Page 691 - Introduction to Business

GLOSSARY G-17

publicly held firms Firms in which there are many sharehold- relationship marketing Developing long-lasting, profitable
ers who openly trade their shares in the financial market- relations with customers (Ch 8)
place (Ch 13) relative advantage How much better than competitive prod-
purchase with purchase An incentive that allows consumers ucts a new product is (Ch 9)
to buy a product if they first purchase another product reliability The consistency with which a product is produced
(Ch 10) or a service rendered (Ch 8)
purchasing The business function responsible for the acquisi- reliability (of an item) The length of time in between failures
tion of goods and services (Ch 16) of an item (Ch 16)
purchasing power parity (PPP) The purchasing power of an reliability (of service) The ability to perform the service
international dollar, which will have the same purchasing dependably and accurately (Ch 16)
power in any country as the U.S. dollar has in the United remanufactured products New products in which the com-
States (Ch 1) ponents of old products are being reused (Ch 16)
pure competition The industry market structure where there replacement charts Charts outlining possible replacements
are a large number of suppliers that produce essentially for key personnel (Ch 6)
identical products, which are sold at a price determined required rate of return The opportunity cost that investors
by the market (Ch 1) demand as a minimum rate of return on their invest-
ment (Ch 13)
quality The ability of a product to meet or exceed customers’ research study design A comprehensive plan for testing an
expectations (Ch 16) hypothesis, that includes planning the sample and col-
quality control A set of activities aimed at ensuring that the lecting data (Ch 8)
production system is producing products that conform to reserve for losses Funds set aside by financial institutions to
design specifications (Ch 16) absorb anticipated losses without affecting profitabil-
quality of conformance The degree to which the product con- ity (Ch 14)
forms to the intent of the designers (Ch 16) reserve requirements The percentage of transactions
quality of design The excellence of the intention of designers deposits that must be held by banks in cash form and not
to include or exclude features in a product (Ch 16) loaned out (Ch 14)
quantitative restrictions (QRs) Quotas that limit the amount responsibility Accountability within an organization for cer-
of imports that can come into a country (Ch 2) tain matters (Ch 5)
quantity theory The notion that money matters to the real responsiveness (of service) The willingness to provide the
economy as expressed in the equation of exchange (Ch 14) service (Ch 16)
restricted stock Corporate stock that has some restrictions
rack jobbers Regular wholesalers that sell nonfood items to on it, for example, regarding when it can be sold (Ch 3)
retailers (Ch 10) retained earnings The portion of profits not distributed as
rate of return The ratio of profit on an investment to the cost dividends but reinvested back into the company to gen-
of the investment (Ch 13) erate additional profits in the future (Ch 1)
real estate investment trust (REIT) A trust that invests in real return on assets A company’s profit divided by the assets
estate rather than stocks and securities (Ch 15) used to obtain that profit (Ch 8)
real GNI, GNP, or GDP Economic output measured on an return on owners’ equity A company’s profit divided by the
inflation-adjusted basis (Ch 1) amount of assets contributed to the company by its
real rate of interest The interest rate charged by lenders on owners (Ch 8)
loans to borrowers for forgoing present consumption for return on your portfolio Cash generated from an individ-
future consumption (Ch 13) ual’s investments and the annual increase in the fair
recessions Relatively brief slowdowns, or contractions, in eco- market value of the investment instruments, such as
nomic activity within a business cycle (Ch 4) stocks and bonds (Ch 15)
record A collection of related fields (Ch 17) revenue The sum of the quantities of all goods or services
recruiting Attracting qualified job applicants (Ch 6) sold times their price (Ch 1)
reference Someone who can provide information about a job right-to-work laws Laws allowing workers represented by
applicant’s suitability for a job (Ch 6) unions the right to be employed without paying dues to
reference groups Groups to which consumers belong or the union (Ch 6)
would like to belong to that affect what, why, and how they ring network A network topology similar to a bus network
purchase goods and services (Ch 8) but where the communications channel forms a closed
regular wholesalers Wholesalers that provide a full range of loop and hence information is passed from one com-
services (Ch 10) puter to the next one in the ring only in only one direc-
reinforcement theory The theory that is based on the princi- tion (Ch 17)
ple that rewarding good behavior will lead to continued risk The probability that the business will fail; The variability
good performance, while penalizing unacceptable behav- of profits over time, with higher risk implying more vari-
ior will lead to reducing unacceptable conduct (Ch 7) ability (Ch 1; Ch 13)
reinforcer Any consequence that strengthens a specific risk premium The added interest rate that must be paid on
behavior (Ch 7) risky debt and equity securities in addition to the riskless
reinvestment risk The risk an investor faces when payments rate of interest, such as the U.S. government debt inter-
on high-earning securities are received and are subse- est rate (Ch 14)
quently used to buy other securities that have lower earn- risk profile The potential loss that entrepreneurs are willing
ings (Ch 13) to take in a business (Ch 2)

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