ADR is something that grants US investors simpler access to the investing of companies outside of the US, they also grant a number of benefits to those companies abroad, branching their interest outside of their domestic situation.
This is when the performance of an investment that has been made has been compared to a benchmark index. 1% alpha for example means that the investment return made was 1% larger than the initial benchmark.
Alternative Investment Market
AIM was created in 1995 by the London Stock Exchange in the aims of becoming a way for the more modern firms to have access to public funds at the time.
The Altman Z-Score’s goal is to show the chances that a company has of filing for bankruptcy within the coming 2 years down the line.
Amortization has two distinct meanings: (1) In one sense, it is the practice of reducing the value of assets to properly reflect their value over time. (2) In another, it can mean the servicing of debt in regular increments.
This has two meanings, which are the following:
- The practice of reducing an asset’s value to better and more accurately show the value that the asset will have down the line in the future.
- The paying of owed debt in multiple or consistency installments.
This is something that can continue to provide you with consistent income even beyond your retirement.
This is a strategy that takes advantage of any price differences in similar markets.
This is the person who the law requires to sign off on a firm’s financial statements officially to show that they have been properly researched and conducted.
This is If you own an asset and its price goes above the price of forward delivery.
Balance of Payments
This summarises a country’s financial state and compares it to the financial state of other countries around the world.
Baltic Dry Index
BDI is something that measures the cost of transporting materials across the world by sea.
Bank Of England
This is England’s main bank. This is a bank that was established in 1694 and has since gone on to represent England’s main banking source in terms of lending money to handle the country’s debt at certain points in history.
This is something that can figuratively measure how risky a share can be.
This is the difference between the price you purchase a share at and the price that you choose to sell the same share at down the line.
This is in reference to the deregulation of the LSE, this happened in 1986.
This is a measurement system to determine ahead of time how long it should take for a bond to reach its mid-point of cash income.
There are a number of organisations put in place to prove those with bond ratings to assist you in determining what the level of risk is when getting involved with an issuer.
If you were to take the usual form of bond yields, which is the annual yield on a fixed income security then this is determined when you take the annual coupon payouts and divide them by the general market price of the initial bond.
This is an instrument that measures debt, it is sold by the government to obtain money. People who purchase bonds will obtain interest down the line, which is named a ‘coupon’.
This is whatever the total value of the net assets of a company is in association within relation to shareholders. This is calculated when you take the net asset value of a specific company and subtract it from the total liabilities involved.
This swiftly passes over the industry or other outside economic factors and prefers to focus in on individual stocks and companies for a more in-depth and precise viewing.
Bovespa is the Brazilian version of the stock market’s benchmarks.
This is a point that an option must hit before the buyer of the option is allowed to retrieve their premium.
Bullet repayment loan
This is when a loanee has to repays the capital in a single load at the end of a loan’s term.
Clearing house settles buyer and sellers accounts, then automatically collects the margin and clears the trades along with delivering the reports of the trade to all the parties involved with the trade.
These are contracts that are an agreement between two parties. They are not traded through centralised exchanges however and as a result are considered to be in line with OTC instruments.
This is something that described the relationship that two independent values have in relation to each other.
If two companies are taking part in cross-border operations, then they are the parties that become most at risk to currency risk. These parties may then experience random profits or losses as a result of currency movements across borders.
This is France’s benchmark for the stock market.
This is when a central bank of a nation enforced solvency rations, they ensure that the bank has a level of its own money in relation to the total amount of loans it has within its loan portfolio at any given point in time.
Capital expenditure (Capex)
This is when fixed assets are bought for use by a business.
This is to stop banks for example bankrupting easily. Regulators will enforce capital requirements upon them in order to prevent this.
The aim to earn income based on the idea that interest rates from banks across the globe differ between one and other.
This is when you set out on the path to find out how good a company or business is at converting profits into cash flow.
Companies are required to publish annual cash flow statements along with other required publishings.
This is a law enforced in America to allow companies more time to renegotiate any debts it may owe.
Some regulators are of the opinion that convertible bonds are the key to stop a bank collapsing in on itself.
Whenever you go and invest your money, you will automatically obtain interest on the capital you have invested.
This is a term used to describe the collapse and troubles that are seen with events such as in 2008.
This is the price of an asset for forward delivery is most often higher than the price you’d pay for the same asset in the modern day.
This is when a company receives items from someone, along with a receipt that has not yet been paid off, the balance that is still owed on the order will be drawn up, usually before the beginning of the new year.
This is when a company allows shareholders within the company to hold a vote on whether or not the company should continue.
