Comprehensive List of Financial Market Terms and Fundamental Analysis Concepts

Unlock the power of financial markets: Learn the language of stocks, bonds, and derivatives

Our page offers an extensive list of financial market terms and fundamental analysis concepts, providing valuable insights into the complex world of finance. Explore the vocabulary and techniques used to describe and evaluate stocks, bonds, currencies, commodities, derivatives, and more. Whether you’re a novice or a seasoned investor, our comprehensive list is a valuable resource for expanding your knowledge and staying ahead in the financial markets.

What are financial market terms?
Financial market terms encompass the lexicon used to describe the different elements of financial markets, including equities, fixed income securities, currencies, commodities, and financial derivatives.

What do you mean by fundamental analysis terms?
Fundamental analysis terms refer to the analytical tools and techniques employed to assess the intrinsic worth of a company or security based on its financial and economic indicators.

From A to Z: A complete glossary of financial market terms and fundamental analysis techniques



Acquisition is the process by which one company purchases another, with the goal being to broaden the buyer’s business operations and/or customer base. It consists of two distinct components: (1) an exchange of assets or stock between companies, and (2) the integration of these assets into the acquirer’s business structure.


Accruals constitute an essential part of financial accounting by recognizing non-cash transactions. This means that expenses or revenue are recognized before any actual payments are received or made.

Asset Turnover Ratio

The Asset Turnover Ratio is a measure of how successful a company is at using its assets to generate income. The ratio is calculated by taking the total revenue earned and dividing it by the average total assets owned by the business. This helps to assess the efficiency with which a company’s assets are being used to drive profit.

Average Collection Period

The Average Collection Period, or ACP, is a metric used to gauge the time taken for a company to collect what is owed to them. It is calculated by taking the total amount receivable and dividing it by the average daily sales of the company. This gives an estimate of how long it takes for collections to occur from customers.

Accounts Payable

Accounts payable is a company’s outstanding debts to its vendors, usually recorded as liabilities on the company’s balance sheet. It represents the amount of money that a company owes for goods and services purchased on credit.

Accounts Receivable

Accounts Receivable is the amount of money which a business has been promised by its customers who purchased products or services on credit. This amount must be collected at a later date.


Alpha is an investment term used to describe the measure of performance of an investment relative to its benchmark index, adjusted for risk. It’s calculated by subtracting the expected return of a benchmark from the actual return of the security or portfolio in question.

Annual Report

An annual report is an authoritative declaration to shareholders that informs them of a company’s financial activities and standing for the preceding year. It outlines the firm’s operations, achievements and management structure, giving investors an idea of its performance and prospects moving forward.


An asset is any resource that has a financial value or potential to generate revenue. Assets can include cash, investments, inventory, accounts receivable, buildings and land. Any item owned by a company which benefits its operations or provides future economic returns can be considered an asset.

Asset Allocation

Asset allocation is an important part of investing, as it refers to how you divvy up your investments among different asset classes. This can include stocks, bonds, cash, and other types of investments. Doing so allows for diversification, which helps you control risks and make sure that your returns are in line with your investment goals.

Authorized Shares

Authorized shares refer to the maximum number of stocks a company is authorized to issue, as set out in its articles of incorporation. This number specifies the upper limit of shares that may be created by the company and forms a legal limitation on its capital structure.


Arbitrage is the act of taking advantage of price differences in different markets. For example, in stock markets, arbitrage could involve the purchase of one stock and the sale of another related one; or in futures markets, it could mean buying a futures contract then simultaneously selling a like contract to take advantage of price discrepancies.



A capital is the money or assets used by a company in order to finance its business operations and investments.

Capital Asset Pricing Model (CAPM)

The Capital Asset Pricing Model, or CAPM, is an important tool used by investors to determine the expected return of an asset. It helps to assess the risk associated with investments and helps make decisions about how best to allocate funds. This model uses two factors: the beta of an investment and the risk-free rate of return when calculating the expected return on an asset.

Call options

Call options are financial contracts that give the holder the right, but not the obligation, to purchase a certain underlying asset at a predetermined price (known as the strike price) before a certain date. These rights may expire after a specified period of time, so it is imperative for traders to use them before they reach their expiration.

