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g l i s h f o r
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- Aji C.S (223030071)
- Dias Fadli H (223030032)
- Destyan S.H
(223030043)
- Fikri Raihan (223030025)
- M. Ikhsan (223030071)
1
Backwardation
it is pricing structure in commodities or foreign-exchange trading in which deliveries
in the near future have a higher place than those made later on.Backwardation occurs
when demand is greater in the near future.
In simple terms, backwardation and cotango are two pricing patterns seen in
commodity or currency trading :
- Backwardation happens when the price for a commodity is higher if you want it now
rather than at a later date. This usually occurs when there high demand for the
commodity in the short term
- Contango is the opposite. It’s when the current price of a commodity is lower than
the price set for future delivery. This can happen if people expect the price to rise over
time or if it’s cheaper to store the commodity until later.
1
Balance Of Payments
This terms sounds serious but doesn’t always mean trouble. A country can have a
deficit ( more money going out than coming in ) for years without issue, especially if
it’s using the money for productive investments like new technology. However, if the
deficit is big and the government can’t cover it by borrowing, raising taxes, or using
reserves it could face a real crisis – like Russia in 1998 when it ran out of money and
couldn’t pay it’s debts.
In the early 2000s, people worried that the U.S could face a similar problem, as it’s
current account deficit grew to over 5% of it’s GDP, making it heavily dependent on
foreign money
2
Balanced Budget
Is a condition in which the government’s total income equals it’s total expenditures
over a specific period. A balanced budget is often seen as a sign of fiscal stability,
although some economists argue that it is not always necessary to achieve it every
year, as public borrowing can be used for productive investments.
2
Brand
When a brand successfully creates positive feelings among it’s audience, it builds brand
equity, seen in recognizable names like Microsoft, Coca-Cola, Ferarri, and Nike.
However, brands face criticism as symbols of capitalism, raising concerns about

environmental issues and labor practices. Yet, many economists view brands positively, as
they ensure quality and reability, fostering consumer trust. The rise of foreign and local
brands in transitioning economics shows increased competition, benefiting consumers.
3
Bank
Banks started out as places to store money safely but eventually became the main
source of loans. However, more people are now turning to financial markets or
companies like credit card providers when they need a loan, which has reduced the
profitability of traditional bank loans. As a result, banks have expanded into new areas
like selling insurance and mutual funds. Additionally, banks are increasingly selling off
their loans in financial markets through a process called securitization.
Banks come in different types:
Commercial banks (retail banks)
Wholesale banks
Investment banks
Universal banks
3
Basis Point
It s one one-hundredth of a percentage point.

Small movements in the interest rate, the exchange rate and
bond yields are often described in terms of basis points. If a
bond yield moves from 5.25% to 5.45%, it has risen by 20 basis
points.
4
Bankruptcy
occurs when a court determines that a debtor cannot pay their

debts, influencing economic growth. Harsh penalties may deter
entrepreneurs, while leniency can lead to moral hazard for
creditors. The U.S. bankruptcy system, especially Chapter 11,
offers protections for troubled firms, allowing time to recover,
unlike some countries that quickly liquidate assets.
4
Barriers To Entry (Or Exit)
Are obstacles that prevent new competitors from entering an

industry, benefiting established firms by safeguarding their profits.
Key barriers include ownership of critical resources, economies of
scale for larger firms, significant sunk costs that newcomers must
match, and high exit costs from practices like long-term contracts
that make it costly to leave the industry..
5
Basel 1 and 2
The goal is to reduce the number of bank failures by making sure

banks hold enough capital (money in reserve) based on the riskiness
of their loans. For example, lending to a government is generally
safer than lending to a new internet company, so banks don't need
to hold as much money in reserve for the safer loan.
The first global attempt at this was in 1988 by the Basel committee.
However, their system for judging loan risk was too basic.
5
Barter
Barter is paying for goods or services with other goods or services, instead of with
money
It is often popular when the quality of money is low or uncertain, perhaps because of
high inflation or counterfeiting, or when people are asset rich but cash-poor, or when
taxation or extortion by criminals is high. Little wonder, then, that barter became
popular in Russia during the late 1990s.
1
Bear
Bear is an investor who thinks that the price of a particular security

