The world of finance is not limited to men in black suits, seated in plush offices. It touches everyone's lives in one way or the other, making a smattering of understanding of financial jargon necessary for one and all.

This need is magnified by the battery of 24-hour business news channels. The anchors mouth a mystifying array of words that they toss with great ease at bewildered viewers. The growing popularity of these channels draw viewers of all kinds — from home-makers foraying into stock trading to small shop-keepers who like to keep an eye on the latest business news.

40 financial concepts

The book Simplifying Financial Jargons , published by Network 18, aspires to be a ready reckoner for television viewers with a non-finance background. But the grammatical error in the book's title should warn readers not to expect too much from it. It is, at best, a random compilation of terms commonly used in the business media.

The book spans 40 financial concepts that are explained by a character called Professor Simply Simple. The professor emerges as an affable person, ever-willing to elucidate financial concepts to friends and family. The conversations are uncomplicated and the numerical example that the professor uses are easy to understand.

The graphic design of the book is one of its strong points. Instead of carrying masses of text that can daunt readers, the text is interspersed with colourful illustrations.

Each chapter also carries takeaway boxes that capture its essence. The characters who ask the questions range from a home-maker and a vendor on the street to common investors, making it easy for the reader to identify with them.

Explanation of the financial ratios, such as price earning ratio, price earning growth ratio, Sharpe ratio and so on will be useful to investors who are beginning to invest in stocks and mutual funds. The nuanced difference between concepts, such as return on capital employed and return on equity, money supply and velocity of money and so on are also brought out quite well.

Not all the concepts are explained comprehensively, but then the book claims to give only a “180 degree view of the concepts”.

The character ‘Professor Simply Simple' was not created for this book. It was created by Tata Mutual Fund to make lessons carried on its Web site more user-friendly.

The book has borrowed some of these lessons from the Web site, woven a conversation around the lesson and then plugged an introduction. As a result, the introduction appears to be an afterthought and does not flow smoothly into the rest of the dialogue.

While the list of lessons on the Tata Mutual's Web site covers a wide gamut of finance topics, the book has selected only some of these. The selection appears random and has a marked tilt towards topics relating to money and banking. These topics are then arranged in alphabetical order so that topics for similar subjects, instead of being bunched together, are haphazardly distributed.

The result is that there is no flow between the chapters. The concepts cash reserve ratio (CRR) and statutory liquidity ratio (SLR) are separated by nine chapters. Similarly fiscal, revenue and trade deficits are described in the tenth chapter but the explanation for deficit financing is in the thirteenth chapter. The publishers probably do not expect anyone to read the book from cover to cover.

Stock trading jargon

The book has also given a wide berth to stock trading jargon though its usage is all-pervasive. For some strange reason, calculation of Sensex and ‘green shoots' are devoted a chapter each. But derivatives, which most people find complicated, are completely ignored. Concepts such as volatility, buy-back, stock split, ASBA, high frequency trading and so on, which are frequently mentioned in financial media, do not feature in the book.

So, pick it up if you want a quick understanding of some words used in business media.

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