Capital Expenditures

Capital expenditures refer to funds used by businesses to purchase long-term assets such as land, buildings, machinery and equipment. Such investments are made with the intent of providing lasting value and benefits that will last many years. Unlike most operating expenses, which are documented on current income/expense statements, capital expenditure outlays can be noted on a company’s balance sheet as an asset.

Cash Flow

Cash Flow is a measure of the inflow and outflow of money within a company over a given period of time. It is an important metric in evaluating a company’s performance, as it allows investors to understand how much cash the company has available to pay expenses, invest in growth initiatives, and otherwise manage its operations.

Cash Flow Statement

A cash flow statement provides an overview of all the money and resources that move in and out of a company over a predetermined period. It tracks where money comes from (cash inflows) and where it is spent (cash outflows). This financial statement helps to assess the short-term liquidity of a business—making it possible to understand when and if any extra capital is needed, as well as identify areas for improvement in budgeting, operations, and debt management.


Exchange-Traded Fund (ETF)

An Exchange-Traded Fund (ETF) is an investment fund traded on a stock exchange that provides an easy, low-cost way for investors to obtain broad exposure to a range of asset classes and/or sectors. ETFs provide access to a variety of asset types such as stocks, bonds, commodities, currencies and more. Investors can choose from a wide selection of ETFs that track different sectors or indices.

Ex-Dividend Date

The ex-dividend date is the day when the purchase of a stock no longer confers the right to the upcoming dividend payment. From this day onward, any shares bought or sold on the market will not be entitled to this dividend.

Equity Capital

Equity capital is the money that owners or shareholders have put into a business. It’s different from debt capital, as it is not borrowed and does not need to be repaid. This money helps a company grow and develop, as investors expect to receive returns on their investment either through dividends or appreciation in the company’s value over time.


Equity, also known as shareholders’ equity, is an accounting measure representing the residual value of assets after taking into account all associated liabilities. It is the value of a company that would remain for its shareholders if all debt were paid off.

Enterprise Value (EV)

Enterprise Value (EV) is a metric used to calculate the total value of a company. It takes into account the company’s equity, debt, and cash, subtracting out any cash and cash equivalents held by the business. By combining these factors, investors can get an indication of what a company may be worth in its entirety.

Earnings Per Share (EPS)

Earnings Per Share, also known as EPS, is a measure of a company’s profits divided by the total number of shares outstanding in its common stock. It helps to tell investors how profitable the company is and gives them an idea of how much money they could get back from their investment.


Earnings refer to the total profit a company has made after all expenses are taken out of its total revenue. This is calculated by subtracting the cost of doing business from the amount of revenue it brings in.

Earnings Before Interest and Taxes (EBIT)

Earnings Before Interest and Taxes (EBIT) is an accounting measure which calculates a company’s profits prior to taking out any interest or tax payments. It is calculated by subtracting a business’s operating expenses from their gross profit, resulting in the amount of money earned before any deductions for taxes and interest payments.


Gross Margin

Gross margin is a measure of a company’s financial performance and efficiency. It can be calculated by taking the total revenue generated from sales, subtracting the cost of goods sold, and then dividing the result by overall total revenue. By assessing a company’s gross margin, investors and managers can effectively evaluate profitability.

Growth Stock

Growth stocks are equities in companies that show potential for strong growth over the long term. They tend to appreciate faster than investments tied to the overall market or an individual sector, making them attractive investing opportunities. As these stocks typically involve higher risk than steadier income-generating investments, they are generally considered to be suitable for investors with a higher risk tolerance.


Goodwill is an intangible asset that represents the accumulated value of a business. It is derived from the reputation, customer loyalty and brand recognition a company has developed over time. Goodwill can be valuable to buyers as it typically creates extra value or good “word of mouth” for a product or service.

Graham Number

Developed by Benjamin Graham, the Graham Number is a value investing formula that calculates a stock’s theoretical fair value based on its per-share earnings and book value. The formula is calculated using the square root of (22.5 x EPS x BVPS) which is then used to determine whether or not a security is undervalued or overvalued.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced in a country over a certain period of time. It is the main indicator used to assess the economic performance of a country.


IPO (Initial Public Offering)

An Initial Public Offering (IPO) is when a company offers its stock for sale to the general public for the first time. Through this process, companies can raise capital by issuing shares and offer investors an opportunity to benefit from the potential appreciation in the stock price of that company.

