Glossary
Explore a comprehensive collection of financial terms and their definitions, covering everything from market capitalization to options contracts and more.
| Term | Definition |
|---|---|
| Aggregate | A whole formed by combining several (typically disparate) elements. |
| American Depository Shares | A U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange. |
| American Option | A version of an options contract that allows holders to exercise the option rights at any time before and including the day of expiration. |
| Amortization | The process of gradually writing off the initial cost of an asset. |
| Anticipated Holding Period | The period of time an individual expects to hold an asset. |
| Antidilutive effect | Result of a transaction that increases earning per common share. |
| Arbitrage | The simultaneous buying and selling of a security at two different prices in two different markets, resulting in profits without risk. |
| Ask | This is the quoted ask, or the lowest price an investor will accept to sell a stock. |
| Bank Investment Contract | Interest guaranteed by the bank in a portfolio over a specific time frame with a specific yield |
| Base | A technical analysis tool that depicts a chart pattern that visualizes when when the supply and demand of a certain stock are in relative equilibrium, resulting in a narrow trading range. |
| Basic Earnings per Share | The amount of a company's earnings allocable to each share of it's company's stock. |
| Bear | An investor who believes a stock or the overall market will decline. A bear market is a prolonged period of falling stock prices, usually by 20% or more. |
| Bear Market | Any market in which prices exhibit a declining trend. For a prolonged period, usually falling by 20% or more. |
| Block | Large quantity of stock or large dollar amount of bonds held or traded. As a rule of thumb, 10,000 shares or more of stock and $200,000 or more worth of bonds would be described as a block. |
| Blue Chip Company | Used in the context of general equities. Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends. Gilt-edged security. |
| Bonds | Bonds are debt and are issued for a period of more than one year. The US government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically. |
| Book Value Per Share | A market value ratio that weighs stockholders' equity against shares outstanding. The value of all shares divided by the number of shares issued. |
| Bull | An investor who thinks the market will rise. |
| Bull Market | A period of increased stock trading and rising stock prices. |
| Capital | Money available for investment. |
| Capital Expenditure | Money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment. |
| Capital Gain | The difference between a higher selling price and a lower purchasing price, resulting in a financial gain for the seller. |
| Capital Loss | The difference between a lower selling price and a higher purchase price resulting in a financial loss to the seller. |
| Commodity | A commodity is food, metal, or another fixed physical substance that investors buy or sell, usually via futures contracts. |
| Common Stock | Term used to describe the total amount paid in by stockholders for the shares they purchase. |
| Consolidated Income Statement | An Income statement that combines the revenue, expenses, and income of a parent company and its subsidiaries. |
| Consolidated Tape | Used for listed equity securities. Combined ticker tapes of the NYSE and the curb. Network A covers the NYSE-listed securities and is used to identify the originating market. Network B does the same for AMEX-listed securities and also reports on securities listed on regional stock exchanges. |
| Corner | When one party is able to acquire enough shares of a particular security type, such as those of a firm in a niche industry, or to hold a significant commodity position to be able to manipulate its price. |
| Cryptocurrency | A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. |
| Current Debt | A liquidity ratio that includes the formal borrowings of a company outside of accounts payable. |
| Current Ratio | A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. |
| Debt to Equity Ratio | Calculated by dividing a company's liabilities by its shareholder's equity. |
| Declaration Date | The date on which the board of directors of a company announces the next dividend payment. This includes the dividend's size, ex-dividend date, and payment date. |
| Deferred Revenue | Advance payments a company receives fpr products or services that are to be delivered or performed in the future. |
| Direct Transfer | When a business sells its stocks or bonds directly to savers, without going through any type of financial institution. |
| Dividend | A portion of a company's profit paid to common and preferred shareholders. |
| Dividend Yield | Ratio of a company's annual dividend compared to its share price. |
| Earnings Per Diluted Share | A calculation used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. |
| EBITDA Margin | Measurement of a company's earnings before interest, taxes, depreciation, and amortization as a percentage of its total revenue. |