This was originally formed and known as the Trendex Timing Technique, its purpose is to find and purchase signals from the lowest of the low in a lowly populated market.
Cost of capital
To ensure that a company is a success it all comes down to making sure that you make a profit by earning more than what you are spending to run the business.
This a financial measuring system that is of vital importance when it comes to calculating the value of banks.
Country’s current account
This is when a list of a country’s balance of payments is made and it is made up by the current account and capital account of the nation as a whole.
This is when a lender of money doesn’t require performance conditions upon the loanee.
This is a form of IOU that is issued by a business, it usually encompasses an offering of fixed rates of interest or a date of repayment that must be adhered to by the issuer of the bond.
Credit default swap
There are two risks when owning a bond. The first being that if the price of the bond were to drop and the second being if the issuer of the bond were to go bankrupt.
This is a rating that a majority of bonds are given to show any potential investors what the chances of a default are like.
This is a risk involved in an unexpected loss or gain or money when it comes to converted prices through different currencies.
Current account surplus/deficit
This is when a country’s position is pit against the rest of the world, often drawing comparisons in their imports and exports.
These depend on the economic cycle at the present time.
These are less common to become invested in cycles than other forms of stocks. They’re usually invested by traders when a slowdown in the economy is one the horizon.
This is the process in which the prices that are in place for services and purchasable goods suddenly drop or drop gradually over time.
This is a sweeping statement used to described any number of instruments whose price relies on the performance of outside factors, such as underlying assets or the general financial markets.
ETFs usually impose this feature; it can affect any expected performances that you have calculated.
This is when a swap is involved where some level of a businesses’ owed debt is eliminated whilst the lenders are provided with shares in return.
The aim of a debt swap is almost always the same, to allow a borrower to refinance and strengthen their balance sheet.
Debt to equity ratio
This is when a businesses’ debt is divided by their equity that they hold.
Debtor and creditor days
If an investor wants to see the level of a firm’s commercial influence, then they may witness how quickly they pay their customers as well as their suppliers of goods.
Defined benefit & defined contribution pensions
This is when you are guaranteed to have an income come your retirement, which is calculated by whatever the percentage of your final earnings are.
This is leveraging of assets in reverse.
This is in reference to the way in which a bank hedges long and short exposures.
This lets foreign investors have access to their shares.
This is when something is watered down, as seen by dilution, which is usually by doing a process of earnings per share.
Discount rate is a process done that decides how much future income one can expect from an investment they may have.
When cash received in the present is represented by that of the future’s money due to inflation eating away at value over a period of time.
Company profits that are given out to potential shareholders within the company.
Process that involved dividing your total money amongst multiple investments to avoid putting all your eggs in one basket.
Indicator of when a bear market may be potentially about to burst onto the scene.
Point of which bonds reach their mid-point of cash flows over a period of time.
Elliott Wave Theory
This is a theory that is used to predict any potential future market fluctuations.
Exchange-Traded Funds are securities. Their purpose is to follow underlying index as well as being marketable. ETFs have no limit on what they have encompass such as bonds, investments, stocks and over time they will include cryptocurrencies.
Earnings per share
A way of finding out a share’s true innate value.
EBITDA and EBITA
EBITDA takes profit and adds two subjective costs. These two subjective costs are the following: depreciation and amortisation.
Stats that show usual and reoccurring trends within the economy.
Shows a company’s total value through adding the market value of their equity and net debt to show what someone may pay for it down the line.
Equity risk premium
If purchasing a share, every investor who is purchasing is expected to have a goal of a particular return in their head.
EV to sales ratio
Short and long term debt subtracted from cash.
Exchange-traded fund (ETF)
ETF combines traits of a share with the traits of those of a bunch of collective funds.
The “Fed Put” is the widespread belief that the US Federal Reserve (commonly referenced as “the Fed”) can always rescue the economy by decreasing interest rates.
This is a belief that the Fed always has the potential to save the economy by simply lowering the interest rates.
This is a theory that follows the line of a sequence of number. The sequence is followed by adding up the two previous numbers together. Indicators and other various decisions can be found by following this line of sequences through this theory.
Foreign Exchange Reserves
These are funds that are being held in a foreign country’s mainline and central banking. These funds are held in the case that those holding the funds need to pay for liabilities.
This determines whether or not a business may be cheap or overpriced basing itself upon their cash flows.
Final salary and money purchase pensions
Pension size depends on value of retirement fund.
A phrase that is a blanket statement for all assets that are intended to be kept on for over a year.