Intrinsic Value

Intrinsic value is an estimation of the actual worth of a company, determined by taking into account its potential long-term earnings and asset holdings. It is considered to be the “true” value of a stock rather than the market price of it.


An index is a measure of performance of a particular group of stocks over time. It reflects the market activity, as well as economic and other macro-level trends, helping investors track the progress of their portfolios.

Implied Volatility

Implied Volatility is an estimated measure of the potential volatility of a security or asset derived from option prices in the marketplace. This statistic gives insight into the market’s view on how much price variation can be expected over time and it is used to gauge investors’ sentiment towards an object.


Inflation is the gradual increase in prices of goods and services, leading to a drop in purchasing power. It is typically measured by the consumer price index (CPI), which records changes in the prices of consumer products over a given period. When inflation occurs, each unit of currency buys less than before, as more money is required to purchase the same item.

Interest Coverage Ratio

The Interest Coverage Ratio (ICR) is a metric used to assess a business’s ability to cover its liabilities from interest payments. It is calculated by dividing Earnings Before Interest and Taxes (EBIT) by the total amount of interest expenses incurred. A higher ratio indicates greater capacity for the company to repay its debt obligations.

In-the-Money (ITM)

In-the-Money (ITM) describes the situation in which a stock option has positive intrinsic value. For a call option, the strike price of the underlying asset must be below its current market price, while for a put option, it must be above its current market price. This means that if the options are exercised, the holder will receive payouts from their investment.


Insiders are people who have access to inside information about a company which could affect their stock price. This includes officers, directors, shareholders, and others who know about the company’s performance before the public does.

Income Statement

An income statement, often referred to as a profit and loss statement, is a document that reports company revenues, expenses, and profits or losses during a given period of time. The report provides vital information about a company’s financial position, including metrics such as net earnings and operating costs.


KPI (Key Performance Indicator)

KPI stands for Key Performance Indicator. It is a numerical value that monitors and measures the performance of a business against their predetermined objectives. KPI’s provide a snapshot of how well a business is performing and helps to identify areas which require improvement.

K-Out Option -

The K-Out option is a type of financial instrument that would become worthless if the underlying asset’s price reaches a specific predefined level (the “K”) before the option’s expiration date. Investing in this kind of option can be beneficial in situations where there are limited opportunities to profit from the market’s performance.


Market Price

Market price is the amount at which a certain security, product or service is being traded in the market. It refers to the current rate of exchange between buyers and sellers of such security or item. The market price may be different from its actual value and is determined by demand and supply forces in the market.


The mean is a measure of central tendency, or a numerical average, within a set of data. It is calculated by taking the sum of all values and dividing it by the total number of values.


Median is a measure of central tendency, used to find the middle value in a dataset when the values are arranged in order. It can help to describe the characteristics of a data set and can provide insights into unusual values that may be influencing the data.

Market Capitalization (Market Cap)

Market capitalization (market cap) is a way to measure the value of a publicly traded company by multiplying its current stock price by the total number of shares outstanding. It’s often used as an indicator of the size of a company and can be used to compare companies in different sectors.

Market Analysis

Market analysis is the systematical examination of a market – such as a stock exchange or goods and services – using one or more approaches, including fundamental analysis, technical analysis, quantitative analysis and more. The goal of market analysis is to gain a deeper understanding of market trends, fluctuations and dynamics in order to make sound investments decisions.

Market Index

A market index is a quantitative measure of the relative changes in a particular stock or group of stocks. The most popular market indexes are the S&P 500 and Dow Jones Industrial Average, which track the performance of hundreds of different companies within their respective markets. Other popular market indexes include NASDAQ Composite, Russell 2000 and Wilshire 5000.


A merger is when two or more companies join forces and form a single legal entity. The goal of the merger is to create synergy or benefit from economies of scale, as well as to increase their market share and profitability.



Options are financial instruments that give investors the flexibility to choose whether they want to buy or sell an underlying asset at a pre-determined price. These contracts are unique in that they don’t require the buyer to follow through on their decision, giving them the ‘right but not the obligation’ to complete the contract.

Operating Expenses

Operating expenses are the costs incurred to run a business, like rent and staff salaries, as well as things like utilities and office supplies. These outgoings must be monitored and controlled in order to remain profitable.