| Enterprise Value Over EBITDA | Calculated by: EV divided by EBITDA or earnings before interest, taxes, depreciation, and amortization. |
| Forex | Currency of another country. "Foreign Exchange". |
| Free Cash Flow | The cash a company produces through its operations, less the cost of expenditures on assets. |
| Free Cash Flow Per Share | A measure of a company's financial flexibility that is determined by dividing free cash flow by the total number of shares outstanding. |
| Futures Contract | A legally binding agreement to buy or sell a commodity or financial instrument in a designated future month at a price agreed upon at the initiation of the contract by the buyer and seller. Futures contracts are standardized according to the quality, quantity, and delivery time and location for each commodity. A futures contract differs from an option in that an option gives one of the counterparties a right and the other an obligation to buy or sell, while a futures contract represents an obligation to both counterparties, one to deliver and the other to accept delivery. |
| Fundamental Analysis | Security analysis that seeks to detect misvalued securities through an analysis of the firm's business prospects. Research often focuses on earnings, dividend prospects, expectations for future interest rates, and risk evaluation of the firm. |
| Gross Margin | Company's net sales revenue minus its cost of goods sold. |
| Gross Profit | The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. |
| Hedge Fund | Institution that will accept funds from large institutions and high net worth individuals to buy various securities. |
| Interest Expense | This represents interest payable on any borrowings - bonds, loans, convertible debt or lines of credit. |
| Interest Income | The amount of interest that has been earned during a specific time period. |
| Issuance Debt Securities | A debt issue refers to a financial obligation that allows the issuer to raise funds by promising to repay the lender at a certain point in the future and in accordance with the terms of the contract. |
| Issuance Equity Shares | Issued shares are the authorized shares sold to and held by the shareholders of a company, regardless of whether they are insiders, institutional investors or the general public, as shown in the company’s annual report. |
| Invested Capital | Total amount of money raise by a company issuing securities to equity shareholders and debt to bondholders, where the total debt and capital lease obligations are added to the amount of equity issued to investors. |
| Interest Income | The amount of interest that has been earned during a specific time period. |
| Invested Capital | Total amount of money raise by a company issuing securities to equity shareholders and debt to bondholders, where the total debt and capital lease obligations are added to the amount of equity issued to investors. |
| Issuance Debt Securities | A debt issue refers to a financial obligation that allows the issuer to raise funds by promising to repay the lender at a certain point in the future and in accordance with the terms of the contract. |
| Issuance Equity Shares | Issued shares are the authorized shares sold to and held by the shareholders of a company, regardless of whether they are insiders, institutional investors or the general public, as shown in the company’s annual report. |
| Long Term Capital Gain | An investment sold at profit that was held for more than one year. |
| Market Hours | US Equities: 9:30am-4pm |
| Primary Market | Market where corporations raise capital by issuing new securities. |
| Secondary Market | Market in which existing, already outstanding securities, are traded among investor after they have been issued by corporations. |
| Spot/Cash Market | Market where assets are bought or sold for "on the spot" delivery. |
| Market Capitalization | The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size. |
| Market Snapshot | A Market Snapshot is a real – time MLS market update and trend analysis overview. It provides the most current sold data, active listings, inventory, and days on market counts – information that is unavailable on any other similar website. |
| Municipal Bonds | A bond issued by a state or local government. |
| Mutual Funds | An investment program funded by shareholders that trades in diversified holdings and is professionally managed. |
| Net Cash Flow | Refers to the difference between a company's cash inflows and outflows in a given period. |
| Net Income | The residual amount of earnings after all expenses have been deducted from sales. |
| Odd Lot | The number of shares being traded is less than 100. |
| Open Corporation | A corporation whose stock is sold to the public at large. |
| Operating Expenses | An expense incurred in carrying out an organization's day-to-day activities, but not directly associated with production. |
| Operating Income | The amount of profit realized from a business's operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS). |
| Options Contract | The legal right to buy or sell a specific number of shares at a set prices within a limited time period. |
