A

• Asset: Any resource owned by an individual or a business which is expected to provide future benefits.
• Annual Report: A yearly publication that public corporations provide to shareholders to describe their operations and financial conditions.

B

• Bond: A fixed income instrument representing a loan made by an investor to a borrower.
• Blue Chip Stocks: Shares of very large and well-recognized companies with a history of sound financial performance.

C

• Capital Gain: The rise in value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
• Commodities: Basic goods used in commerce that are interchangeable with other goods of the same type.

D

• Dividend: A distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.
• Diversification: The strategy of investing in a variety of securities in order to lower the risk involved with putting money into few investments.

E

• Equity: Ownership interest in a corporation in the form of common stock or preferred stock.
• Exchange-Traded Fund (ETF): A type of security that involves a collection of securities—such as stocks—that often tracks an underlying index.

F

• Financial Statement: Written records that convey the business activities and the financial performance of a company.
• Futures Contract: A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.

G

• Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
• Growth Investing: An investment strategy that focuses on stocks of companies and stock funds where earnings are growing rapidly and are expected to continue growing.

H

• Hedge Fund: An aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.
• High-Yield Investment: An investment that returns a high yield (interest or dividends).

I

• Index Fund: A type of mutual fund with a portfolio constructed to match or track the components of a financial market index.
• Initial Public Offering (IPO): The process by which a private company can go public by sale of its stocks to general public.

J

• Junk Bond: A bond that is rated below investment grade at the time of purchase.
• Junior Equity: Equity that is subordinate to all other equities and liabilities.

K

• Key Rate: The specific interest rate that determines bank lending rates and the cost of credit for borrowers.
• Knock-Out Option: An option with a built-in mechanism to expire worthless, if a specified price level is exceeded.

L

• Leverage: The investment strategy of using borrowed money to increase the potential return of an investment.
• Liquidity: The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price.

M

• Market Capitalization: The total dollar market value of a company’s outstanding shares of stock.
• Mutual Fund: An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.

N

• Net Asset Value (NAV): The value of an entity’s assets minus the value of its liabilities.
• Non-Performing Asset (NPA): A loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

O

• Option: A financial derivatives that represents a contract sold by one party (option writer) to another party (option holder).
• Over-The-Counter (OTC): Trading of securities among a network of dealers, who negotiate prices privately, rather than through a centralized exchange.

P

• Portfolio: A grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts.
• Preferred Stock: A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock.

Q

• Quantitative Analysis: The use of mathematical and statistical methods in finance and investment.
• Quick Ratio: An indicator of a company’s short-term liquidity, and measures a company’s ability to meet its short-term obligations with its most liquid assets.

R

• Return on Investment (ROI): A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
• Risk Tolerance: The degree of variability in investment returns that an investor is willing to withstand.

S

• Securities: A fungible, negotiable financial instrument that holds some type of monetary value.
• Stock: A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.

T

• Treasury Bill (T-Bill): A short-term debt obligation backed by the U.S. government with a maturity of less than one year.
• Trading Volume: The amount of a security that was traded during a given period of time.

U

• Underlying Asset: The financial instrument (e.g., stock, futures, commodity, currency, index) on which a derivative’s price is based.
• Unsystematic Risk: The risk that is unique to a particular company or industry.

V

• Valuation: The analytical process of determining the current (or projected) worth of an asset or a company.
• Volatility: A statistical measure of the dispersion of returns for a given security or market index.

W

• Warrant: A derivative that confers the right, but not the obligation, to buy or sell a security – normally equity – at a certain price before expiration.
• Write-Down: Reducing the book value of an asset because it is overvalued compared to the market value.

X

• X-Efficiency: The degree of efficiency maintained by individuals and firms under conditions of imperfect competition.
• X-Mark Signature: A signature made by a person who cannot write his or her name.

Y

• Yield: The income return on an investment, such as the interest or dividends received from holding a particular security.
• Yield Curve: A line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates.

Z

• Zero-Coupon Bond: A debt security that doesn’t pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.
• Z-Score: A statistical measurement that describes a value’s relationship to the mean of a group of values.