(above: Shanghai)
Bond - A promise (an "IOU") in writing to repay borrowed money on a specified date and (usually) interest at fixed intervals on the way toward that date.
Bubble - A cycle in which price increases fuel speculation which in turn fuels more speculation. The cycle causes prices to reach unsustainably high levels after which the "bubble pops," and a crash occurs. Also: trade in high volumes at prices that are considerably different from the value of the items traded.
Capital - Wealth in the form of property or money that is used to generate more wealth. (see also venture capital)
Convertibles - Securities that can be exchanged at the holder's option for common stock shares.
Crash - A sudden and massive decline in business or in the prices of stocks.
Depression - A severe or extended recession.
Dirigisme - Economic planning and control under the "direction" of central government (from Fr. diriger "to direct").
Equity - The difference between the market value of property and the claims against it; the difference between a company's assets and liabilities: the net worth of a company; the ownership interest of shareholders in a business.
Equity market - Synonym for stock market: an arrangement for trading publicly held stock in companies and other financial instruments, such as stock options, convertibles, and stock index futures.
Floating Exchange Rate - This phrase describes a currency whose value is determined by supply and demand on the Foreign Exchange market relative to the currencies of other countries; as opposed to a currency whose exchange rate is "fixed." A "fixed currency" (also called a "pegged currency") rises or falls relative to a single standard (gold, for example, or another currency) and is theoretically better protected from market influences.
Futures - Contracts to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
Globalization - A term characterizing the favoring of a worldwide investment environment and the integration of national capital markets (Bloomberg).
Gross Domestic Product (GDP) - The sum of all goods and services produced by a nation in a given period of time; applies to all workers and capital within a nation's borders (as opposed to Gross National Product, which covers what is produced by a nation's citizens wherever they reside in the world).
Hedge Fund - A relatively high risk investment plan limited to small groups of wealthy investors. A hedge fund sometimes operates by a different set of rules permitting it to engage in aggressively speculative activity.
Inflation - The annual rate at which prices are increasing.
International Monetary Fund (IMF) – Constituted in 1945 as part of the Bretton Woods agreements, the IMF is an international organization that oversees the global financial system by keeping track of exchange rates and balance of payments and provides financial and technical assistance.
Labor - Work done for wages.
Laundering - Moving cash or other assets acquired illegally (through criminal activity, for example) through legal financial institutions with the aim of concealing their origins.
Leverage - The extent to which a purchase was paid for with borrowed money.
Liquidity - The ease and speed with which a security or other asset can be converted into cash; also the degree to which securities or other assets can be bought or sold in the market without affecting their price.
Mercantilism - An economic concept developed during the decline of European feudalism that put a premium on strict governmental regulation of economic activity with the aim of strengthening the state. It came under attack during the Enlightenment by such figures as Adam Smith.
Outsourcing - Delegating operations to another firm in the interest of saving costs.
Productivity - The amount of output per unit of input (labor, capital, etc.), or, the revenue generated by a worker divided by his or her wages or salary.
Protectionism - The policy of protecting domestic industry from import competition by means of tariffs, quotas, and other trade barriers (Bloomberg).
Pyramid Schemes - A form of investment fraud: examples include the "Ponzi Scheme" of the 1920s and the fraud allegedly committed by Bernard Madoff that came to light in 2008. (More from the SEC)
Recession - A decline in a nation’s real Gross Domestic Product (GDP) for two or more successive quarters of a year.
Reserves - The supply of gold and foreign currency held by a nation to finance any calls for payment of foreign debts.
Securities - Paper certificates (definitive securities) or electronic records (book-entry securities) proving ownership of equity (stocks) or debt obligations (bonds). (Bloomberg)
Speculation - Buying or holding investments, including risky ones, in hope of higher profits in the long run.
Stock - Ownership of share(s) in a corporation representing a portion of the corporation's assets or earnings.
Stock Market - The market where stocks - also called equities - are traded (hence, also called the "equity market").
Stock index futures - Futures contracts based on a market index.
Stock options - The right to purchase shares of stock at a specified price.
Subprime Loan - A loan to a borrower with poor credit, income or assets that are hard to document, or other circumstances that would hinder loans from more orthodox sources.
Tariff - A tax on imports or exports (Bloomberg). (see also)
Venture capital - Source of financing for startup companies. (see also capital)
World Bank - Constituted in 1945 as part of the Bretton Woods agreements, the World Bank is committed to financing international economic development and to eliminating poverty. The United States holds 16.4% of the total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each 4.3%. Insofar as major decisions require an 85% super-majority, the United States has the voting power to block any major change.
Additional Resource - Bloomberg.com
