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Financial Glossary – O

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ObamaCare – an informal term for the Affordable Care Act. We know it officially as The Patient Protection and Affordable Care Act. US President Barack Obama signed the Act in 2010. It is an American national health care plan that focuses on creating better health care coverage.

Objective – in business it refers to the specific aims a company has including details of how it will get there plus a time frame. It is not the same as a goal, which is less specific and is longer-term. A company’s aims are the same as its objectives, hence the term ‘aims and objectives’.

Objective Evidence – evidence that we base on facts that we can prove. It is the same as ‘compelling evidence’ and the opposite of ‘subjective evidence.’ Subjective evidence requires a leap of faith. We use the term ‘objective evidence’ in business, science, philosophy, and layman’s English.

Obsolescence Risk – the risk of a company’s product, system, or technology becoming obsolete. When, for example, a company’s technology becomes obsolete it loses competitiveness in the market. Obsolescence affects a firm’s bottom line, i.e. its profits.

Obstruction of Justice – an offense that covers any attempt by a person to corruptly ‘influence, obstruct, or impede the due administration of justice.’

Occupation Tax – a tax that certain professions, establishments, and other businesses must pay. They pay this type of tax to the local government. Some US states call it ‘business and occupation tax.’

Occupational Accident – an accident that workers suffer in the course of their work. This type of accident is common all over the world. Examples include animal attacks, human attacks, falls, slips, being struck by objects, and poisoning. The worker may become physically or mentally injured or ill. In some cases they may even die.

Ockham’s Razor – a proposition that we should always choose the simplest explanation when there are two or more. The simpler explanation is more likely to be the right one. The concept was put forward by William of Ockham, a medieval Franciscan friar.

OECD – which stands for Organisation for Economic Co-operation and Development, is a unique forum where the governments of thirty-five nations – all democracies with market economies – work with each other. The aim is to promote sustainable development, prosperity and economic growth. The OECD was founded in 1960.

Office – a place where people do non-manual work. An office may be one room, a set of rooms, or even a whole building. Clerks, secretaries, accountants, IT personnel, and other professionals work in an office.

Office Audit – an audit that the US IRS (Internal Revenue Service) carries out at one of its offices. The IRS auditor tries to determine whether the taxpayer is paying the correct amount of tax. There are three types of audits: 1. Office audit. 2. Correspondence audit. 3. Field audit.

Office Automation – using computers and software to do office work automatically. With office automation, machines and IT systems do the work that humans used to do. Files, for example, are stored digitally rather than in large filing cabinets.

Office Manager – somebody who is in charge of a company’s or organization’s administrative activities. We also call them administrative service managers or business office managers. They are responsible for running the office.

Officer of the Court – the term refers to people who are responsible for promoting justice. Examples include judges, magistrates, court clerks, court stenographers, lawyers, and bailiffs.

Official Development Assitance (ODA) – an indicator of aid flow around the world. The Development Assistance Committee of the OECD coined the term in 1969. The world’s largest donor is the United States, followed by the United Kingdom.

Official Interest Rate – this is the rate at which banks lend to each other. Specifically, they are one-day maturity loans or overnight loans. Americans use the term ‘federal funds rate.’ In the UK, people call it the ‘official bank rate,’ while New Zealanders and Australians say the ‘official cash rate.’

Official Reserve – the amount of gold, tradable foreign currency, and special drawing rights (SDR) that a country has. The central bank holds the official reserve in most countries. We can also refer to it in the plural form, as in ‘official reserves.’

Officials – these are people with jobs in which they have power and authority. Officials may work in government departments, companies, organizations, or sports. Politicians in power are elected officials. However, people working in regulatory agencies are non-elected officials.

Offshore – in finance and business, the term means any other country other than one’s own – foreign, overseas. An offshore account is one that is held abroad. An offshore financial center offers financial services to people from abroad, they are usually tax havens or places with considerably lower tax rates than the home country of the bank account holders. The majority of offshore financial centers have small populations – many of them are or used to be British colonies or protectorates.

Offshore Company – the term has two broad meanings. 1. A company that operates in one country but is registered in another. That ‘other country’ is usually a tax haven. 2. A company that produces its goods abroad, in a country with cheaper labor or raw material costs. It then imports those good into the country where it operates.

Offshore Fund – a fund that operates abroad. Most of us interpret the term as a fund in a tax haven. However, technically speaking, an offshore fund simply means one that is abroad.

Offshore Manufacturing – relocating a company’s production plant abroad. Company’s do this because the other country has low labor costs. Sometimes, it moves production abroad because raw materials are cheap in the other country. The firm produces the goods abroad and imports them for sale in the home market.

