Dictionary

The excess return achieved relative to a benchmark after risk adjustment.

The excess return of an investment relative to a benchmark, after adjusting for the level of risk taken.

The lowest price at which a seller is willing to sell an asset.

The lowest price at which a seller is willing to sell a security or other asset.

Something of economic value that is owned and expected to provide future benefits.

Anything of economic value that is owned by an individual, company, or institution and is expected to provide future benefits. Examples include cash, stocks, bonds, real estate, and commodities.

A statement of assets, liabilities, and equity at a point in time.

A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.

A reference standard used to compare investment performance.

A standard or reference index used to compare the performance of an investment or portfolio, such as a broad stock-market or bond-market index.

A measure of an asset's sensitivity to overall market movements.

A measure of how sensitive an asset's price is to movements in the overall market. A beta above 1 indicates greater sensitivity than the market, while a beta below 1 indicates lower sensitivity.

The highest price a buyer is willing to pay for an asset.

The highest price a buyer is willing to pay for a security or other asset.

The difference between the best available bid and ask prices.

The difference between the highest bid price and the lowest ask price. It is commonly used as an indicator of trading costs and market liquidity.

A debt instrument that pays interest and repays principal at maturity.

A debt instrument through which an investor lends money to a government, company, or other issuer in exchange for interest payments and repayment of principal at maturity.

An option giving the holder the right to buy an underlying asset.

An option that gives the holder the right to buy an underlying asset at a predetermined price, known as the strike price.

A profit is earned when an asset is sold above its purchase price.

The profit earned when an asset is sold for more than its purchase price.

A loss incurred when an asset is sold below its purchase price.

The loss incurred when an asset is sold for less than its purchase price.

A statement showing cash movements from operating, investing, and financing activities.

A financial statement showing how cash moves into and out of a company through operating, investing, and financing activities.

The annual interest rate paid on a bond's face value.

The annual interest rate paid by a bond issuer to bondholders, usually expressed as a percentage of the bond's face value.

A contract whose value depends on an underlying asset or benchmark.

A financial contract whose value is derived from the price or performance of an underlying asset, such as a stock, bond, currency, commodity, or index.

Spreading investments to reduce exposure to any single risk.

A risk-management strategy that spreads investments across different assets, sectors, regions, or asset classes to reduce exposure to any single investment.

A distribution of a company's profits to its shareholders.

A portion of a company's profits is distributed to shareholders, usually in cash or additional shares.

A decline in value from a prior peak to a subsequent low.

The decline in the value of an investment or portfolio from a previous peak to a subsequent low point.

The company's profit is allocated to each outstanding common share.

A company's profit is allocated to each outstanding share of common stock. It is commonly calculated as net income divided by the number of outstanding shares.

An ownership interest in a company or other business.

Ownership interest in a company. Equity holders generally have a claim on the company's assets and earnings after its liabilities have been paid.

The nominal amount of a security is typically repaid at maturity.

The nominal amount of a bond or other security that is normally repaid to the investor at maturity.

Cash remaining after operating expenses and capital expenditures.

The cash a company generates after paying for operating expenses and capital expenditures. It can be used for dividends, debt repayment, acquisitions, or reinvestment.

A standardized agreement to trade an asset at a set future date and price.

A standardized agreement to buy or sell an underlying asset at a predetermined price on a specified future date.

A strategy intended to reduce the risk of adverse price movements.

A strategy used to reduce or offset the risk of adverse price movements in an asset, often by taking an opposite position in a related security or derivative.

A statement reporting revenue, expenses, and profit over a period.

A financial statement that reports a company's revenues, expenses, profits, and losses over a specific period.

The use of borrowed funds or instruments to increase market exposure.

The use of borrowed money or financial instruments to increase exposure to an investment. Leverage can magnify both gains and losses.

An order to trade at a specified price or better.

An order to buy or sell a security at a specified price or better. It may not be executed if the market does not reach that price.

The ability to buy or sell an asset quickly with little price impact.

The ability to buy or sell an asset quickly, in significant volume, and with little effect on its market price.

Funds or securities deposited to support a leveraged trading position.

Funds or securities that an investor must deposit with a broker to open or maintain a leveraged trading position.

The total market value of a company's outstanding shares.

The total market value of a company's outstanding shares is calculated by multiplying the share price by the number of shares outstanding.

An order to trade immediately at the best available price.

An order to buy or sell a security immediately at the best available current market price.

The date when a debt instrument's principal must be repaid.

The date on which the principal amount of a bond, loan, or other debt instrument must be repaid.

The largest peak-to-trough decline over a specified period.

The largest peak-to-trough decline in the value of an investment or portfolio over a specified period.

Profit remaining after all expenses, taxes, and other costs are deducted.

A company's profit is calculated after all expenses, taxes, interest, and other costs have been deducted from revenue.

The lowest price at which a seller is willing to sell an asset.

The lowest price at which a seller is willing to sell a security or other asset.

A contract giving the holder a right, but not an obligation, to trade an asset.

A contract that gives its holder the right, but not the obligation, to buy or sell an underlying asset at a specified price before or on a certain date.

The nominal amount of a security is typically repaid at maturity.

The nominal amount of a bond or other security that is normally repaid to the investor at maturity.

A collection of investments held by an investor or institution.

A collection of investments held by an individual or institution, such as stocks, bonds, funds, cash, and alternative assets.

A valuation ratio comparing the market price with book value per share.

A valuation ratio calculated by dividing a company's market price per share by its book value per share.

A valuation ratio comparing the share price with earnings per share.

A valuation ratio calculated by dividing a company's share price by its earnings per share. It indicates how much investors are willing to pay for each unit of earnings.

An option giving the holder the right to sell an underlying asset.

An option that gives the holder the right to sell an underlying asset at a predetermined price, known as the strike price.

The gain or loss generated by an investment over a period.

The gain or loss generated by an investment over a period, usually expressed as a percentage of the original investment.

Total income earned from a company's ordinary business activities before expenses.

The total amount of money a company earns from its normal business activities before expenses are deducted.

The possibility that an investment's actual return differs from its expected return.

The possibility that an investment's actual return will differ from its expected return, including the possibility of losing some or all of the invested capital.

Investment performance measured relative to the risk taken.

A measure of investment performance that considers both the return earned and the amount of risk taken to achieve it.

A tradable financial instrument representing ownership, debt, or related rights.

A tradable financial instrument that represents ownership, a creditor relationship, or rights to ownership. Common examples include stocks, bonds, and derivatives.

A measure of return earned per unit of volatility.

A measure of risk-adjusted return that compares an investment's excess return over the risk-free rate with its volatility.

Selling borrowed securities in anticipation of buying them back at a lower price.

A trading strategy in which an investor sells borrowed securities with the expectation of buying them back later at a lower price.

A unit of ownership in a corporation.

A unit of ownership in a corporation. Depending on the type of share, shareholders may receive dividends and may have voting rights.

An order intended to limit losses once a set price is reached.

An order designed to limit an investor's loss by automatically selling or buying an asset once it reaches a predetermined price.

The predetermined price at which an option can be exercised.

The predetermined price at which an option holder can buy or sell the underlying asset.

The number of units of an asset traded during a period.

The total number of shares, contracts, or units of an asset traded during a specified period.

The extent to which an asset's price fluctuates over time.

The degree to which the price of an asset fluctuates over time. Higher volatility generally indicates greater uncertainty and risk.