Out-of-the Money (OTM)

Out-of-the Money (OTM) options are options whose strike price is not in line with the current underlying stock price. In other words, OTM options have no intrinsic value and are only profitable if the stock price moves significantly. For call options, this means the stock must rise higher than the strike price while for put options, this means the stock must fall below the strike price.

Operating Cash Flow (OCF)

Operating Cash Flow (OCF) is the cash generated from a business’s ongoing operations. It can be calculated by subtracting the company’s expenses from its revenues, not accounting for capital expenditures, investments or other non-operating factors. OCF can then be used to measure the liquidity of the company and its ability to pay off debt or invest in expansion opportunities.


Qualitative Analysis

Qualitative analysis is an evaluation method that uses subjective data to make decisions about a company or investment. This type of analysis looks at non-financial factors such as management experience, brand recognition, customer loyalty and product quality. It helps investors gain insight into a business or an industry to identify strengths and weaknesses before making an investment decision.

Quantitative Analysis

Return on Assets (ROA) is a metric that measures the efficiency of a company in generating profit from its assets. It gives insight into how well the company is utilizing the money it has invested in its resources and offers a comparison of profitability between different companies.


Supply and Demand

Supply and demand are a fundamental concept of economics. It is the principle that states that the price of a good or service is determined by how much of it is supplied versus how much of it is in demand at any given time. This relationship between supply and demand can significantly affect the cost of goods, as well as their availability. Thus, understanding how supply and demand work together can help individuals make better decisions when it comes to purchasing goods and services.

Stop-Loss Order

A stop-loss order is an instruction that lets traders set a price at which they would like to sell a security, stock, or currency in order to limit potential losses. The order instructs the broker to sell the security once it reaches a certain price and is an important risk management tool used by traders.

Stock Split

A stock split is a corporate action that increases the number of shares outstanding by issuing additional shares to existing shareholders. This process results in an increase in the amount of available shares, and can be done in various ratios such as two-for-one or three-for-two. After a split, a company’s outstanding shares increase and its stock price decreases but is still proportional to the pre-split share price.


A stock is a security that gives an investor ownership in a company. It is a form of equity investment, which means that the investor owns a percentage of the company’s assets and profits. Buying stocks offers the potential for profit through stock price appreciation, as well as dividend payouts from dividends companies may decide to distribute among shareholders.


Spread in investing refers to the discrepancy between the bid and ask price of a security. This gap is indicative of what buyers and sellers in the market are willing to pay or receive for the asset. The largest spread indicates greater volatility and liquidity in the market, while a small spread may indicate low volumes and limited trading activity.

Strike Price

In an option contract, the strike price is the predetermined price at which the underlying asset can be purchased or sold. It is set forth in the option’s agreement before it is exercised.


A shareholder is a person or entity that owns at least one share of stock in a company. Shareholders typically have ownership rights and may receive dividends depending on the performance of the company. The number and rights of shareholders vary based on the type of corporation and how many shares it has issued publicly.

Share Buyback

Share buyback is a corporate action in which a company purchases its own shares from the market. This can be done as a way to redistribute cash to shareholders, reduce the number of outstanding shares and increase the ownership stake of existing shareholders.


Spin-off is a type of corporate action which involves the parent company removing a segment of its operations, creating a new and independent entity. This outgoing part can take many forms such as a company subsidiary, joint venture, affiliate company or otherwise.


Sales refer to the revenue generated by a company through selling goods or services. It is an important economic indicator and can help determine the health of a business or industry as it reflects demand for products or services.


Underlying Asset

A derivative is a financial contract that derives its value from an underlying asset. The underlying asset used for these contracts can be stocks, bonds, currencies, commodities, or other financial instruments. As the name implies, the value of derivatives is based on the performance of the underlying assets on which the contract is based.

Unsystematic Risk

Unsystematic risk, also referred to as specific risk or diversifiable risk, is the inherent risk of an individual security, business venture or industry. It is a type of financial risk that can be minimized by diversification – spreading investments across different types of assets in order to reduce the volatility of returns caused by any one investment.


Weighted Average Cost of Capital (WACC)

The Weighted Average Cost of Capital (WACC) is a metric used to measure the overall cost of a company’s borrowed and equity capital, weighted in accordance to their respective proportions. It is commonly used as a method for determining an appropriate return rate when assessing potential investments.