Offshore Production – the manufacturing or assembly of products abroad, and then selling them in the home country. Companies do this because either labor costs or raw materials are cheaper in the foreign country.

Offshore Trust – this is a trust that a trustor created outside the jurisdiction of their country of residence. Offshore trusts offer confidentiality, tax benefits, and protection from local laws.

Offshore Outsourcing – the term means farming out business activities to organizations and companies abroad. The main reason is cost. The company finds organizations in countries with low labor costs.

Offshoring – relocating part of a company’s business operations abroad. Offshoring may include the relocation of production, manufacturing, accounting, or other service to another country. For example, several large companies have moved their call centers abroad.

Off-the-Shelf – an item that has not been custom-made. Off-the-shelf products are one-size-fits-all goods that anybody can buy. They are the opposite of bespoke, tailor-made, customized, or made-to-measure products.

Offtake Agreement – an agreement between a producer who plans a project and a buyer. They both agree to sell and buy a specific amount of future production. Offtake agreements are common in project finance with significant capital outlays. The lender needs to know that the project will hit the ground running before granting a loan.

Oil Economy – the term may refer to: 1. A country where oil revenues represent a major part of the economy. 2. A country that relies on oil for transportation, heating, etc. 3. A portion of the overall economy that is associated with the exploration, extraction, refining, and sale of oil.

Oilfield – a geographical area below the surface of the Earth with oil wells. There are onshore and offshore oilfields. We can write the term with one or two words, i.e., oilfield or oil field. There are over 40,000 oilfields in the world. Many of the largest ones are in the Middle East.

Oil Patch – the term originally referred to the major oil-producing states in the USA. However, today some people use it in Canada and other countries for regions with oil deposits. It also means an oil slick as well as the oil industry in general.

Oil Port – a deepwater port where large oil tankers can load and unload. The water in most ports is about twenty feet deep. Oil ports must have considerable deeper water.

Oil Spill – an unintentional escape or leak of oil into a body of water; usually the sea. However, some oil spills can also occur on land. We only use the term when talking about major leaks. Oil spills harm wildlife and the environment. They also have an economic cost, often take human lives, and can make people ill.

Okun Gap – or the output gap is the difference between what total GDP actually is and what it could be. For example, if unemployment is high, output is lower than it could be if unemployment were low. That gap in output is the Okun gap.

Okun’s Law – an empirical relationship in economics whereby a certain decline or increase in gross domestic product results in a different but correlated rise or fall in the rate of unemployment. The GDP and unemployment fluctuations do not change by the same amounts due to a number of factors, including increased/declining productivity, changes in the average number of hours worked each week, and people who stop seeking work (they drop out of the job market).

Old Economy – the economy that existed from the Industrial Revolution until the mid-1990s. The ‘new economy’ emerged with the arrival of the Internet, online activities, and more powerful computers. The companies that drove GDP growth in the old economy are different from the ones in the new economy. Today, hi-tech companies dominate.

Old Money – refers to rich families that inherited their wealth. The wealth was passed down multiple generations. It contrasts with nouveau riche. In the UK the term generally only applies to members of the aristocracy.

Olf – this is a unit that we use to measure how strong air pollution is from a source. It measures the scent emission from an object, animal, plant, and even human. One olf is what an average sedentary, healthy, non-smoking human emits.

Oligopoly – a market in which very few companies dominate supply. These ‘oligopolists’ are able to control prices as well as output. This type of market may have dozens of competitors, but only very few dominant ones. If a market with 100 suppliers has three giant ones that control 90% of all sales, it is an oligopoly.

Oligopsony – a market with few buyers and many sellers. The buyers in this type of market are usually big and powerful. For example, there are not many supermarket chains. The few that exist are huge. They can dictate terms when negotiating prices with farmers.

Ombudsman – an official who represents the interests of the public. They investigate and address complaints between individuals and companies or government departments.

Omnibus Account – an account opened in the name of an account provider with the securities that belong to two or more clients of the account provider.

On Account – the partial payment of a debt. The term may also mean deferred payment. For example, if I buy something ‘on account,’ it means that I pay for it later. In other words, ‘on credit.’ There are also some other meanings that you can read about in the full article.

One Price Policy – a pricing strategy in which the seller offers everybody the same price. There is no discrimination. There is no haggling. The price you see is the final price; take it or leave it. This pricing strategy contrasts with a variably price policy or differential pricing approach. Both approaches have pros and cons.

