Arbitrage ( Economic Terms)

Buying an  asset in one market and simultaneously selling an identical asset in another market at a higher  price . Sometimes these will be identical assets in different markets, for instance, shares in  a  company  listed  on  both  the  London  Stock  Exchange and New York Stock Exchange. Often the assets being arbitraged  will  be  identical  in  a  more complicated  way ,for example, they will be different sorts of financial  securities that are each exposed to identical risks.Some kinds of arbitrage are completely risk-free – this is pure arbitrage. For instance, if  euros are available more cheaply in
dollars in London than in New York, arbitrageurs (also known as arbs) can make a risk-free  profit by buying euros in London and selling an identical amount of them in New York. Opportu-nities for pure arbitrage have become rare in recent years, partly because  of  the  globalisation of  financial  markets .Today, much of what is called arbitrage, much of it done by hedge funds , involves assets that have some similarities but are not identical. This is not pure arbitrage and can be far from risk free.

Animal Spirit ( Economic Terms)

The colourful name that  keynes gave to one of the essential in-
gredients  of  economic  prosperity:  confidence.  According  to
Keynes, animal spirits are a particular sort of confidence, “naive
optimism”. He meant this in the sense that, for entrepreneurs in
particular, “the thought of ultimate loss which often overtakes
pioneers, as experience undoubtedly tells us and them, is put
aside  as  a  healthy  man  puts  aside  the  expectation  of  death”.
Where  these  animal  spirits  come  from  is  something  of  a
mystery. Certainly, attempts by politicians and others to talk up
confidence  by  making  optimistic  noises  about  economic
prospects have rarely done much good.

Amortisation ( Economic Terms)

The  running  down  or  payment  of  a  loan  by  instalments.  An
example is a repayment mortgage on a house, which is amor-
tised  by  making  monthly  payments  that  over  a  pre-agreed
period of time cover the value of the loan plus  interest . With
loans that are not amortised, the borrower pays only interest
during  the  period  of  the  loan  and  then  repays  the  sum  bor-
rowed in full