Wall Street

Wall Street is an iconic thoroughfare in the Financial District of Lower Manhattan, New York City. It is known as the heart of America’s financial industry and home to prestigious businesses such as the New York Stock Exchange and numerous investment banks, accounting firms and other corporate offices. The area has become a symbol for ambition, success and money-making power.



Yield is a measurement of the return or income generated by an investment. It is usually shown as a percentage of the amount invested and indicates how much money has been earned from the investment.

Yield Curve

The yield curve is a visual representation of the different yields (or interest rates) associated with bonds that have various maturities. It is typically plotted on a graph, where the x-axis is maturity, and the y-axis shows bonds’ corresponding yields. By looking at this graph, investors can gain insight into macroeconomic conditions and compare different financial instruments with varying levels of risk.

Yield to Maturity (YTM)

Yield to Maturity (YTM) is an indicator of the total return expected on a bond once it matures. The YTM takes into account the bond’s current market price, coupon rate, and the amount of time until maturity. It provides investors with a measure of how much they can expect to earn by investing in the bond until its maturity date.


Balance Sheet

A Balance Sheet is a document prepared by businesses to provide an overview of their financial position at a particular moment in time. It summarizes the company’s assets, liabilities, and equity and gives investors an idea of where the company stands financially.

Bear Market

A bear market is a stock market where prices are falling and investor mood tending towards pessimism. It is generally defined as a decline of 20% or more in an index from recent highs. During a bear market, investors may become fearful and reluctant to invest resulting in further downward pressure on prices.


A beta is a number that measures how a stock’s price moves compared to the market as a whole. A stock with a Beta of 1 tends to move in the same direction and by about the same percentage as its index, while stocks with higher Beta values tend to be more volatile and move faster than the market. It’s important to note that Beta is not an absolute figure and can change over time based on different economic conditions.

Blue Chip

Blue Chip stocks are top-tier securities usually issued by well-known, actively traded companies that have a long history of market success and strong performance. They are seen as a safer investment option with less potential for risk and offer potentially greater returns over time.

Book Value

Book value is a term used to describe a company’s financial worth. It is obtained by subtracting a company’s liabilities from its assets, as reported on the balance sheet. Book value can be used as an indicator of how much money an investor would receive if the company were liquidated.


A broker is a person or organization that facilitates the buying and selling of securities such as stocks, bonds, derivatives and other investments. They generally act as an intermediary between buyers and sellers to make transactions happen seamlessly. Brokers are regulated by various financial authorities, ensuring their operations are aboveboard and in line with the law.

Bull Market

Bull markets are characterized by increasing stock prices, a rise of 20% or more from past lows, and elevated investor sentiment. These market conditions typically indicate that the economy is strong and that investors have a feeling of optimism about it.

Buy and Hold

The buy and hold strategy is an investment approach where an investor chooses to purchase a security and retain it for at least five years. This method works best in stable markets where the investor can experience maximum returns without the need for frequent adjustments.


Debt-to-Equity Ratio

The debt-to-equity ratio is a financial metric that measures how much of a company’s financing comes from issuing debt versus how much comes from equity. It is calculated by dividing total liabilities by total shareholder equity, providing insight into the amount of risk a company is taking on to finance its operations and investments.

Due Diligence

Before any investor makes a commitment, they should go through a process of Due Diligence. This involves researching and evaluating the financial performance and risks associated with the investment, allowing for better decision-making. Due Diligence is essential for reducing losses or avoiding potential financial scams.

Dividend Reinvestment Plan (DRIP)

A Dividend Reinvestment Plan (DRIP) is a passive investment strategy that enables shareholders to reinvest their dividends back into the company’s stock. This allows shareholders to accumulate additional shares without having to pay out of pocket and can result in greater returns over time.

Diluted Earnings Per Share (EPS)

Diluted Earnings Per Share (EPS) is a financial measure that takes into account the potential dilution of shares due to stock options, warrants, and other convertible securities. It serves as an indicator of a company’s performance that can be used in evaluating its viability and potential for growth. Diversification is an investment strategy which involves allocating capital across different asset types and sectors, with the aim of reducing risk exposure and maximizing returns.