One-Stop Shop – this might be a place or a company. It has everything a person with a particular need might want. Therefore, it is the only ‘stop’ you need to make to get everything you want. For example, a wedding one-stop shop will make the ceremony arrangements as well as organize the reception afterwards. It will make the invitation cards and the bride’s wedding dress. Put simply, for your wedding needs, you do not need to go anywhere else.

One-to-One Marketing – a kind of customer relationship management approach in which the sales and marketing people communicate directly with somebody. This person is an individual that the seller targets directly. We also call it 1:1 marketing, individual marketing, and personalized marketing.

Online – the term refers to a state of connectivity, specifically in a technology and telecommunications context. If something is online, it means it is connected to a network, on the Internet, or available to read or download. It is the opposite of offline.

Online Advertising – the term refers to placing adverts on websites and other Internet venues. Promotional material appears on the screens of mobile phones, laptops, desktops, smart TVs, and tablets. Online advertising has grown exponentially since the 1990s.

Online Banking – a service where customers can manage several aspects of their account over the Internet, rather than physically visiting a branch, using the telephone, or sending letters and forms via surface mail. Online banking can be done through your smartphone, tablet or personal computer. Also known as e-banking, Internet banking, and virtual banking.

Online Broker – a securities broker that interfaces with investors over the Internet rather than face-to-face. People visit the online broker online and not in a physical office. Online brokers have been around since the birth of the Internet.

Online Community – this is where like-minded people get together on the Internet and chat. Like in offline communities, members of an online community have something in common. They join the community to talk about that thing they have in common.

Online Shopping – the action or activity of purchasing things on the Internet. Online shopping refers to buying goods or services. People have been shopping online since the 1990s. You purchase something online and the seller delivers it to your home, office, or a nearby pickup point.

Online Trading – the act of buying and selling (trading) financial products on the Internet. The online trader buys and sells using an online trading platform. Online traders can buy and sell futures, international currencies, stocks (shares), bonds, and other financial instruments. All of the trades occur online, without the need to see a broker face-to-face or call them on the telephone.

Ontology – the study of things in the Universe. More specifically, the study of what exists and what entities there are in the Universe. It is a branch of metaphysics, which is part of philosophy (not physics).

OODA Loop – the four stages we go through from receiving a stimulus to responding to it. OODA stands for Observe, Orient, Decide, and Act – they are the four stages we go through. Entities that can go through the OODA Loop the fastest are more likely to win in a competitive environment. You are also more likely to survive a military conflict if your OODA Loop is faster than your enemy’s.

OPEC – Organization of the Petroleum Exporting Countries. An economic carter whose members collaborate to fix the price of oil.

Open Interest – the number of derivative contracts (such as futures and options) that are not closed or delivered on a particular day. Also called open commitments or open contracts.

Open Market – one where all the participants, i.e. buyers and sellers, compete on a level playing field. There are no tariffs, taxes, subsidies and regulations that favour some players and hinder others. There are no regulatory barriers to entry in an open market.

Open Market Operations – activities carried out by central banks to give or take liquidity to/from the economy. When the central bank wants to kick-start the economy it purchases bonds – and sells them when its goal is to control inflation.

Opening Price – the price of a security when it is first available to be exchanged in a business day (which occurs as soon as the market it’s listed on opens).

Operating Activities – everything people do in a company related to the sale of goods or services. In other words, all the functions that generate revenue. Examples include purchasing materials, paying workers, talking to potential buyers, delivering to buyers, etc.

Operating Ratio – generally refers to a business’ operating expenses divided by its net sales (operating revenues). It may also refer to any type of financial or business ratio that measure’s a company’s efficiency, including net profit to gross income ratio, net profit to net worth ratio, or sales to cost of goods sold ratio. The higher a company’s operating ratio is the less efficient it is.

OPEX – means operational expenditure or operating expense. It is the money that a business spends on a daily basis to keep going. It contrasts with CAPEX, which stands for capital expense.

Opinion Poll – a survey in which market researchers ask people what they think about different issues. The respondents belong to a representative sample of the whole population. Opinion polls are popular during election campaigns.

Opportunism – the practice of exploiting opportunities regardless of who they may affect. The opportunist takes advantage of opportunities as and when they arise. Opportunists are selfish, exploitative, unprincipled, and inconsiderate.

Opportunity Cost – the value of the best alternative choice when deciding to go along with a certain action. Looking and evaluating the option you gave up when you made a choice.

Oprah Effect – the huge sales boost that a product or book would experience after receiving a mention by Oprah Winfrey. If a company, product, or book appeared in the Oprah Winfrey Show, its commercial future was virtually guaranteed. The same applied if there was a mention in The Oprah Magazine.

