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acronym
/ˈækrənɪm/ (say 'akruhnim)

noun 1.  a word formed from the initial letters of a sequence of words, as radar (from radio detection and ranging) or ANZAC (from Australian and New Zealand Army Corps). Compare initialism.

2.  an initialism.

[acro- + -(o)nym; modelled on synonym]

Usage: Acronyms tend to start out in life as capitals which then reduce to lower case as the word formed becomes accepted as a lexical item and people cease to analyse it into its component parts. However, if there is the possibility of confusion with some other homograph, this process is arrested. Thus DINK became dink, but AIDS has retained its capitalised status, so as not to be confused with aids.