Discounts occur when the price of an option or future is lower than its theoretical value, reflecting the degree of pessimism among market participants.

Dividend Yield

Dividend yield is a financial term used to indicate the yearly dividend payment of a stock per share in relation to its current market price. It is computed by dividing the annual dividend by the current market price and expressed as a percentage.


A dividend is a sum of money paid out by a company to its shareholders. It is a way for the business to share profits generated with those who have invested in it.

Debt-to-Asset Ratio -

The Debt-to-Asset Ratio is a measure used to assess the amount of debt that a company is carrying relative to its total assets. This ratio is calculated by taking the total liabilities and dividing it by the total assets of the company.


Fundamental Analysis

Fundamental analysis is an approach to analyzing companies based on looking at their finances and economic data. This can include assessing items such as profits, revenues, and assets. By using this process, it may be easier to evaluate the health of a company than simply relying on stock prices or other market performance metrics.

Future Value

Future Value is an estimation of the value of an investment at a particular date in the future. It takes into consideration the current value, time period and interest rate to determine a probable outcome.

Free Cash Flow (FCF)

Free cash flow (FCF) is the money remaining after a company pays off all its costs and expenses, including capital expenditures and dividends. This amount of money is available to be invested or used as the company sees fit. It can be an indicator of the financial health of a business.

Financial Statements

Financial statements are financial reports that give an overview of a company’s financial performance, position, and activities. This includes the income statement, balance sheet, and cash flow statement. These documents provide information about the company and help to inform key stakeholders, such as investors and creditors.


Hedge Fund

A hedge fund is a type of alternative investment that is typically available only to accredited investors and institutions. These funds are not subject to the same regulations as mutual funds, giving them more freedom to pursue sophisticated investment strategies that can produce higher returns. Funds are managed by professional managers who use various strategies such as leverage, short selling, arbitrage and derivatives in order to generate active returns for their investors.

Historical Volatility

Historical volatility is a financial tool used to measure the realized volatility of a security over a given time period. It is a key measure of risk and is commonly used by traders when assessing the potential profitability of trading strategies. Historical volatility is calculated by examining past price changes of a security, such as stocks or commodity futures, in order to determine whether it will move in an unpredictable manner in the future.

High-Yield Bond

A hedge fund is a type of alternative investment that is typically available only to accredited investors and institutions. These funds are not subject to the same regulations as mutual funds, giving them more freedom to pursue sophisticated investment strategies that can produce higher returns. Funds are managed by professional managers who use various strategies such as leverage, short selling, arbitrage and derivatives in order to generate active returns for their investors.


Junk Bond

Junk bonds, or high yield bonds, are debt securities characterized by higher risk and lower credit rating than regular investment-grade bonds. To make up for the increased default risk, junk bonds tend to offer higher yields than their investment-grade counterparts.


Long-Term Debt

Long-Term Debt describes debt with a maturity of more than one year and is typically used to pay for a company’s long-term investments. Such debt can come in the form of bonds, loans, leases, or other forms. The borrower agrees to make regular payments until the loan is paid off.


Liquidity refers to the swiftness with which an asset can be converted into cash without incurring a substantial loss in value.


Liabilities refer to financial obligations a company is obligated to pay, such as loans, bills and other debt. These are debts the business owes and will have to pay out at some point, either immediately or in the near future.


Leverage is the practice of using loaned funds to increase potential returns on an investment. By taking on debt, investors are able to invest more than they could have with their original capital. This amplifies any profits that may be realized from the investment, although it should be noted that losses from leveraged investments could be greater.


Non-Performing Loan (NPL)

A Non-Performing Loan (NPL) is a loan that fails to produce any income or payments. Declaring a loan non-performing means the lender is unable to collect any repayments and can suffer financial losses if the borrower ultimately fails to make repayment in full.

Non-Farm Payrolls

The monthly Non-Farm Payrolls report is a compilation of data that provides an estimate of the number of jobs added or lost in the US economy throughout the month, excluding agricultural workers. The report is released on a regular basis and provides a snapshot of the health and direction of the US labor market.

Net Present Value (NPV)

Net Present Value (NPV) is an investment evaluation method which involves calculating the present value of all projected future cash flows, subtracting the initial investment outlay needed, to determine how profitable a given project may be.

