Financial Glossary

The process of spreading the cost of an intangible asset or loan over a specific period of time, typically through scheduled payments.

A series of equal payments made at regular intervals over a specified period. Common in retirement planning and insurance products.

The simultaneous purchase and sale of an asset in different markets to profit from price differences between them.

The strategy of dividing an investment portfolio among different asset categories such as stocks, bonds, and cash to optimize risk and return.

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

A market condition in which prices of securities fall 20% or more from recent highs, typically accompanied by widespread pessimism.

A fixed-income instrument representing a loan made by an investor to a borrower, typically corporate or governmental, with periodic interest payments.

A financial market condition in which prices are rising or expected to rise, characterized by optimism and investor confidence.

The profit realized from the sale of a non-inventory asset that was purchased at a lower price than its selling price.

Interest calculated on the initial principal and also on the accumulated interest from previous periods. Often described as 'interest on interest.'

The reduction in value of an asset over time due to wear and tear. In accounting, it systematically allocates the cost of a tangible asset over its useful life.

A risk management strategy that mixes a variety of investments within a portfolio to reduce exposure to any single asset or risk.

A distribution of a portion of a company's earnings to its shareholders, typically in the form of cash or additional stock.

Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's overall financial performance used as an alternative to net income.

The value of ownership interest in a company, represented by the difference between its assets and liabilities. Also refers to stocks as an asset class.

Exchange-Traded Fund. A type of investment fund traded on stock exchanges that holds assets such as stocks, commodities, or bonds.

A one-year period used by governments and businesses for accounting and budget purposes, which may not align with the calendar year.

The difference between revenue and cost of goods sold, expressed as a percentage of revenue. Indicates how efficiently a company uses labor and materials.

An investment made to reduce the risk of adverse price movements in an asset, typically using derivatives like options or futures.

A type of mutual fund or ETF designed to track a specific market index, offering broad market exposure with low operating expenses.

The rate at which the general level of prices for goods and services rises, eroding purchasing power over time.

Initial Public Offering. The process by which a private company offers shares to the public for the first time on a stock exchange.

The use of borrowed capital to increase the potential return of an investment. Higher leverage means higher risk and potential reward.

A financial obligation or debt owed by a person or company that must be settled over time through the transfer of economic benefits.

The ease with which an asset can be converted into cash without significantly affecting its market price.

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

An investment vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets.

The total value of all assets owned minus all liabilities owed. A key measure of financial health for individuals and companies.

Price-to-Earnings Ratio. A valuation metric calculated by dividing a company's current stock price by its earnings per share.

A collection of financial investments such as stocks, bonds, commodities, and cash equivalents held by an individual or institution.

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in GDP, employment, and trade.

Return on Investment. A performance measure used to evaluate the efficiency of an investment, calculated as net profit divided by the cost of investment.

Tradable financial instruments that hold monetary value, including stocks, bonds, and derivatives.

A statistical measure of the dispersion of returns for a given security or market index. Higher volatility means greater price swings.

The difference between a company's current assets and current liabilities. A measure of a company's short-term financial health and operational efficiency.

The income return on an investment, such as interest or dividends, usually expressed as an annual percentage based on the investment's cost or market value.