The current financial crisis has thrown terminology from the business pages onto the front page of newspapers, with jargon now abounding everywhere from the watercooler to the back of a taxi.

Here is a guide to many of the business terms currently cropping up regularly, as well as some of the more exotic words coined to describe some of the social effects of the credit crunch.

AAA-rating
Administration
Assets
Bear market
Bond
Bull market
Capital
Carry trade
Chapter 11
Capitulation
Chapter 11
Collateralised debt obligation
Commercial paper
Commodities
Correction
Credit crunch
Credit default swap
Currency peg
Dead cat bounce
Deflation
Derivatives
Dividends
Equity
Fundamentals
Futures
Futures
GDP
Hedge fund
Hedging
Inflation
Investment bank
Keynesian economics
Limited liability
  Leveraging
Libor
Liquidity
Loans to deposit ratio
Mark-to-market
Money markets
Monoline insurance
Mortgage-backed securities
Naked short selling
Nationalisation
Negative equity
Preference shares
Profit warning
Rating
Recapitalisation
Recession
Retained earnings
Rights issue
Securities lending
Securitisation
Security
Short selling
Spiv
Stagflation
Sub-prime mortgages
Swap
Tier 1 capital
Toxic debts
Underwriters
Unwind
Warrants
Write-down 

A-C

AAA-rating

The best credit rating that can be given to a corporation's bonds, effectively indicating that the risk of default is negligible.

Administration

A rescue mechanism for UK companies in severe trouble. It allows them to continue as a going concern, under supervision, effectively to try to trade out of difficulty.

A firm in administration cannot be wound up without permission from a court.

Assets

Things that have earning power or some other value to their owner.

Fixed assets (also known as long-term assets) are things that have a useful life of more than one year, for example buildings and machinery; there are also intangible fixed assets, like the good reputation of a company or brand.

Current assets are the things that can easily be turned into cash and are expected to be sold or used up in the near future.

Bear market

In a bear market, prices are falling and investors, anticipating losses, tend to sell. This can create a self-sustaining downward spiral.

Bond

A debt security - or more simply an IOU. The bond states when a loan must be repaid and what interest the borrower (issuer) must pay to the holder. Banks and investors buy and trade bonds.

Bull market

A bull market is one in which prices are generally rising and investor confidence is high.

Capital

The wealth - cash or other assets - used to fuel the creation of more wealth. Within companies, often characterised as working capital or fixed capital.

Capitulation

Used of the stock markets, the point when a flurry of panic selling induces a bottoming out of prices.

Carry trade (currency)

Typically, the borrowing of currency with a low interest rate, converting it into currency with a high interest rate and then lending it. One common carry trade currency is the yen, as traders seek to benefit from Japan's low interest rates. The element of risk is in the fluctuations in the currency market.

Chapter 11

The term for bankruptcy protection in the US. It postpones a company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business, for example.

Collateralised debt obligations (CDOs)

A collateralised debt obligation is a financial structure that groups individual loans, bonds or assets in a portfolio, which can then be traded.

In theory, CDOs attract a stronger credit rating than individual assets due to the risk being more diversified. But as the performance of some assets has fallen, the value of many CDOs have also been reduced.

Commercial paper

Unsecured, short-term loans issued by companies. The funds are typically used for working capital, rather than fixed assets such as a new building.

Commodities

Commodities are products that, in their basic form, are all the same so it makes little difference from whom you buy them.

That means that they have a market price. You would be unlikely to pay more for iron ore from a particular mine, for example.

Correction

A short-term drop in stock market prices. The term comes from the notion that, when this happens, overpriced stocks are returning back to their "correct" values.

Credit crunch

The situation created when banks hugely reduced their lending to each other because they were uncertain about how much money they had.

This in turn resulted in more expensive loans and mortgages for ordinary people.

