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Saturday, July 30, 2011

Finance Glossary

Arbitrage: The buying of foreign exchange, securities, or commodities in one market and the simultaneous selling in another market, in terms of a third market. By this manipulation a profit is made because of the difference in the rates of exchange or in the prices of securities or commodities involved.


Back-to-back Loan: an arrangement in which two companies in different countries borrow offsetting amounts in each other's currency and each repays it at a specified future date in its domestic currency. Such a loan, often between a company and its foreign subsidiary, eliminates the risk of loss from exchange rate fluctuations.  

Bottom Line: The figure that reflects company profitability on the income statement. The bottom line is the profit after all expenses and taxes have been paid.

Take-home Pay: the amount of pay an employee receives after all the deductions, such as income tax, social security, or pension, contributions.