Optimal Price – the price of a product or service that gives you the greatest profit. Finding it is often a question of trial and error. We also use the term profit maximizing price.

Optimal Solution – the best possible solution. When there is no other feasible solution anywhere, we say it is the globally optimal solution. When there is no better solution ‘in the vicinity,’ we call it the locally optimal solution.

Optimization – making something the best it can possibly be. For example, if you want to optimize production, you want to produce as much as possible at the lowest possible cost. We use the term for the production of goods as well as the delivery of services. Optimizing a design means making sure it has the best characteristics.

Optimum Capacity – when production is as high as possible and costs as low as possible. In other words, when the cost to produce each unit cannot go any lower, the factory is at optimum capacity.

Order – this may be a spoken or written announcement of an intention to buy something. When I place an order I am telling the seller that I am buying it. In finance, a bank check or bank draft with the name of the receiver written on it is an order. Courts issue orders. To order somebody to do something means to give them a command.

Order Management – the process of managing orders, from when customers first place them until they receive their product or service. Order management may also include dealing with refunds, returns, and replacements. Most order management systems (OMS) today are automated.

Ordinary Share – a form of corporate equity ownership. An ordinary share is written proof that the holder owns a part of a company. It is a British (and Commonwealth countries) term. Americans say common stock. Ordinary shareholders get dividends if there are profits, and also have voting rights.

Ore – naturally-occurring rock with metal or metal compounds in it. Ore refers to the rock, and not the metal. For example, gold ore is a rock with bits of gold in it. There must be enough metal in the rock so that we can mine it and make a profit. Otherwise, it is not an ore. We extract the metals from the ore and either sell it, if it is a precious metal, or use it to make things. For example, from iron we make steel. And with steel we make knifes and forks and thousands of other things.

Organic Farming – farming the natural way. Organic farmers never use artificial fertilizers or pesticides. Neither do they use growth hormones or genetically-modified organisms. They practice natural pest control, such as using ladybugs (UK: ladybirds) to reduce aphid populations. Organic farming is more expensive than conventional farming. Therefore, organic food costs more than non-organic food.

Organic Food – refers to food which has been created, prepared, or raised without artificial fertilizers or pesticides. Organic meat, poultry, and fish come from animals that did not consume livestock feed additives or growth regulators. Organic food comes from organic farms. Organic farms do not irradiate their products or use genetically modified organisms (GMOs).

Organic Growth – means the same as internal growth. It involves expansion from within a business, rather than the result of acquisitions or borrowing from outside. Organic growth builds on the company’s own resources and capabilities.

Organization – an organized group of people who work together and have a common goal. There are many types of organizations. For example, governments, companies, schools, charities, and the armed forces are organizations. Partnerships, non-governmental organizations, and organized crime groups are also organizations.

Organizational Change – occurs when a company or organization makes a transition from its current state to a desired future state. In today’s marketplace, commercial enterprises must undergo changes nearly constantly if they are serious about remaining competitive. Globalization of the markets and evolving technology have forced companies to respond rapidly and frequently in order to stay alive.

Organizational Development – commonly known as OD, refers to a planned and systematic approach to enhancing the effectiveness of a company or any organization. OD includes the practice of planned, systematic change in the attitudes, values and beliefs of a company’s workers through the creation or reinforcement of long-term training.

Organizational Economics – the study of how we create and develop organizations and how they affect economic growth. It uses applied economics to understand how organizations, such as companies, behave and perform.

Organizational Memory – all the accumulated data and knowledge that a company has. The human memory exists in our brain. Organizational memory, however, exists in many places. We also call it corporate memory or institutional memory. They are the things that a company remembers which help it make good decisions and not repeat mistakes.

Organizational Performance – an analysis of a company’s current performance against its goals and objectives. In other words, is it doing as well as it had planned to do? Were senior management’s forecasts accurate regarding the company’s performance? Organizational performance concentrates on three principal outcomes; shareholder value performance, financial performance, and market performance.

Organizational Strategy – a strategy to transform an organization from its current state to a desired future state. First of all, it must create a strategic plan. Making a good plan is much easier than properly executing it.

Organizational Structure – defines how activities within a company or any type of organization are directed towards the achievements of its goals and objectives. A company can be structured in many different ways, depending on what it does and where it seeks to go. Its structure will determine the modes in which it operates and performs.

Organization Theory – there are many theories, and they all look at the relationships between organizations and their environment. We also call it organizational theory. It examines the effects of those relationships on how entities function. Basically, organization theory is everything to do with organizations. It aims to understand them and improve them.

