Terms
B
backward: bending individual paid labor supply
curve: this curve arises because, beyond some level of wages,
income effects may outweigh substitution effects in determining
the decisions of an individual
bad-debt ratio: Number obtained by dividing
the amount of bad debts by the total amount of credit sales.
bait advertising: Insincere offer to sell
a product or service at a very low price, used to lure customers
in so that they can be switched later to a more expensive
product or service.
balance sheet: Financial statement that lists
all assets, liabilities, and equity of a company or individual
at a given point in time. Balance sheet uses the basic accounting
equation which is Assets = Liabilities + Owner’s Equity
or net assets in NFP’s.
Balance sheet: The financial statement that
shows the financial condition of a company on a particular
date.
balanced mutual funds: Mutual funds that
invest in both stocks and bonds. They provide both capital
growth and fixed income.
Balancing equation: Assets = Liabilities
+ Stockholders' equity.
bank discount: Amount deducted by a bank
from the amount borrowed. Usually a percentage rate based
on the amount borrowed.
bankruptcy: Is a state of insolvency where
the liabilities of a company or individual exceed the assets
and the company or individual does not have sufficient cash
flow to make payment to creditors.
bargaining theory: theory about situations
in which two actors could come to an agreement that benefits
them both but may disagree about the distribution of these
benefits
bargaining: an activity in which a single
buyer and a single seller negotiate the terms of their exchange
barriers to entry: obstacles that keep new
sellers from entering a market. They can be economic, legal,
or deliberate.
barter: exchange of goods, services, or assets
directly for each other, without the use of money
Basic earnings per share: The earnings per
share figure calculated by dividing net earnings available
to common shareholders by the average number of common shares
outstanding.
basic structure: Simplest structure of a
venture, consisting of only the entrepreneur as a key manager.
batch manufacturing: Type of manufacturing
operation that is intermediate (between job shops and repetitive
manufacturing) in volume and variety of products.
Bear Spread (Put): The simultaneous purchase
of a put option with a higher striking price and sale of a
put option with a lower striking price.
bearish Spread: Portfolio of calls or puts
on which the holder makes money mainly when the price of the
underlying security falls.
Bearish: Describes the belief that the market
or an individual stock will fall in value.
bench-marking: Process of studying the products,
services, and practices of other companies and using the insights
gained to improve quality internally.
benefit variables: Specific characteristics
that distinguish market segments according to the benefits
sought by customers.
bilateral monopoly: the situation in which
there is only one buyer confronting only one seller
Binomial Probability Distribution: Binomial
probability distribution assigns probability to a random variable
that has two possible outcomes. It is described by two parameters
N (sample size) and p (the probability assigned to one of
the possible outcomes).
board of directors: Governing body of a corporation,
elected by the stockholders or nominated by the entrepreneur.
Board of Governors of the Federal Reserve:
Seven-person governing body of the Federal Reserve system
in Washington, DC.
bond price: the price at which a bond is
traded
bond yield to maturity: the amount a bond
returns per year, if held to maturity, expressed in percentage
terms. The yield is determined by the coupon amount, the bond
price, and the time to maturity. Bond price and bond yield
have an inverse relationship
bond: a financial instrument that, in return
for the loan of funds, commits its seller to pay a fixed amount
every year (called the coupon amount), as well as repay the
amount of principal (the bond's face value) on a particular
date in the future (called the maturity date)
book value: Value of a fixed asset on a company’s
books after depreciation has been accounted for.
book value method of valuation: Method of
determining the value of a company by determining the actual
net value of the venture’s assets.
Book value: See Net book value.
bounded rationality: the identification of
some arbitrarily defined subset of information to consider
when making decisions
brand: Verbal and/or symbolic means of identifying
a product.
breakdown process (chain-ratio method): Forecasting
method that begins with a macro-level variable and works down
to the sales forecast.
break-even analysis: Process of determining
how many units of production must be sold, or how much revenue
must be obtained, before a business begins to earn a profit.
break-even price: the price at which a profit-maximizing
firm makes zero profits
break-even production level: the level of
production at which revenues are just enough to cover economic
costs
break-even quantity (BEQ): Number of units
that must be produced and sold in order to cover the total
costs of production. Formula is fixed costs divided by sales
price minus variable costs.
budget deficit: Difference between a government’s
spending and its revenues from taxation.
budget: Plan that lays out expected revenues
and expenditures and is used as a control for the operation
of the venture.
budget line: a line showing the possible
combinations of two goods that a consumer can purchase
Bull Spread (Call): The simultaneous purchase
of a call option with a lower striking price and sale of a
call option with a higher striking price.
bullish Spread: Portfolio of calls or puts
on which the holder makes money mainly when the price of the
underlying security rises.
Bullish: Describes the belief that the market
or an individual stock will rise in value.
business incubator: Facility that provides
shared space, services, and management assistance to new businesses.
business interruption insurance: Coverage
of lost income and certain other expenses while the business
is being rebuilt.
business plan: 1 Overall plan for the venture.
2 Written document designed to guide the strategy of the venture
or to gain financing for the venture.
business policies: Basic statements that
provide guidance for managerial decision making.
business sector: composed of firms that produce
goods and services for profitable sale
buy and hold: Method of investing where once
purchased the investment is held for a number of years.
buyout: Purchase of an existing venture as
a method of launching a new venture.
