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Glossary

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  • Hyper-inflation

    High inflation episodes. According to Philip Cagan, this is defined the instance when inflation exceeds 50% a month.
  • IGPA

    General Stock Price Index that measures the price variations of all stocks registered on the Santiago Stock Exchange. This index is prepared using the stock equity (Stock Exchange) value of the different listed companies, classified into business sectors and sub-sectors within the index according to their activity.
  • IMACEC

    Monthly Economic Activity Indicator.
  • Indexation

    Adjustment to the value of a financial instruments to keep without any actual changes with respect to a variable (e.g. CPI).
  • Inflation

    Percentage rise in the consumer price index.
  • IPSA

    The Selective Stock Index, IPSA, measures the price variations of the 40 most liquid (heavily traded) stocks listed on the Santiago Stock Exchange. Companies are selected on a quarterly basis in March, June, September, and December. The index basis is reset at 100 at the beginning of each year.
  • IRR (TIR in Spanish)

    A standard measure of profitability the interest rate that when used to discount future returns (cash flows) is equal to the present value of the investment.
  • Joint Venture

    A partnership between two or more companies, either public or private, to invest capital in a business venture.
  • Liquidity

    The ease with which a financial asset may be traded in the market without any substantial change in price. An asset is regarded a liquid when it can be readily converted into cash.
  • Market Access

    The ease with which foreign suppliers of goods and services are able to enter and operate in the market of a given country. Factors that determine the degree of market access include trade barriers.
  • Monetary Unit

    The denomination of a country’s legal currency, which can usually be exchanged for gold or other currencies. Monetary unit also refers to accounts or values of the International Monetary Fund, which due to its international function must include the values of currencies from several countries. The monetary unit used by the International Monetary Fund is the Special Drawing Right (SDR).
  • Monopoly

    Market structure where a single company supplies a good.
  • Nominal Interest Rate

    The return on savings that will be obtained in the future for a given sum of money saved in the present.
  • OPA

    Tender Offer. A securities market operation through which a company publicly expresses its intent to purchase a part or all of the stock in a company that is listed in the stock exchange. The operation aims at all those holding shares in the company, whom are offered a certain purchase price for each one of the shares. The purpose of the tender offer (OPA) is to take over the company that is the object of the offer. This offer may by friendly (agreed with the directors of the tendered company) or hostile ( without any agreement).
  • Per Capita Income

    Income per inhabitant. A country’s total annual product divided by the number of inhabitants.
  • PPO

    A public purchase offer when a company publicly expresses its willingness to purchase a part or all of the stock in a company that is listed in the stock exchange at a given price per share. The offer is aimed at all those holding shares in the company. The purpose of the public purchase offer is to take over the company that is the target of the offer. This offer may by friendly (agreed with the directors of the target company) or hostile (without any agreement).
  • Price Range

    A system that sets forth specific maximum and minimum prices for certain agricultural products in order to limit medium-term volatility in prices.
  • Public Debt

    Obligations that the government has with its creditors.
  • Public Expenditure

    The funds paid by the government to buy goods and services, to pay social security, interest, transfers, and make investments.
  • Real Interest Rate

    The inflation-adjusted interest rate or return on savings or investments.
  • Reserve on Investment

    A mandatory deposit system for investment funds; it is reserve requirement limited to entries to foreign investment portfolios in Chile and intended to reduce, to a minimum degree, speculative trends; this system directly benefits investors as it reduces the risk of financial fluctuations. A special reserved made up by the AFP’s (Pension Fund Companies) to answer for minimum profitability.
  • Risk Country

    Risk that is assumed when keeping or committing resources in some foreign country, for eventual impediments to recover them due to factors globally affecting the appropriate country, other than credit risk and other risks inherent to the operations carried out with its residents, the accounting analysis and recognition of which is made disregarding considerations related to potential difficulties in repatriating of the resources, and which are alien to the counterparties liquidity, solvency o performance. Risk country comprises the sovereign risk and transfer risk. As for credit operations, the former corresponds difficulties that might arise when exercising actions against the borrower or the ultimate debtor for sovereignty reasons, while the former refers to the debtors general inability of a country to comply with their obligations with foreign creditors due to lack of currency.
  • Risk (Credit) Rating

    For fixed income -- bills, promissory notes, bonds and debt -- the credit rating is used to measure the solvency of a borrower. Solvency refers to the likelihood the borrower will repay the interest and principal it owes. This rating uses a series of letter combinations AAA means maximum solvency and C warns of a high risk of default. Between these two extremes is a series of letters that indicate differing degrees of solvency. Investors worldwide rely on these ratings when deciding whether or not to buy an issue and often make buy or sell decisions based only on this rating.
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