Credit default swap

A swap designed to transfer credit risk, in effect a form of financial insurance. The buyer of the swap makes periodic payments to the seller in return for protection in the event of a default on a loan. Currency peg A commitment by a government to maintain its currency at a fixed value in relation to another currency. Typically this is done by the government buying its own currency to force the value up, or selling its own currency to lower the value. One example of a peg was the fixing of the exchange rate of the Chinese yuan against the dollar.

Dead cat bounce

A phrase long used on trading floors to describe a short-lived recovery of share prices in a falling stock market.

Deflation

The downward price movement of goods and services.

Derivatives

Derivatives are a way of investing in a particular product or security without having to own it. The value can depend on anything from the price of coffee to interest rates or what the weather is like.

Derivatives can be used as insurance to limit the risk of a particular investment.

Credit derivatives are based on the risk of borrowers defaulting on their loans, such as mortgages.

Dividends

A payment by a company to its shareholders, usually linked to its profits.

Equity

In a business, equity is how much all of the shares put together are worth.

In a house, your equity is the amount your house is worth minus the amount of mortgage debt that is outstanding on it.

Fundamentals

Fundamentals determine a company, currency or security's value. A company's fundamentals include its assets, debt, revenue, earnings and growth.

Futures

A futures contract is an agreement to buy or sell a commodity at a predetermined date and price. It could be used to hedge or to speculate on the price of the commodity.

GDP

Gross domestic product. A measure of economic activity in a country, namely of all the services and goods produced in a year. There are three main ways of calculating GDP - through output, through income and through expenditure.

Hedge fund

A private investment fund with a large, unregulated pool of capital and very experienced investors.

Hedge funds use a range of sophisticated strategies to maximise returns - including hedging, leveraging and derivatives trading.

Hedging

Making an investment to reduce the risk of price fluctuations to the value of an asset.

For example, if you owned a stock and then sold a futures contract agreeing to sell your stock on a particular date at a set price. A fall in price would not harm you - but nor would you benefit from any rise.

Inflation

The upward price movement of goods and services.

Investment bank

Investment banks provide financial services for governments, companies or extremely rich individuals. They differ from commercial banks where you have your savings or your mortgage.

Keynesian economics

The economics of John Maynard Keynes. In modern political parlance, the belief that the state can directly stimulate demand in a stagnating economy. For instance, by borrowing money to spend on public works projects like roads, schools and hospitals.

Leveraging

Leveraging, or gearing, means using debt to supplement investment.

The more you borrow on top of the funds (or equity) you already have, the more highly leveraged you are. Leveraging can maximise both gains and losses.

Deleveraging means reducing the amount you are borrowing.

Libor

London Inter Bank Offered Rate. The rate at which banks lend money to each other.

Limited liability

Confines an investor's loss in a business to the amount of capital they invested. If a person invests ￡100,000 in a company and it goes under, they will lose only their investment and not more.

Liquidity

The liquidity of something is how easy it is to convert it into cash. Your current account, for example, is more liquid than your house.

If you needed to sell your house quickly to pay bills you would have drop the price substantially to get a sale.

Loans to deposit ratio

For financial institutions, the sum of their loans divided by the sum of their deposits.

Currently important because using other sources to fund lending is getting more expensive.

Mark-to-market

Recording the value of an asset on a daily basis according to current market prices.

So for a futures contract, what it would be worth if realised today rather than at the specified future date. Also marked-to-market.

Money markets

Global markets dealing in borrowing and lending on a short-term basis.

Monoline insurance

Monolines were set up in the 1970s to insure against the risk that a bond will default. Companies and public institutions issue bonds to raise money. If they pay a fee to a monoline to insure their debt that in turn helps to raise the credit rating of the bond which in turn means the institutions can raise the money more cheaply.

Mortgage-backed securities

These are securities made up of mortgage debt or a collection of mortgages. Banks repackage debt from a number of mortgages which can be traded. Selling mortgages off frees up funds to lend to more homeowners. See securities.

Naked short selling

A version of short selling, illegal or restricted in some jurisdictions, where the trader does not first establish that he is able to borrow the relevant asset.

Nationalisation

The act of bringing an industry or assets like land and property under state control.

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