16. Forecast:
The estimation made by the experts to guess the trend of prices in future is called “Forecast”.
OR
Specialized experts estimate and analyze the trend of prices in the future depending upon the certain factors. This estimation in advance is called “Forecast”.
· 17. Floor-Price:
It is the minimum price of a commodity. This price is fixed by the government.
· 18. Glut: P.U.2005,2006
An excessive supply of any commodity in the market is called “Glut.”
Explanation: The economic stability of a market is determined by the factors of demand and supply. If the supply of a commodity is more than its demand, the prices start decreasing. If demand decreases and supply becomes less, the prices of a thing increase. Glut is a state of market when there is an excessive supply of any commodity. In such a state, the prices of goods decrease.
· 19. Haggling:
The literary meaning of Haggling is bargaining. In the business language, it is an agreement about rates by making offer and counter offers by the buyer and seller.
Explanation: Haggling is an important characteristic of a retail market but now-a-days, it is also normal feature of an organized market. The purpose of haggling is to settle the price i.e. a price which is acceptable to both the buyer and the seller.
· 20. Hedging:
It means to protect an investment against the loss caused by fluctuations in the market.
Explanation: In the stock market, dealers make future contracts to make profit. These contracts are based on forecast. In the case of wrong forecast, the dealers transfer some part of the loss to the shoulders of other by making another contract. It is called “Hedging”.
· 21. Lame Duck of the Market:
When prices fall, the commodity which suffers most is called “Lame duck of the market”. This term is also used for the investors.
· 22. Liquidate:
It means to wind up the affairs of a failing business. This thing happens when a business goes into debt. The firm or company which reaches the state of bankruptcy is bound to liquidate. It cannot carry on its business. The process which is adopted to make an end of a bankrupt business is called “Liquidation.”
· 23. Market Price: P.U.2004, 2005,2006,2009
The price paid by the buyer at the time of sale is called “Market Price”.
Explanation: It indicates the price of every unit of commodity. Market price is generally determined by two factors i.e. demand and supply.
Market price creeps up when these forces are at par. If price increases, demand decreases and vice versa. Therefore, price has inverse relationship with demand but positive relationship with supply.
· 24. Market Value: P.U.2204,2007, 2008, 2009
It is the price of a commodity which the dealer expects to get from the buyer in the market.
Explanation: Market value is different from market price. Market price is the actual price which a seller gets at the time of selling a thing while, market value is the price which he hopes to get at the sale of a thing. Market value is based on two factors.
1. Depreciation
2. Appreciation
1. Depreciation: It indicates fall in existing value.
2. Appreciation: It indicates rise in existing value.
· 25. Power of Attorney:
A document in which one person authorizes another to act on his behalf in respect of some specific matters discussed in the documents.
· 26. Pegging:
Sometimes, change in prices does not go in favour of speculators. In such situation, some powerful bulls try to control prices through artificial ways to keep them fixed. This process is called “Pegging”.
· 27. Rigging: P.U.2009
When the bulls see that the market is not behaving according to their expectations, they form an organization and try to manipulate the prices in their favor by controlling market through bogus transactions. This act on the part of the bull is called “Rigging”.
· 28. Ready Business: P.U.2007
This term is used for spot dealing. The seller is ready to give the delivery at the spot and the seller is also ready to get the thing at the spot, after the settlement of terms.
· 29. Recession: P.U.2008
A temporary decline in the business is called ‘Recession.’
Explanation: Sometimes, the investors do not invest money in the market due to a short period of depression. They take their time to make heavy investment. In this period of slow investment, the market remains dull. The business activity does not improve. This temporary decline in business is called ‘Recession.’
· 30. Set Back: P.U.2007
A sudden fall in the volume of business transactions due to low prices is termed as “Set Back”.
Explanation: The prices of commodities change in a market. They do not remain fixed. They rise and fall according to different factors. When there is an un-expected and dramatic fall in pricesor volume of business, it is termed as ‘Set Back.’
· 31. Slump:
It is the period of falling prices and small business.
· 32. Shade:
It is the slight rise or fall in prices.
Explanation: The prices of commodities do not remain fixed in a market. They may go up or down. If there is slight variation in the rise and fall of prices, the process is called ‘Shade.’ There may also be a little rise or fall in the volume of business.
· 33. Speculation: P.U.2005, 2008, 2009
Speculation refers to a business activity that does not take place in the actual purchase or sale of a commodity. This type of business is done by the bears or the Bulls. The Bears sell a thing on the speculation that its price may fall in future. The Bulls buy a thing in the hope that its price will rise in future. It is a risky business. The speculators may suffer loss.
· 34. Straddling: P.U.2009
Straddling is a process by which the investors have the privilege to sell or buy the different classes of bills at a specified price, within a certain period in the same market.
· 35. Street Price: P.U.2005, 2006, 2009
It is an off-the-record business activity done by the investors to make a profit outside the Stock Exchange Market.
Explanation: Generally, all business transactions related to sale or purchases are done in Stock Exchange Market. But, sometimes the investors want to raise profit and carry the business transaction outside the Stock Exchange Market. The transaction is done at a privately quoted price. This price is known as ‘Street Price.’
· 36. Spurts /Rallies:
When the prices rise suddenly and buy a good margin, it is called “Spurts or Rallies”.
· 37. Stag:
An individual who buys shaves in a public offer to resell them at a profit after a short period is called “Stag”.
· 38. Stock Exchange:
It is a place where stocks, bonds, shares and securities are purchased or sold through brokers. The whole process is done under some definite rules and at regular hours.
· 39. Subdue Note:
When a market shows a downward tendency in terms of prices and the volume of business, the market is termed as “Subdued.”
· 40. Tender:
It is a written offer to supply certain goods or to perform certain work upon specific terms.
· 41. Turn-Over: P.U.2005, 2007
It means the total amount of transactions done in a particular period.
Explanation: Turn over includes both total sales and total purchases on a particular day, date or given period. This term is also used to refer to the total receipts and payment made during business transactions in a specified period.
Turn Over: Total goods sold
The total amount in price
· 42. Upset Price:
An upset price is the lowest fixed price on which a person is ready to sell his property in the auction.
· 43. The volume of business:
Stagnant/Dull/Uncertain:
When little business is done in a market for a particular period, it is termed as “Stagnant” or “Dull” or “Uncertain.”
Brisk/Broad Scale:
When heavy business is done in a market, it is termed as “Brisk” or “Broad Scale.”
Stagnant and Brisk are the terms which are used to show the “Volume of business.”
· 44. Trade Association:
If some businessmen or business concerns of the same line of trade form a society to safeguard their mutual interests and rights, their society is called a ‘Trade Association.’