| Paper Profit | Profit that is created when the price rises but before stock has actually been sold. |
| Payout Ratio | The residual amount of earnings after all expenses have been deducted from sales. |
| Pension Fund | A type of mutual fund that holds assets in order to provide retirement income to its members. |
| Portfolio | Holdings of stocks, bonds, and other investments by individual investors, banks, companies, and brokerages. |
| Preferred Shares | Shares of stock that entitle owner to a fixed dividend amount. Dividend must be paid by the company before common stock owners get paid. Shareholders usually do not have voting rights. |
| Price to Book Ratio | The ratio of market value of a company's shares over its book value of equity. |
| Price to Earnings Ratio | Indicates the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company's earnings. |
| Price to Sales Ratio | Calculated by taking a company's market capitalization and divide it by the company's total sales or revenue over the past 12 months. |
| Primary Market Transaction | When a firm's new securities are issued through an Investment Bank and the firm receives the proceeds of sale. |
| Prospectus | Document issued to possible buyers of a stocks and bonds outlining the financial condition of the company issuing those securities. Required by the SEC. |
| Qualified Dividends | Dividend that falls under the capital gains tax rates that are lower than the income tax rates on unqualified, or ordinary dividends. |
| Quote | The price at which the last trade of a particular security or commodity took place. |
| Rally | A rapid increase in the prices of stock after a period of decline in the stock market. (A rally can apply to an individual stock or to the entire market). |
| Recession | An economic slowdown of the economy which results in rising unemployment, increased business failures, declining economic growth and higher personal bankruptcies. |
| Retained Earnings | The amount of net income left over for the business after it has paid out dividends to its shareholders. |
| Return on Average Equity | Financial ratio that measures the profitability of a company in relation to the average shareholder's equity. |
| Return on Invested Capital | A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. |
| Return on Sales | A measure of how efficiently a company turns sales into profit. |
| Round Lot | The number of shares being traded is at least 100. |
| Sales Per Share | Represents the portion of a company's revenue that is allocated to each share of common stock. |
| Share Based Compensation | A way of paying employees, executives, and directors of a company with shares of ownership in the business. |
| Shareholder's Equity | Difference between total assets and total liabilities. |
| Share Price Adjusted Close | Shows the stock's value after proposing a dividend. |
| Short Sale Rule | Nov 2010, the SEC introduced Rule 201 (Alternative Uptick Rule), a short sale-related circuit breaker that when triggered, will impose a restriction on prices at which securities may be sold short. |
| Speculative Stock | A very high-risk stock from a company with potential for substantial earnings in the future. |
| Split | Sometimes companies split their outstanding shares into more shares. If a company with 1 million shares executes a two-for-one split, the company would have 2 million shares. |
| Tape | Service that reports prices and sizes of transactions on major exchanges-ticker tape. (2) Dow Jones and other news wires. |
| Tangible Asset Value | The value of all physical ("tangible") assets minus all liabilities. |
| Tangible Book Value Per Share | The value of a company's tangible assets divided by its current outstanding shares. |
| Tax Liability | The total amount of tax debt owed by an individual, corporation, or other entity to a taxing authority like the Internal Revenue Service (IRS). |
| TCP | TCP (Transmission Control Protocol) is a standard that defines how to establish and maintain a network conversation via which application programs can exchange data. TCP works with the Internet Protocol (IP), which defines how computers send packets of data to each other. |
| Trade | An oral (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered "done" or final. |
| Treasury Bond | A federal government bond that can be issued for as long as 30 years. |
| Trust | Fiduciary relationship in which one person is the holder of the title of the property subject to equitable obligation to keep or use the property for the benefit of another. |
| Trust Company | Legal institutions that have trust functions. |
| Trustee | In whom confidence is reposed as regard to the property for the benefit of another person. |
| Trustor | An individual or organization that gifts funds or assets to others. |
| Trust Property | Assets that have been placed into a fiduciary relationship between a trustor and trustee for a designated beneficiary. |
| Weighted Average Shares | Calculated by taking the number of outstanding shares and multiplying the portion of the reporting period those shares covered, doing this for each portion and, finally, summing the total. |