or class of securities
( shares, say) is going to fall ; the opposite of a bull
1
Behavioural Economics
Behavioural Economics studies how people make decisions in real life, often deviating
from traditional economic theories. It combines economics with psychology to explain
irrational behaviors like avoiding regret, sticking to outdated beliefs, and being easily
influenced by outside suggestions ( anchoring ). People also take bigger risks to
maintain the status quo and tend to make decisions in isolation without considering
the broader impact.
2
Budget
A budget is a yearly plan that decides how much money the government will spend
and how it will raise that money through taxes, service fees, or borrowing.
The budgeting process varies greatly between countries. In the United States, the
president presents a budget proposal in February for the upcoming fiscal year starting
in October. Congress must approve it, leading to several competing versions and
often last-minute negotiations before a final decision is reached. Sometimes,
disagreements over the budget can even cause temporary closures of federal
government offices.
2
Brentton Woods
Bretton Woods is a resort in New Hampshire where, in 1944, representatives from 44
countries met to create a new international monetary system after World War II. This
conference led to the establishment of key institutions like the International Monetary
Fund (IMF) and the World Bank.
The agreement included a system where member countries' exchange rates were
tied to the U.S. dollar, allowing for only a small fluctuation of 1% in either direction. If
a country faced significant economic issues, it could adjust its exchange rate more
dramatically.
2
Bubble
A bubble is characterized by a situation where people buy assets at inflated prices because
they believe they can sell them for even more later, even if they know the prices are
unrealistic. This was seen during the tulip mania in the 17th century and the South Sea
Bubble in the 18th century, among others. Economists debate whether bubbles result from
irrational behavior or rational decisions made with limited information. Regardless of their
cause, bubbles don’t last, often ending with a sharp decline in prices rather than a gradual
deflation
3
Beta
Beta is a number that shows how much a stock or portfolio moves in relation to the
overall market. A beta of 1.0 means the asset moves in line with the market. If beta is
higher than 1.0, the asset is more volatile than the market; if it's lower, the asset is
less volatile.
For example, if a stock has a beta of 0.8, it means the stock tends to move 0.8% for
every 1% change in the market. Beta is part of a financial theory called the capital
asset pricing model, which helps calculate the risk and cost of investments. However,
there’s debate about whether beta accurately predicts future performance, with some
economists questioning its usefulness.
3
Big Mac Index
The Big Mac Index is a fun way to compare the purchasing power of different
currencies by looking at the price of a Big Mac burger at McDonald's in various
countries. It was created by Pam Woodall of The Economist in 1986 to see if
currencies are valued correctly.
The idea behind it is based on purchasing power parity (PPP), which suggests
that in the long run, a dollar should buy the same amount of goods in every
country. Since Big Macs are sold in over 100 countries, comparing their prices
helps determine if a currency is undervalued or overvalued. For example, if a
Big Mac costs significantly less in one country than in the U.S., that currency
might be undervalued.
4
Bonds
Bonds are like loans you give to governments or companies,

and in return, they pay you interest over time. They’re a way
for these entities to raise money without selling shares or
borrowing from a bank. After they are issued, bonds can be
traded just like stocks.
4
Bounded Rationality
Bounded rationality is a theory of human decision making that

assumes that people behave rationally, but only within the
limits of the information available to them. Because their
information may be inadequate (bounded)
5
Black Economy
The black economy refers to the part of the job market that
isn’t officially reported, meaning it doesn’t show up in tax
records or government statistics. It’s sometimes called the
“informal economy” in less developed countries.
5
.Black-Scholes
The Black-Scholes formula is a mathematical tool used to determine the price of

financial options. Before this formula was created, pricing options relied on
rough estimates, which were not very accurate. Introduced in the early 1970s
by Myron Scholes and Robert Merton, the formula allowed for much more
precise pricing, leading to significant growth in the markets for options and
other financial derivatives. Scholes and Merton won a Nobel Prize for their work,
but their co-inventor, Fischer Black, couldn’t be awarded because he had
passed away.
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g l i s h f o r

However, brands face criticism as symbols of capitalism, raising concerns about

It s one one-hundredth of a percentage point.

occurs when a court determines that a debtor cannot pay their

Are obstacles that prevent new competitors from entering an

The goal is to reduce the number of bank failures by making sure

Bear is an investor who thinks that the price of a particular security

Bonds are like loans you give to governments or companies,

Bounded rationality is a theory of human decision making that

The Black-Scholes formula is a mathematical tool used to determine the price of

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