Organizational Unit – we use this term in business and computing. In business it means one of many organizational groups in a company that accomplishes a specific function. In computing, it is a subdivision inside an archive directory. Within that archive directory, we can place computers, users, groups, as well as other organizational units.

Organized Crime – crime that powerful criminal groups carry out. They carry out these crimes on a large scale. Organized crime groups, often in several different countries, work together in specific sectors. They may be involved in money laundering, people trafficking, prostitution, gambling, arms dealing, etc.

Orientation – in Human Resource Management, it refers to a program to introduce new employees to their position and company. Some people call it ‘onboarding.’ A good orientation program helps optimize productivity and employee retention. Unfortunately, orientation is not something many employers take seriously enough.

Or Near Offer (ONO) – this term means that the seller would consider a lower offer. However, that offer would need to be close to the asking price. We generally write the short form – ‘ONO’ – when placing adverts. However, when speaking, we tend to use the long form – ‘or near offer’.

Outage – the term may refer to an interruption in the electricity supply, i.e. a blackout. An outage also occurs when a system stops working. A Sun outage is when geostationary satellite signals fail to reach earth stations. Sun outages are due to solar radiation.

Outlay – how much people spend on an activity or project. It is the total cost for reaching an objective or acquiring something. If you purchase new equipment, your outlay includes the money you spent buying it, delivery charges, plus installation and setting up costs.

Out Of The Box Thinking – means thinking in original, non-conventional, and creative ways. Imagine the box is the traditional framework for doing things. If you come up with a situation and follow protocol, you are ‘thinking in the box.’ Sometimes, to find an effective solution, we need ‘out of the box thinking.’ In other words, a novel approach.

Outplacement – the process of helping employees who have been laid off or made redundant to find jobs elsewhere. Instead of just handing out redundancy notices, a progressive employer arranges of its workers to receive career advice and assistance in seeking employment.

Output – in business, it is the quantity or amount produced by a person, firm, town, region or country over a specified time, usually one year. In electronics and computers, it refers to data that has been processed and sent out. In electronic devices, it may be where power leaves a system.

Outsourcing – involves farming out work to a third party supplier, not doing the task in-house. It also refers to the practice of contracting out control of public services to profit-making companies. When outsourcing is done with a foreign provider it is called offshoring.

Overdraft – occurs when your checking account balance goes below zero – into negative numbers. This may occur by accident, when you draw more money than was available in the account, or because you have an ‘arranged overdraft’, a previous agreement with your bank with interest charged at an agree rate. Overdrafts should be used as a last resort contingency, rather than an everyday spending limit, banks and financial advisors say.

Overdraft Protection – an arrangement a customer has with his or her bank in which debit card payments and checks are honored, even if there are insufficient funds in the checking account. Savings and checking accounts, for example, may be linked up, with the savings account providing the backup funds if they are needed.

Overhead – refers to all ongoing business expenses. It is also called the “operating expense”.

Over-The-Counter (OTC) – refers to trading that is carried out directly between two parties, rather than on an official exchange such as the New York Stock Exchange or the London Stock Exchange. OTC derivatives come from deals negotiated bilaterally and privately between a buyer and a seller, rather than traded on a formal securities exchange. In healthcare, over-the-counter refers to medications that you can buy without a doctor’s prescription.

Over-The-Counter Shares – shares in the smaller and/or newer companies that are not traded through stock exchanges, such as the New York Stock Exchange or London Stock Exchange. Also known as over-the-counter securities or over-the-counter stocks. ‘Over-the-counter’ is often written as ‘OTC’.

Owner – somebody or something to whom something belongs. If I own something, it means that it belongs to me; it is mine. When you are the owner of something, you have a ‘bundle of rights.’ You can keep it, use it, give it away, sell it, exchange it for something else, etc.

Ownership – if you are the owner of something, it means you have ownership of it; it is yours. Ownership may also refer to an organization or group of owners. Ownership is the exclusive and ultimate legal right to a lawful title or claim.

Oxidation – occurs when substances gain oxygen. Oxidation is the opposite of reduction, which means the loss of oxygen. Rust is an example of metal oxidation.

Ozone – a gas comprising three oxygen atoms. Ozone’s chemical formula is O3. Most of our atmosphere’s ozone exists in the stratosphere, eight to thirty miles above the ground. Ozone protects us from the Sun’s harmful UV radiation. At ground level, however, too much ozone causes lung and throat irritation, and worsens asthma and emphysema symptoms.

Ozone Hole – excessive thinning of the ozone layer at high altitude. When a significant proportion of the ozone layer in the stratosphere thins, more sun rays get through. Some of these rays are harmful. However, there is good news; the holes are shrinking.