Net Margin

Net margin is a measure of profitability that simply compares a company’s net income to its total revenue. It expresses the profitability of a company as a percentage and helps investors gauge how much profit a company generates from its sales, before taking into account taxes, operating expenses, and other overhead costs.

Net Income

Net income, also known as net profit or the bottom line, is a company’s total earnings after subtracting all expenses such as taxes, operating costs and other deductions. It is the money left over for distribution to investors and shareholders.

Net Asset Value (NAV)

Net Asset Value (NAV) is a measurement of a mutual fund or exchange-traded fund (ETF)’s per-share value. It is calculated by subtracting the fund’s liabilities from its assets and dividing the result by the number of shares outstanding.


P/E Ratio (Price-to-Earnings Ratio)

The Price-to-Earnings Ratio (P/E Ratio) is a valuable tool for investors when considering stocks that represent companies. It is a metric which measures the current stock price of a company in relation to its earnings per share, providing investors with an indication of whether or not the stock is undervalued.

P/B Ratio (Price-to-Book Ratio)

The price to book ratio, also known as the P/B ratio, is a metric used for evaluating the relative value of a company’s stock. The P/B ratio compares the current market price of a stock to its book value per share. By comparing these two values, investors can get an idea of what kind of bargain they may be getting when buying the stock.

Passive Investing

Passive investing is an approach that involves tracking a market index rather than actively selecting individual securities. This strategy seeks to replicate the performance of the associated market index and generally results in lower fees and costs for investors.


A portfolio is a collection of investments assembled by an individual or institution. It typically includes stocks, bonds, cash, and possibly other types of financial securities. Building a portfolio makes it easier to diversify one’s investments across different assets in order to manage risk and potentially generate better returns over time.

Preferred Stock

Preferred Stock is a type of equity that has certain preferential rights over common stock. It gives shareholders priority over common stockholders in the event of liquidation or bankruptcy, and often pays dividends at set intervals. These dividends must be paid before dividend payments can be made to the holders of common stock.

Put Option

A put option provides an investor with the right, but not the obligation, to sell a security or asset at a pre-agreed price (the strike price) within a specified amount of time. This type of contract gives the holder the ability to protect themselves against losses without actually having to commit to selling the asset.

Price-to-Sales Ratio

The Price-to-Sales Ratio is a tool used by investors to evaluate and compare companies, as it informs them of the relationship between the current stock price and the revenue per share. This metric helps investors determine which stocks are undervalued or overvalued compared to their earning potential.

Profit Margin

Profit margin is a profitability ratio that measures the amount of net income generated as a percentage of total revenue. It provides an indication of how efficiently a company utilizes its resources to generate profit and reveals whether there is room to increase prices, further optimize variable costs or manage fixed costs more effectively.

Profitability Ratio

A profitability ratio is a measure of a company’s efficiency in turning revenue into profit. It looks at various metrics such as gross margin, net margin and operating margin to get a sense of how efficiently the business is generating profit from its operations. It can be used to compare companies within an industry or across different industries to help investors determine which is the most profitable.

Proxy Statement

A Proxy Statement is a document prepared by a company for its shareholders that includes important information related to an annual meeting. This statement contains details about proposals for shareholder votes, as well as pertinent data about the corporation’s board of directors.


Premium is the price of an option contract, which encompasses both the intrinsic value and time value of the option. Additionally, it describes the distinction between cash and futures prices.


Return on Assets (ROA)

Return on Assets (ROA) is a metric that measures the efficiency of a company in generating profit from its assets. It gives insight into how well the company is utilizing the money it has invested in its resources and offers a comparison of profitability between different companies.

Rights Offering

Rights Offerings are a type of corporate action in which a company issues new shares to its existing shareholders at a discounted price. Shareholders then have the right to purchase these new shares according to their ownership stake, on a proportionate, or pro-rata, basis.

Risk Management

Risk management involves identifying potential risks in an investment or business decision, assessing the likelihood and severity of these potential risks, and then taking steps to minimize the impact that these risks may have. It is a critical part of successful investing and can help protect investors from unexpected losses.


Risk is the potential for loss or harm associated with an investment or business decision that cannot be accurately determined beforehand. It is a consequence of volatility, practice and environment; and can create both positive and negative outcomes when it comes to monetary investments.