Buying a property and waiting for an increase in price before then selling it on for a profit.
Foreign exchange reserves
Collections of foreign currencies.
Free cash flow
A calculation of the total amount of cash a business has left over upon meeting their operating obligations for that period of time.
Free cash flow per share
Dividing the yearly cash flow that is able to pay dividends and dividing it by the total amount of shares that are issued out at that point in time.
Free cash flow yield
Ratio that is used to determine the cash flow return on shares as a %
The UK’s stock market.
Futures are contracts that are tradeable either be selling as a price or an asset at an agreed time frame.
A measuring of a total amount of goods made by a nation in a certain amount of time is known as a Gross Domestic Product.
Relationship that is established between debt, equity in a company and the money that is loaned out to shareholders.
Gilt = Government body.
The potential returns on a bond as a %
This is when an auditor determines that a company is in line to remain in business beyond the present moment in time.
Goodwill is determined by what a business’ reputation is seen as.
Gordon’s growth model
A way of valuing shared basing it upon the business’ dividends down the line in the future.
Option contract that goes higher in value as the initial pricing of the original underlying asset lowers.
Gross margin is one of the ways that a business can have its profits measured.
Hang Seng index
Hong Kong’s index for stocks.
Countries often measure the quality of the goods being received to accommodate inflation.
These provide snapshots of any given segment of a market at a certain point in time.
This works in the pursuit of calculating the risk-adjusted return of an asset portfolio. An asset portfolio is simply a collection of assets that have been acquired over time.
Sterling bonds issued by BOE and bonds that are listed upon the LDE.
This tracks the performance of any index on the market.
Individual savings account (Isa)
A way for an individual to save without having to pay income or capital gain tax as a result.
Individual Voluntary Arrangement (IVA)
An alternate option to bankruptcy that can be reaches if an agreement on how the debt clearance can be achieved.
Compares profits before tax to determine the interest rate that should be charged.
Interest rate swap
Deal made between 2 separate investors.
A business who makes it their business to invest their funds in other businesses.
ISEQ is Ireland’s national indice.
John Maynard Keynes suggested that the only way to make sure constant economic stability is for the government to become involved in the economy.
South Korea’s stock market.
Leverage can increase earnings, but at the same time it can also increase losses.
This is when an investor group purchases a company by using money that have loaned.
Libor and the OIS
Libor is London Interbank’s rate, and IOS is the US’ comparable rate.
The liability that the shareholders have is capped to whatever they have put into the business themselves.
In reference to the ease in selling or acquiring an investment.
Insurance market that regulate activities of companies that may be offering insurances to people for a variety of reasons.
A risk assessment that is used to decide whether to not to set somebody up with a mortgage for example.
Buying shares that have a tendency to fluctuate in price.
Profiting from a company purchasing another company or two businesses combining.
A margin is an initial deposit that is required.
Margin of safety
Gap between buy price and the price that the asset may be worth in the future.
This is when an investor put up a % of the total cost they spent on an asset they have bought.
Banks and brokerages are usually the ones who make the markets.
Marking to market
Updating one’s portfolio to make it up to date with the newest and most up to date prices of the market.
When a bank acquires a short-term source of finance and turns it into a long-term loan.
Mean, median and mode
Three ways of calculating an average.
Layer between two others.
When you add the unemployment rate to a rate of inflation.
An activity that attempts to convert money acquired through illegal activities into legit money.
Blanket term for covering the vast market for short-term loans.
The underlying principle of credit creation.
The total amount of money that is within the economy.
A company that has specialty within a certain financial area.
Average of the last few days’ share prices.
Market cap weighting
When businesses in the index become ranked by their total market value.
Nation’s current account
Measures goods being imported and exported from a nation.
NAV is amount of money remaining if an asset was closed.
Net working capital
To determine the Net working capital, take away a company’s current liabilities from its current assets that it has.
Japan’s stock market.
Nominal value of a bond
Bonds have fixed values; these are nominal values.
Loanees can now raise finance without having to show any liability on the balance sheet at the end of the day.
Open-ended investment company (OEIC)
Modern version of a unit trust.
The relationship that is established between a company’s fixed and variables.
This is the return you could have earned if you had chosen to use your money elsewhere rather than where you chose.
Difference between economy’s output and the output that could be achieved if the industries of the economy were going all-out.
Over the counter (OTC)
Private transactions that are conducted.
Traders who make it their aim to profit from changes in price in comparisons to another share.
Period that determines how long an investment will take to repay.
Avenue that allows companies to loan money.
