Bank-PO (IBPS) General-Awareness Banking and Finance Revision (Page 27 of 40)

Opportunity Cost

The rate of return that can be earned on the best alternative investment. In general, the gain or return on the next best investment opportunity or the next best use of resources, which is forgone by putting the resources to a given use.

Option Contract

A contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset by (or on) a specific date for a specific price. For this right the purchaser pays a premium.


A formal contract which grants the holder of the option the right to buy or sell a certain quantity of an underlying interest or asset at a stipulated price within a specific period of time.

Overdraft System

The system in which the borrower is allowed to overdraw on his current account with the banker upto a certain specified limit during a given period.


Public Sector Undertaking

Par Value

The value of a security when it is issued. For bonds and preferred stock, par value is equivalent to face value.

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