Accrual: The process of recognizing a financial transaction that has occurred but has not yet been settled in cash.
Alpha: A measure of a portfolio’s performance that considers both the return on the portfolio and the risk-free rate of return.
Alternative Investment: investments other than traditional investments like stocks, bonds, and cash. Examples include real estate, commodities, and private equity.
Amortization: The process of paying off a debt, such as a loan or bond, in regular payments over time.
Annuity: A financial product that pays out a fixed stream of payments to an individual, typically used for retirement income.
Appreciation: An increase in the value of an asset over time.
Arbitrage Pricing Theory (APT): A theory that explains the relationship between risk and returns, stating that the expected return on an investment is a linear function of the risk factors.
Arbitrage: The practice of taking advantage of a price difference between two or more markets.
Asset Allocation: the process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash.
Asset Management: The process of managing a portfolio of assets to achieve specific investment objectives.
Asset: Anything that has value and can be owned, such as property, investments, and cash.
Balance Sheet: A financial statement showing a company’s assets, liabilities, and equity at a specific time.
Bear Market: A market characterized by a prolonged period of declining prices.
Bearish: A market sentiment that reflects a belief that prices will fall.
Beta Coefficient: A measure of a stock’s volatility in relation to the overall market.
Beta: A measure of a stock’s volatility in relation to the overall market.
Black-Scholes Model: a model used to calculate the theoretical value of an option.
Bond Fund: A type of mutual fund that invests primarily in bonds.
Bond: A debt security that pays interest to the bondholder and returns the principal when the bond matures.
Bull Market: A market characterized by a prolonged period of rising prices.
Bullish: A market sentiment that reflects a belief that prices will rise.
Call Option: An option contract that gives the holder the right to buy an underlying asset at a specific price on or before a certain date.
Capital Adequacy Ratio (CAR): The measures of a bank’s capital. It is the ratio of a bank’s capital to its risk.
Capital Budgeting: The process of planning and managing a company’s long-term investments.
Capital Gain: The profit made from selling an asset, such as a stock or real estate.
Capital Loss: The loss incurred from selling an asset, such as a stock or real estate.
Capital Market: A market for long-term investments, such as stocks and bonds.
Capital: Money or other assets that a business uses to generate income.
Cash Flow Statement: A financial statement that shows the inflow and outflow of cash and cash equivalents for a specific period of time.
Cash Flow: The amount of cash and cash equivalents coming into and going out of a business.
Cash Management: The process of managing a company’s cash to ensure that there is enough to meet its short-term obligations.
Collateral: Property or assets that are pledged as security for a loan.
Collateralized Debt Obligation (CDO): A type of security backed by a pool of debt, such as mortgages or corporate bonds.
Commodity: A raw material or primary agricultural product that can be bought and sold, such as gold, oil, or wheat.
Compound Interest: Interest calculated on the initial principal and the accumulated interest of previous periods.
Consumer Price Index (CPI): The average price change consumers pay for a basket of goods and services.
Credit Default Swap (CDS): A financial contract that provides insurance against the risk of default on a debt security.
Credit Rating: A rating assigned to a borrower, such as an individual or company, that indicates their creditworthiness.
Credit Report: A record of an individual’s or company’s credit history, including information on credit accounts and payment history.
Credit Risk: The risk that a borrower will default on a loan or debt security.
Credit Spread: The difference in yield between two similar bonds, one with a higher credit rating and one with a lower credit rating.
Credit: The ability to borrow money or access goods and services with the promise to pay later.
Currency Risk: The risk that changes in currency exchange rates will affect the value of an investment.
Currency Swap: A financial contract in which two parties agree to exchange a set of currencies at a fixed exchange rate for a specified period of time.
Current Ratio: A measure of a company’s liquidity, calculated as current assets divided by current liabilities.
Debt-to-Equity Ratio: A measure of a company’s financial leverage, calculated as total liabilities divided by total equity.
Default Risk: the risk that a borrower will default on a loan or debt security.
Default: The failure to repay a debt.
Depreciation Expense: The expense that a company records to account for the wear and tear of its long-term assets over time.
Depreciation: A decrease in the value of an asset over time.
Derivative: A financial contract whose value is derived from the value of an underlying asset, such as a stock or commodity.
Derivatives Market: A market for financial contracts whose value is derived from the value of an underlying asset, such as stocks, commodities, or currencies.
Diversification: The strategy of spreading investments among different asset classes, sectors, and geographic regions in order to reduce risk.
Dividend Yield: A measure of a company’s dividend performance, calculated as dividends per share divided by market price per share.
Dividend: A distribution of a portion of a company’s earnings to its shareholders.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): A measure of a company’s profitability, calculated as revenue minus operating expenses and depreciation.
Earnings Management: The practice of manipulating a company’s financial statements to meet or exceed analysts’ expectations.
Earnings per Share (EPS): A measure of a company’s profitability, calculated by dividing the company’s net income by the number of outstanding shares of stock.
Emerging Market: A market for stocks, bonds, or currencies in a country that is considered to be in the early stages of economic development.
