Business Terms Quiz (Answers)
Q & A from Sept - November 2009
Asset Allocation:
Technique to get the best of a risk/reward
trade off by dividing investments among
different alternatives. A firm has to decide,
for example, which products to
manufacture, whether to buy or lease a
machine, or how much to invest in an
advertising campaign. Similarly, an
individual is faced with the choice of
putting savings in stocks (shares), bonds,
precious metals, real estate, etc. In all
such cases, the strategy to allocate funds
is based on balancing the investor's
objectives regarding income with the
corresponding risks.
Customer Relationship Management
(CRM)
Information-technology enabled strategy
aimed at identifying, targeting, acquiring,
and retaining the best mix of customers.
CRM helps in profiling prospects,
understanding their needs, and in building
relationships with them by providing the
most-suitable products and a very high
level of customer service. It integrates back
and front office systems to create a
database of customer contacts,
purchases, information requested,
technical support, etc. This database
helps the firm in presenting a unified-face
to its customers, and improve the quality of
the relationship.
Long Hedge:
Transaction that secures an advantage or
protection against a possible increase in
the price of a traded item (commodity,
financial instrument, security, etc.) that will
be bought or sold in the future. For a buyer
or consumer, it provides at least a partial
protection by securing future supply at a
fixed ceiling price. For a seller it locks in an
advantageous floor price. Also called buy
hedge, buying hedge, or purchasing
hedge. See also short hedge.
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