Much used financial jargon words

D

dewdrop

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I am amused how every few weeks some new word is used by most financial commentators. At the moment "conditionality" seems to hog the financial airwaves.
 
"in this current economic climate"

Used by people haggling in shops, used by people moaning on Joe Duffy, used everytime there is a high quote, used by housewives having a chat in the aisle of Tesco

It's everywhere!


What I want to know is what happened "soft landing" :confused:
 
"Basis points" & "precentage points"

Going by wikipedia a precentage point is 1%, so the difference between 20% and 30% is 10 percentage points, a basis point is one hundredth of a percent, so 0.01%, so if the ECB base rate went from 3.5% to 3.25% it has changed 25 basis points.

The were very in vogue when we were obsessing about "bond yields" - I nearly get queasy at the mention of the phrase.

Anyway I think percentage points and basis points have been used interchangeably by commentators (must watch it more closely now that I've clarified it for myself), so I usually have to do a "sanity check" to see what would make sense.

There's another one "sanity check" - used by people who work on spreadsheets and in technical areas when asking a colleague to briefly review something - for fear one might have made a complete hash of it (a la the Dept of Finance!)
 
What I want to know is why is the country so expert now on financial terms when we don't have any money. When we did have money we didnt know a tracker mortgage from a tracker bar!
 
Betsy Og said:
"Basis points" & "precentage points"
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I heard an RTE commentator saying that AIB had raised the Standard Variable Rate by 500 basis points.

I have to admit though, that I have to translate basis points into percentage points. If someone says that rates increased by 50 basis points, I think "Is that half a percent?"
 
Brendan Burgess said:
I heard an RTE commentator saying that AIB had raised the Standard Variable Rate by 500 basis points.

I have to admit though, that I have to translate basis points into percentage points. If someone says that rates increased by 50 basis points, I think "Is that half a percent?"
Click to expand...

I just don't get it,its as easy to say 1/4% or 1/2% as 50 basis points indeed the former trips easier off the tongue,I think it has more to do with sounding like you are some kinda finance boy wonder,speak as you find and stop talking in riddles.

I am talking in particular to RTE radio/TV journos and the those working for the once fine paper the Irish Independent.
 
It's easier to use basis points in finance because there is less room for confusion. If you say rates rise by 1/2%, is that a relative or absolute value?

Guess this doesn't really matter when reporting because people would know what is meant but it's a simple enough financial/mathematical term. I don't really have problems with people outside finance using it.
 


That's gobbledygook to me. As a person with Engineering training and not financial, could you explain base points, and % APR vs. % interest?
 
I think if you consider one basis point is 1/100th of 1 per cent it is easier to understand. When dealing with vast sums of money any slight movement in rates is better expressed in this manner. Anyway that is my view. Incidentally i see the plural is sometimes referred to a bips.
 
Basis points or percentage points are terms what we should use when referring to interest rate changes to avoid confusion. If rates are 4% and we are told the there has been a 0.5% increase then that actually means that the new rate is 4.02% even though most people take a 0.5% increase to mean mean that the new rate is 4.5%. The correct way to describe the interest rate increasing from 4 % to 4.5% is to say that rates have risen by 50 basis points or they have risen by a half a percentage point.
 
I wondered for ages what Quantitative Easing was now when I hear those words in the news I wonder how many more billions will the Central Bank inject into a forever ailing economy.
 
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