Current Affairs PDF

Banking Awareness (Part II)

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What is meant by Amortization?

Payment of a loan in installments by the borrower. It is usually done in an agreed period and every installment includes a part of the total loan plus the interest.The term is used for two separate processes. They are,

  1. Amortization of loans
  2. Amortization of intangible assets.
What is meant by Asset?

Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Asset can be divided into three types.

  • Tangible Asset –  The assets which are in the material form such as land, machinery, building etc.
  • Intangible Assets – All non-physical/immaterial assets such as brand names, knowledge etc.
  • Financial Assets – All financially valid valuables other than tangibles and intangibles such as currencies, bank deposits, bonds, securities, shares, etc.
What is meant by Crony Capitalism? 

An economy that is nominally free-market, but allows for preferential regulation and other favorable government intervention based on personal relationships. In such a system, the false appearance of “pure” capitalism is publicly maintained to preserve the exclusive influence of well-connected individuals.

A description of capitalist society as being based on the close relationships between businessmen and the state.

What is meant by Market Capitalization?

The total market value of all of a company’s outstanding shares is called Market Capitalization and it can be calculated by multiplying a company’s shares outstanding by the current market price of one share. It is also referred as Market Cap.

If a company has 35 thousand shares outstanding, each with a market value of Rs 100, the company’s market capitalization is Rs. 35.00,000/- (Rs Thirty Five Lakh)

What is meant by Free Trade?

The international trade among an agreed-upon group of countries without any barriers (such as tariffs, quotas, forex controls, etc.), promoted with the objective of securing international specialisation and an edge in their foreign trade. Free trade is exemplified by the European Union / European Economic Area and the North American Free Trade Agreement, which have established open markets.

What is Macro and Micro Economics?

Macroeconomics (‘macro’ means ‘large’) looks at the behaviour of the economy as a whole such as the issues like inflation, rate of unemployment, economic growth, balance of trade,

Microeconomics (‘micro’ means ‘small’) looks on the behaviour of the units i.e. the individual, the households, the firms, a specific industry–which together make up the economy.

What is meant by Usury?

The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate is called as Usury. It is common on all parts of India and Government has imposed many laws to restrict this practice.

What is meant by Animal-Spirit?

The term “animal spirits” is used to describe human emotion that drives consumer confidence.  This term used by John Maynard Keynes used in one of his economics books.

What is meant by Balance of Payments?

Balance of Payments or BOP is a statement that summarizes an economy’s transactions with the rest of the world for a specified time period. The BoB encompasses all transactions between a country’s residents and its nonresidents involving goods, services and income; financial claims on and liabilities to the rest of the world; and transfers such as gifts.

What is meant by Liquidity?

The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price is called Liquidity. It is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.

In simple words, Liquidity is the ability to convert an asset to cash quickly. It is also known as “marketability“.