Equity: Ownership in a company, represented by stock.
Fair Value: The estimated price that an asset would fetch in an orderly transaction between market participants.
Financial Leverage: The use of borrowed money to amplify potential returns on an investment.
Financial Planning: The process of setting financial goals and creating a plan to achieve them.
Financial Ratio: A mathematical comparison of financial information, used to evaluate a company’s performance and liquidity.
Financial Statement Analysis: The process of examining and interpreting a company’s financial statements to gain insights into its performance and financial position.
Foreign Exchange Market: A market for the trading of currencies.
Foreign Exchange Risk: The risk that changes in currency exchange rates will affect the value of an investment.
Forward Contract: A financial contract in which two parties agree to buy or sell an asset at a specific price on a specific date in the future.
Forward Rate Agreement (FRA): A financial contract in which one party agrees to pay a fixed rate of interest to the other party on a specified date in the future.
Gross Profit: A company’s revenue minus the cost of goods sold, used as a measure of profitability.
Hedge Fund: A type of investment fund that uses a variety of strategies to earn high returns, often with high levels of risk.
Hedge: A strategy used to reduce the risk of an investment by taking an offsetting position in a related security.
Hedging: a strategy used to reduce the risk of an investment by taking an offsetting position in a related security.
Income Statement: A financial statement that shows a company’s revenues, expenses, and net income for a specific period of time.
Inflation: A sustained increase in the general price level of goods and services in an economy over a period of time.
Interest Coverage Ratio: A measure of a company’s ability to meet its interest payments, calculated as earnings before interest and taxes divided by interest expense.
Interest Rate Risk: The risk that interest rate changes will affect an investment’s value.
Interest Rate: The percentage of an amount of money charged for its use, usually over a year.
Interest: The cost of borrowing money, typically expressed as a percentage of the amount borrowed.
Inventories: The raw materials, work-in-progress and finished goods that a company holds for sale.
Investment: The purchase of goods not consumed today but used in the future to create wealth.
Leverage Ratio: A measure of a company’s financial leverage, calculated as total debt divided by total assets.
Leverage: The use of borrowed money to increase the potential return on an investment.
Leveraged Buyout (LBO): The purchase of a company using a significant amount of borrowed money.
Liquidity Risk: The risk that a company will not be able to meet its financial obligations as they come due.
Liquidity: The ability to convert an asset to cash quickly and easily.
Market Capitalization: The total market value of a company, calculated by multiplying the number of shares outstanding by the market price per share.
Market Capitalization: The total value of a company’s outstanding shares of stock.
Market Efficiency: The degree to which a financial market reflects all available information in the prices of its securities.
Market maker: A financial institution or individual that provides liquidity to the market by buying and selling securities for its own account.
Market Microstructure: The study of how markets operate and how they are affected by various factors, such as market participants, regulations, and trading systems.
Market Risk: The risk that the value of an investment will be affected by market conditions.
Maturity: The date on which a debt security becomes due and payable.
Money Market Fund: a type of mutual fund that invests in short-term debt securities, such as Treasury bills and commercial paper.
Money Market: A market for short-term debt securities, such as Treasury bills and commercial paper.
Municipal Bond: A debt security issued by a state or local government.
Mutual Fund: A type of investment fund that pools money from many investors to purchase securities.
Net Asset Value (NAV): The value of an investment fund’s assets minus its liabilities, divided by the number of shares outstanding.
Net Income: The amount by which a company’s revenue exceeds its expenses.
Net Present Value (NPV): The present value of an investment’s future cash flows, calculated by discounting the cash flows at a certain rate.
Operating Income: A company’s income from its primary operations, calculated as revenue minus operating expenses.
Operating Margin: A measure of a company’s profitability, calculated as operating income divided by revenue.
Option: A financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date.
Options Market: A market for options contracts.
Pairs trading: A trading strategy in which an investor buys and sells two related securities at the same time, with the expectation that the difference in their returns will be favorable.
Payout Ratio: A measure of a company’s dividend policy, calculated as dividends per share divided by earnings per share.
Pension Fund: A fund established to provide retirement income for employees.
Portfolio: A collection of investments held by an individual or institution.
Price to Earnings Ratio (P/E Ratio): A measure of a company’s valuation, calculated as the market price per share divided by earnings per share.
Private Equity: A type of investment in which a company’s equity is not publicly traded.
Profit Margin: a measure of a company’s profitability, calculated as net income divided by revenue.
Put Option: An option contract that gives the holder the right to sell an underlying asset at a specific price on or before a certain date.
Quantitative analysis: A method of evaluating securities that uses mathematical and statistical techniques to analyze historical data and make predictions about future performance.
Quick Ratio: A measure of a company’s liquidity, calculated as current assets minus inventories divided by current liabilities.
Rate of Return: The gain or loss on an investment over a certain period, expressed as a percentage of the investment’s cost.
Rating Agency: a company that assigns credit ratings to bonds and other debt securities.
Real Estate Investment Trust (REIT): A type of investment vehicle that owns and manages income-producing real estate.
