onomi     on epts and erminolo ies          22.43
               returned. But, by definition, it is not the the house at the market price and the loan of the
               result of a ‘forced’ transaction. Returning bank will be settled. If the value of the house is
               of Hong Kong to China by the UK in          more than the loan, the difference is paid to the
               1997 is the best such example of the        senior citizens or their heirs. If the heir wants to
               recent times.                               possess the house, he/she needs to pay the loan.
        (iii) The act of ‘differentiating’ and
               ‘diversifying’ assets by consolidating and     reverse yielD gAp
               then dividing them amongst a number
                                                           An excess of returns on gilt-edged (government)
               of stakeholders – by doing so the risk
                                                           securities above those on equities. This occurs
               involved is ‘retroceded’ (i.e., cut down
                                                           during periods of high inflation because equities
               or minimised). This is, usually, done by
                                                           provide capital gains to compensate inflation
               the ‘hedge funds’ in their day-to-day
                                                           while the gilt-edged securities do not.
               portfolio management.
                                                              reveAleD preference
        reverse tAkeover
                                                           The notion that what one wants is revealed by
     The term is used to mean two different kinds of       what one does, not by what one says–actions
     takeovers:                                            speak louder than words.
          (i) Takeover of a public company by a
               private one, and                               ricArDiAn equivAlence
         (ii) Takeover of a bigger company by a
               smaller one.                                An idea which (generated too much controversies)
                                                           originally suggested by David Ricardo (1772–
                                                           1823) and more recently by Barro, that government
        resiDuAl unemployment                              deficits do not affect the overall level of demand in
     Unemployment of those who remained                    an economy.
     unemployed even in the times of full employment            This is because tax-payers know that any
     (as for example employing a severely handicapped      deficit has to be paid later, and so they increase
     person may far outweigh the productivity obtained     their savings in anticipation of a higher tax bill in
     from him).                                            future; thus government attempts to stimulate an
                                                           economy by increasing public spending or cutting
        reverse mortgAge                                   taxes, will be rendered impotent by private sector
                                                           reaction.
     A scheme for senior citizens in India announced            The equivalence can be seen as part of a thread
     in the Union Budget 2007–08. Under this               of economic thinking which holds that only
     scheme, the senior citizens go to mortgage their      decisions about real variables (e.g., consumption
     house owned by them in reverse to a bank and          and production) matter, and that decisions about
     the bank pays them the agreed money either in         financing will, in a perfectly functioning market,
     installments or lumpsum. Guidelines for reverse       never have an effect.
     mortgage announced by the National Housing
     Bank (NHB) in May 2007 has a provision of                risk seeking
     maximum period of 15 years for such mortgage.
     Once the period of mortgage is complete either        An act whereby investors prefer an investment
     the house should be vacated or the bank will sell     with an uncertain outcome to one with the same