Economy and Business Terms - Charlie, your teacher of English
It's an event that is extremely hard to predict. It is generally associated with Nassim Nicholas
Taleb's book. Black swan events are typically random and unexpected, and some think the current
financial crisis is a black swan.
Before the discovery of Australia, it was assumed that all swans were white because nobody had
seen one of a different shade. Markets tend to work on the basis that black swans either don't exist
or appear with such irregularity that they are not worth worrying about. Black swan events are
typically random and unexpected. For example, the previously successful hedge fund Long Term
Capital Management (LTCM) was driven into the ground as a result of the ripple effect caused by
the Russian government's debt default. The Russian government's default represents a black swan
event because none of LTCM's computer models could have predicted this event and its
subsequent effects.
Blue Chip: A blue chip is a nationally recognized, well-established and financially sound company.
Blue chips generally sell high-quality, widely accepted products and services. Blue chip companies
are known to weather downturns and operate profitably in the face of adverse economic conditions,
which helps to contribute to their long record of stable and reliable growth.
Bond: A bond is a debt investment in which an investor loans money to an entity (typically
corporate or governmental) which borrows the funds for a defined period of time at a variable or
fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments
to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or
creditors, of the issuer.
Bonus 1: A bonus is an additional compensation given to an employee above his/her normal wage.
A bonus can be used as a reward for achieving specific goals set by the company, or for dedication
to the company.
2. They are dividends paid to shareholders from funds created out of additional profits realized by
the company.
3. Or a premium paid for accepting an agreement. Sometimes referred to as a "signing bonus".
4. It's also anything over and above what is expected.
Bridge Loan: It's a loan for a short-term period, usually two weeks to three years, and until longterm financing can be arranged or an obligation is removed. Interest rates are relatively high, often
12-15%. Bridge loans are used to satisfy working capital needs; for example, if a company is
arranging for an IPO or a bond issue in the coming months, but needs capital before then, it may
take out a bridge loan. In doing so, it will plan to pay back the bridge loan with the money raised in
the longer-term financing.
Broker: It is a person or firm that conducts transactions on behalf of a client. Some brokers only
conduct transactions while others also offer different types of investment advisory services. Brokers
derive their profit from commissions on orders given. That is, they usually collect a percentage of
the value of each transaction, though some charge flat fees. Clients may give orders in a variety of
ways. One may meet with a broker, call on the telephone, or give orders over the Internet. Brokers
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