Rights Issue

A Rights Issue is a type of corporate action in which a company provides existing shareholders with the ability to purchase additional shares of stock at a discounted rate. This type of offering allows shareholders to increase their ownership stake in the company whilst taking advantage of the discounted share price.


Revenue is a measure of the total money earned by a business through its services or sales of products. This is an important figure that tells us how successful a company is in terms of its operations and how it generates income.

Return on Investment (ROI)

Return on Investment (ROI) is a metric used to evaluate the profitability of an investment. It can be calculated by dividing the gain or loss from an investment by the initial amount invested. ROI allows investors to assess their performance and evaluate if the investment was worth their time and money.

Return on Equity (ROE)

Return on Equity (ROE) is a measure of performance that shows how efficiently a company uses the money invested by its shareholders. It shows how much net income a company has earned compared to the total amount of shareholder equity. It provides an indication of how well management is leveraging the shareholders’ investments to generate profits.



Trends refer to the overall direction of a security or market. They may be short-term, such as when a stock moves higher for several days in a row, or long-term, such as when a stock moves broadly higher over multiple weeks or months. Tracking trends can help traders and investors anticipate potential buying and selling opportunities.

Time Decay

As the expiration date of an option contract draws closer, the value of the contract decreases – a phenomenon known as time decay. This occurs because there is less time remaining for investors to benefit from the movement in price of the underlying asset before the option expires.

Treasury Bonds

Treasury bonds are fixed-income securities issued by the United States federal government. These debt instruments have maturities of 10 years or more and are backed by the full faith and credit of the US government. Treasury bonds provide investors with a guaranteed return as they usually carry low interest rates but also involve a long-term investment period.

Trade Balance

A trade balance is a measurement of the difference between a country’s imports and exports of goods and services. A positive trade balance indicates that more of a country’s goods or services are being exported than imported, while a negative balance indicates that more of its goods or services are being imported than exported.

Total Return

Total return is a term used to refer to the overall profit generated from an investment, taking into account both capital gains and income from dividends or interest. It’s a measure of the appreciation of an asset plus any other yields that are associated with it.

Time Value of Money

The idea of the Time Value of Money (TVM) is that money currently available is worth more than the same amount in the future, as it has potential to be invested and earn returns. This concept highlights the importance of saving and investing now and not waiting for the future.

Technical Analysis

Technical analysis is an approach to evaluating investments and predicting future trends by considering past market data, primarily price and volume. This method of stock assessment looks into charts, patterns, and indicators in order to identify buying and selling opportunities for traders.



Volatility is the fluctuation of a security’s price; it describes how turbulent or unstable the market has been in any given period. It measures both the magnitude and frequency of price movements. High volatility implies that the price of a security can change dramatically over short time frames, and vice versa.

Value at Risk (VaR)

Value at Risk (VaR) is an analytical tool that provides an estimate of the maximum probable loss over a given period of time for a given investment portfolio, based on statistical analysis. This method can be used to set limits on how much risk an investor can take and help manage the overall financial exposure of an organization.

Value Investing

Value investing is an investment strategy that seeks stocks that are not highly priced by the market. This strategy is largely predicated on looking at a company’s financial statements and using fundamental analysis to determine which stocks are considered undervalued or mispriced.



X-efficiency describes how well a company can use its resources when it is competing with other less efficient competitors. It involves maximizing the use of inputs for production, such as labor and capital, to achieve maximum output without wasting resources. X-efficiency has become increasingly important in today’s competitive marketplaces.


Zero-Coupon Bond

A zero-coupon bond is a type of bond that does not offer regular interest payments. They are instead sold at a discounted price below their face value and redeemed for their full face value upon maturity. Essentially, investors receive their returns as the difference between the buying price and the redemption price.

Zone of Possible Agreement (ZOPA)

Zone of Possible Agreement (ZOPA) describes the range of potential outcomes in a negotiation where both parties can find a solution that works for them. This space is created by knowing the needs and interests of each party so that solutions can be found that meet both of their goals. The ZOPA helps negotiators determine where they can compromise and make concessions while still coming to an agreement that works for everyone involved.

Zombie Company

Zombie companies are companies that are unable to generate enough profit from their operation to pay off their debt, and thus must keep refinancing it in order to stay operational. As the debt grows, these companies become increasingly more unstable and vulnerable.