Economy and Business Terms - Charlie, your teacher of English
Derivative: It's an asset that derives its value from another asset. For example, a call option on the
stock of Coca-Cola is a derivative security that obtains value from the shares of Coca-Cola that can
be purchased with the call option. Call options, put options, convertible bonds, futures contracts,
and convertible preferred stock are examples of derivatives. A derivative can be either a risky or
low-risk investment, depending upon the type of derivative and how it is used..
Disposable Income: Disposable income, also known as disposable personal income (DPI), is the
amount of money that households have available for spending and saving after income taxes have
been accounted for. Disposable personal income is often monitored as one of the many key
economic indicators used to gauge the overall state of the economy.
Dividend: It's a portion of a publicly-traded company or fund's earnings that is distributed to
shareholders. The amount of earnings distributed as dividends is usually determined by the board of
directors and divided by the number of shares, but preferred stock often has guaranteed dividends.
Dividends exist in order to encourage investment in the company and to allow shareholders (who
are really co-owners) to participate in the profits. A rapidly expanding company often pays little or
nothing in dividends, as most of its earnings are reinvested in the company. On the other hand, a
well-established company with solid profits likely pays relatively high dividends.
Dow Jones Industrial Average (DJIA): The Dow Jones Industrial Average (DJIA), sometimes
referred to as the Dow, is the best-known and most widely followed market indicator in the world. It
tracks the performance of 30 blue chip US stocks.
Though it is called an average, it actually functions more like an index. The DJIA is quoted in points,
not dollars. It's computed by totaling the weighted prices of the 30 stocks and dividing by a number
that is regularly adjusted for stock splits, spin-offs, and other changes in the stocks being tracked.
The companies that make up the DJIA are changed from time to time. For example, in 1999
Microsoft, Intel, SBC Communications, and Home Depot were added and four other companies
were dropped. The changes are widely interpreted as a reflection of the emerging or declining
impact
Durables: Durables is a category of consumer goods that do not have to be purchased frequently.
Some examples of durables are appliances, home and office furnishings, lawn and garden
equipment, consumer electronics, toys, small tools, sporting goods, photographic equipment,
jewelry, motor vehicles and motor vehicle parts, turbines and semiconductors. They also known as
"durable goods," they tend to last for at least three years. Non-durables: A good which is
immediately used by a consumer or which has an expected lifespan of three years or less.
Examples of non-durable goods include food and clothing.
EBIT: It's a type of operating profit. Ebit stands for earnings before interest and tax. Earnings
Before Interest and Tax: It's a measure of a company's ability to produce income on its operations
in a given year. It is calculated as the company's revenue minus its expenses (such as overhead)
but not subtracting its tax liability or interest paid on debt. It is important to note that EBIT does not
account for one-off or otherwise unusual revenues and expenses, only recurring ones. EBIT
represents cash available to pay off creditors in the event of liquidation and, as such, it is closely

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