General terms

Question 1

Marginal cost

Answer 1

The cost of producing one additional unit

Question 2

Odd pricing

Answer 2

Psychological effect on people. 4.99 instead of 5

Question 3

Cost leadership strategy

Answer 3

Keeping track of costs in a very detailed way

Question 4

Unrealised gains

Answer 4

Arise in a case of revaluation

Question 5

Underwriter

Answer 5

A bank or any other financial institution that offers to buy the shares

Question 6

Authorised share capital

Answer 6

The maximum amount of shares the company is allowed to issue

Question 7

(Share) subscription

Answer 7

An offer to buy shares (by a shareholder)

Question 8

Stock split (US)/ Share split (UK)

Answer 8

An increase in the number of shares with the proportional decrease in value of the share

Question 9

To retire a bond

Answer 9

To pay off the bond

Question 10

Rights issue

Answer 10

Gives the shareholders to buy new shares at a discount

Question 11

Bonus issue (UK)/ Stock dividend (US)

Answer 11

Proportional distribution of own shares to shareholders

Question 12

Opportunity cost

Answer 12

Amount that a factor of production could have earned if put to another use

Question 13

Treasury stock (US)/ Own shares (UK)/ Reacquired shares

Answer 13

Company’s own shares that have been issued and later reacquired.

Question 14

Allotment

Answer 14

Dividing shares between shareholders

Question 15

Underwriting

Answer 15

Bank purchases any unsold shares.

Question 16

Market capitalisation

Answer 16

Number of shares x Market price

Question 17

Spread

Answer 17

aka Interest margin - the difference between interest rate charged to borrowers and paid to depositors.

Question 18

Balance of payments

Answer 18

A record of all the financial transactions between a country and the rest of the world during a given year