Glossary

Baby Boomers: The very large generation born in the United States and Canada between the end of World War II and the mid-1960s.

Board of directors: The forum in which directors meet to carry out the business of the company. Chairman of the board: Highest ranking officer on the board, and one who usually has more influence and power than other directors.

Bond: A loan in which the lender provides a certain amount of money (capital) to a company or government, in exchange for regular interest payments and repayment of the principal after a specified number of years. Bonds are often bought and sold like stocks.

CEO (Chief Executive Officer): The person in charge of all of a company's operations, and the person responsible to a board of directors for the organization's successes or failures. Until recently, the person holding this office often carried the title of President.

Corporation: A legal entity authorized to carry on business. A public corporation has shares that trade on stock markets; any person or company can buy or sell these shares. A private corporation also has shares, but outsiders cannot buy them without an offer from an existing owner.

Defined benefit pension plan: Provides payments to retirees at a specified rate, usually some percentage of the salaries the retirees earned while still working. Now offered less often by private-sector employers, which are responsible for much of the funding.

Defined contribution pension plan: Specifies how much participants will pay before retirement, but does not specify how much participants receive when they retire (unlike a defined benefit plan). Employers may or may not contribute.

Demographics: Information about the so-called vital statistics, such as age, gender, marital status, income, education, and location.

Directors: Individuals chosen by the owners to represent their interests in the company; usually elected at annual general meetings.

Dividends: A payment to shareholders from a company's profits, with payments proportional to the number of shares held (dividends are a certain number of dollars or cents per share).

Equity: Ownership, usually partial, of a corporation or company, obtained by buying shares or stocks.

Financial sector: Companies and organizations whose main business involves money transactions; for example, banks, insurance companies, and stock brokers.

Freer trade: Governments reduce the level of tariffs (taxes on goods coming into a country) paid by manufacturers or raw-material suppliers in other countries, usually on a reciprocating basis.

Globalization: The processes by which the economic affairs of various countries are linked together, including the transfers of money and investments in companies.

"Going public:" The process by which a company transforms itself from being privately owned to being publicly owned.

Governance (corporate): The way in which a company is managed by its executives and board of directors. Currently, it most often refers to the way that power is shared among stakeholders.

Institutional investors: Organizations and companies that manage large amounts of money on behalf of pension funds, mutual funds, and insurance companies, as well as other organizations like endowment funds.

Pension plan: A contract between an employer and employees, to provide employees with a pension. Pension fund: an organization that manages a pension plan on behalf of an employer and/or employees.

Productivity: The amount of goods or services that can be produced with a given amount of input, such as labor, machinery and equipment, or dollars invested. Higher productivity leads to higher profits and/or wages.

Professional managers/management: Managers hired to run a company because of their expertise or experience in certain functions, rather than having started a company or having an ownership stake in it.

Retail investors: Individuals who buy and sell stocks, usually in relatively small amounts, through stock brokers.

Robber Barons: Freewheeling, innovative, and sometimes ruthless entrepreneurs of the U.S. in the late 19th and early 20th centuries. Accused by many at the time (and some today) of plundering resources and other companies, they're now seen in a more favorable light.

Shares/stocks: Certificates of ownership in a company. As the word share suggests, each certificate represents a share of the company's assets and entitlement to participate in the profits and losses.

Transaction costs: The fees or commissions charged by financial institutions when they buy or sell shares on behalf of a client.

Trillion: One thousand billions; rather than say 1,000 billion we say 1 trillion. For example, if we increased a sum of money by $1 billion at a time, our counting would sound like this: "...$998 billion, $999 billion, $1 trillion."

Trustee: A person who is elected to help supervise the operations of a pension fund. Is roughly the equivalent of a director of a corporation.

Whole life or universal life insurance: includes a savings component that provides an income after retirement or at a certain age.

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