Used to discover high-quality companies by looking through separate categories and criteria.
This is when a place is contacted by a firm and offered blocks of shares.
An agreement reached between American, West Germany, UK, France and Japan in 1985.
Illegal operations that are named after Charles Ponzi, he had taken deposits from upwards of 35,000 investors, promising them immense returns for their investment.
Price to book ratio
Calculated by dividing current share prices by book value per share.
Price to cash flow ratio
A measurement of the market’s expectation of how a firm will perform in the future.
Price to sales ratio
Market cap divided by annual sales of a company.
Price/earnings (P/e) ratio
Swift and simple way of knowing a company’s general value.
Investment banks that have the ability to sell clients a service.
Private finance initiative (PFI) / public-private partnership (PPP)
This is a way of a private sector incorporated businesses in financing project such as schools and other public sector projects of a similar ilk.
Banks taking a risk with their own capital to attempt to make money as a result.
Purchasing power parity
Theory that seeks to determine how over or undervalued a currency is in comparison to another currency.
Option to sell an asset for a fixed rate on a particular date.
Puts and calls
Puts we have already established; a call gives one the right to purchase.
Real and nominal
Terms used to describe prices that have or have not been adjusted to accommodate inflation.
Fall in inflation adjusted domestic product for more than two quarters back to abck.
Sale and repurchase agreement.
Return on capital
Useful measuring assistance for determining the performance of a business.
Return on capital employed (ROCE)
Ratio that determines the profitability of a company by using the total money amount it deploys.
Return on equity
Measuring a year’s earnings alongside shareholder’s equity.
Return on invested capital (ROIC)
Ratio that determines how good a company is at obtaining profits from assets.
This ratio is a way to calculate how much of a return is going to be achieved on each individual unit of risk involved.
This is a way for traders to calculate the risk-adjusted performance of the portfolios that they have collected over time. This helps and aides them in deciding how much return is possible per each individual unit of risk.
S&P 500 index
America’s cyclical indices.
Mortgage arranged on a loanee’s home, if things were to go south the home can be seized and resold.
Companies often buy back existing shares alongside issuing new ones.
Option to purchase or sell shares at a past price regardless of the present price.
Prices can rise when a large collection of short sellers all aim for the same exact stock.
Traders can still acquire profit on an asset by shorting their asset if they believe the price is due to plummet.
A form of DIY pension.
Combines the most effective aspects of passive and active management.
Sovereign wealth fund
A fund owned by the state that come about through running with other nations.
Special drawing rights
Allows members of a nation to gain access to surplus currency that is being held by another member nation.
Spread is a gap and is how brokerages gain their profit.
A way of leveraging financial markets.
Mixture of prices on the rise and falling.
This is a form of re-registration tax. You pay this form of tax whenever you purchase a registered asset.
Increases the total amount of a company’s issued shared by dividing the already existing shared that it has issued.
An instruction that is put in place to place a limit on the amount of losses that gain be gained.
Combo of financial instruments that are made to copy another single security.
This measures return per unit of risk. This is extremely similar in purpose to that of the previous two mentioned ratios in the glossary.
Taiwan’s stock market index.
Tangible common equity
Determines how big of a hit a bank can have impact it before the shareholder’s total equity is non-existent anymore.
Tangible book value per share
This is the total value of all the assets a company has minus the liabilities.
This is a payment system that all of the central banks across Europe use for emergency and important electronic money transfers.
People who attempt to predict the price of a share by looking at the movements of the price in the past.
The highest quality of capital.
Time value of money
The time value of money. The lower the amount you withdraw the sooner you have to pay it back.
A positive balance of trade is what occurs when a nation’s exports are higher than its imports.
An IOU issued by the central bank to the government.
These are businesses that provide necessities such as electricity and water.
Value at risk (VAR)
This is a process that attempts to understand the odds of you losing your money on a portfolio.
Velocity of money
This is the measurement of how the economy is performing based upon the speed of which available money is being spent.
When two companies merge to form a bigger company.
Vix (volatility index)
Reflects how volatile traders seem to expect the market to be performing in a year from the present time.
Reflects the movements of prices.
Security that is issued by businesses and moved around the market, similarly to shares.
Wholesale money markets
Wholesale refers to funds that are loaned or lent in large amounts.
Total of a businesses’ current assets minus their current liabilities.
Highlights the bond between the yield securities and maturities.
Yield on cost
Highlights a businesses’ dividend return as a %.
Shows the chances of a company filing for bankruptcy within the next 2 oncoming years.
A form of share or bond that can be issued.
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