Real Estate Market: A market for the buying and selling of real estate properties.
Real Interest Rate: The interest rate adjusted for the effects of inflation.
Repurchase Agreement (Repo): A financial contract in which a party sells a security to another party with the agreement to buy it back at a higher price at a later date.
Retained Earnings: A company’s accumulated net income that is kept in the business and not distributed as dividends.
Return on Assets (ROA): A measure of a company’s profitability, calculated as net income divided by total assets.
Return on Equity (ROE): A measure of a company’s profitability, calculated as net income divided by total equity.
Return on Investment (ROI): A measure of the profitability of an investment, calculated as the return divided by the cost of the investment.
Return: The amount of money made on an investment, typically expressed as a percentage of the initial investment.
Revenue: The amount of money a company brings in from its primary operations before deducting expenses.
Risk Premium: the additional return an investor requires for bearing a higher level of risk.
Risk: The potential for an investment to lose value.
Risk-adjusted return: A measure of a portfolio’s performance that takes into account the risk associated with the portfolio.
Short Sale: The sale of a security that the seller does not own, with the expectation that the price will fall, allowing the seller to buy the security back at a lower price.
Short selling: The practice of selling a security that is not owned by the seller, with the expectation that the price will fall, allowing the seller to buy the security back at a lower price.
Soft dollar: A method of compensating a broker for research and other services by allowing the broker to charge higher commissions on trades.
Sovereign Risk: the risk that a government will default on its debt.
Speculation: The act of investing in an asset with the hope of profiting from a price change, rather than from the income it generates.
Stock Market: A market for the buying and selling of stocks.
Stock Option: A financial contract that gives the holder the right, but not the obligation, to buy or sell a stock at a specific price on or before a certain date.
Stock: A type of security that represents ownership in a corporation.
Swap: A financial contract in which two parties agree to exchange a series of cash flows in the future.
Systematic risk: The risk that affects all securities in the market, such as the risk of changes in interest rates or economic conditions.
Tax Haven: A country or jurisdiction with low tax rates and favorable tax laws that are used by individuals and companies to minimize their tax liability.
Taxable Income: The income on which a company or an individual is liable to pay taxes.
Technical analysis: A method of evaluating securities that uses charts and other technical indicators to analyze past price and volume data and make predictions about future performance.
Time Value of Money: The concept that a dollar today is worth more than a dollar in the future due to its earning potential.
Total assets: The sum of all assets of a company, including cash, investments, inventory, property, and equipment.
Total Equity: The sum of all equity of a company, including common stock, retained earnings, and other comprehensive income.
Total Liabilities: A company’s total outstanding debts and obligations.
Transaction Exposure: The risk that changes in exchange rates will affect the value of a company’s assets and liabilities denominated in foreign currencies.
Treasury Bill (T-bill): A debt security issued by the U.S. government with a maturity of less than one year.
Treasury Bond: A debt security issued by the U.S. government with a maturity of more than 10 years.
Trust: A legal arrangement in which a trustee holds and manages assets for the benefit of one or more beneficiaries.
Underwriting: The process by which a securities firm or bank assesses a borrower’s creditworthiness and determines the terms of a loan or bond issue.
Unit Investment Trust (UIT): An investment trust that issues a fixed number of units, which are then traded on an exchange.
Value Investing: An investment strategy that focuses on buying undervalued companies with strong fundamentals and holding them for the long term.
Value-at-Risk (VaR): a measure of the maximum loss that a portfolio is expected to suffer over a given time period with a given level of confidence.
Variable Interest: Interest rate or dividend that fluctuates with a benchmark or market indicator.
Venture Capital: A type of private equity investing in early-stage or start-up companies with high growth potential.
Volatility Arbitrage: a strategy that seeks to profit from the difference in volatility between two related securities.
Volatility arbitrage: A trading strategy that seeks to profit from the difference in volatility between two related securities.
Volatility: A measure of the degree of variation of a financial instrument’s price over time.
Volatility: The degree of variation of a financial instrument’s price over time.
Wealth management: The process of managing a person’s financial assets to achieve their financial goals.
Working Capital: current assets minus current liabilities, it is a measure of a company’s short-term liquidity.
Write-off: A reduction in the recorded value of an asset, usually due to obsolescence, damage, or other factors that make it worth less than the recorded value.
Yield Curve: A graph that shows the relationship between bond yields and maturities.
Yield spread: The difference in yield between two bonds of similar maturity but different credit quality.
Yield to call (YTC): The return on a bond if it is held until the call date, taking into account both the coupon payments and the change in bond price.
Yield to Maturity (YTM): The total return expected on a bond if held until maturity, taking into account both the coupon payments and the change in bond price.
Yield: The income generated by an investment, typically expressed as a percentage of the investment’s cost.
Zero-coupon bond swap: A financial contract in which two parties exchange zero-coupon bonds of different maturities.
Zero-Coupon Bond: A bond that does not pay interest during its term but is sold at a deep discount to its face value and returns the face value at maturity.
