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Financial Terms and Glossary

Understand the most important financial terms with our detailed A to Z glossary.

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Z

A

A (credit rating)

AA (credit rating)

AAA (credit rating)

Abnormal Return

Absolute Return Funds

Accelerated Monitoring Fees

Accelerated Return Note

Accelerated Share Repurchase

Acceptance Testing

Accounting Currency

Accounting Insolvency

Accounting Liquidity

Accounting Rate of Return

Accounting Ratio

Accretive Acquisition

Accrual Accounting

Acid-Test Ratio

Acquisition Structure

Active Investing

Activist Shareholder

Adjusted Present Value (APV)

Advanced Computerized Execution System

After-Hours Trading (AHT)

Agency Security

Algorithmic Trading

Alpha Generation Platform

Alternative Asset

Alternative Display Facility

Alternative Energy Indexes

Alternative Public Offering

Alternative Trading System

Annual Equivalent Rate (AER)

Annual General Meeting (AGM)

Annual Percentage Rate (APR)

Annual Percentage Yield (APY)

Annual Total Return

Annualized Loss Expectancy (ALE)

Arbitrage Betting

Arbitrage Pricing Theory (APT)

Articles of Incorporation

Asset Allocation

Asset Purchase Agreement (APA)

Asset Stripping

Asset Valuation

Asset-Backed Securities Index

Asset-Backed Security (ABS)

Asset-Based Approach

Asset-Based Lending

Assets Under Management (AUM)

Assurance Contract

Attitude to Risk

Auction Process

Audited Account

Automated Market-Making (AMM)

Automated Trading

Automated Valuation Model (AVM)

Average Accounting Return

Average Accounts Receivable

Average Daily Trading Volume

Average Propensity to Consume

Average Propensity to Save

B

B (Credit Rating)

Banking as a Service (BaaS)

Bankruptcy Court

Bankruptcy Prediction

Barbell Strategy

Barriers to Entry

Basel Committee on Banking Supervision (BCBS)

Basic Earnings Per Share

Basket of Goods

BB+ (Credit Rating)

BBB (Credit Rating)

Beachhead Acquisition

Bear Call Spread

Behavioral Economics

Behavioral Finance

Benchmark Indices

Beneficial Ownership

Bid Instructions

Bid-to-Cover Ratio

Big Data Scoring

Black Swan Funds

Blockchain Oracle

Blockchain Technology

Blue Ocean Strategy

Blue-Chip Index

Blue-Chip Stock

Bolt-On Acquisition

Bond Conversion

Bond Prospectus

Boom and Bust Cycle

Boutique Investment Bank

Break-even Analysis

Bridge Financing

Business Assets

Business Failure

Business Process Redesign (BPR)

Business Valuation Standards

Buy-In Management Buyout (BIMBO)

C

C (Credit Rating)

Cable in Forex Trading

Calculation Products (Indices)

CAMELS Rating System

Capital Adequacy Ratio (CAR)

Capital Asset Pricing Model (CAPM)

Capital Budgeting

Capital Expenditure (CAPEX)

Capital Gains Distribution

Capital Gains Tax

Capital Market Imperfections

Capital Recovery Factor

Capital Requirements Directives (CRD)

Cascades in Financial Networks

Cascading Failure

Cash Conversion Cycle (CCC)

Cash Flow Hedge

Cash Management

Cash-Flow Return on Investment (CFROI)

CC (Credit Rating)

CCC+ (Credit Rating)

Center for Audit Quality (CAQ)

Central Bank Digital Currency (CBDC)

Central Counterparty Clearing (CCP)

Central Limit Order Book (CLOB)

Certified Risk Manager (CRM)

CFA (Chartered Financial Analyst)

CFP (Certified Financial Planner)

Checkable Deposits

Choice Dividend

Choice Dividend Delivery

Choice Dividend Issue

Clearing Balance Requirements

Clientele Effect

Closed-End Fund

Closing Offset (CO) Order

CMO (Collateralized Mortgage Obligation)

Coherent Risk Measure

Collateralized Debt Obligation (CDO)

Collateralized Mortgage Obligation (CMO)

Collective Action Clause (CAC)

Commercial Mortgage-Backed Security (CMBS)

Commercial Paper

Commodity Channel Index (CCI)

Commodity Market

Commodity Supercycle

Commodity-Backed Money

Common Ordinary Equity

Common Stock Dividends and DRIP (Dividend Reinvestment Plan)

Compliance Officer

Composite Index

Compound Interest

Condition-Related Order

Conditional Listing Application (CLA)

Confidential Treatment Order (CTO)

Conglomerate Merger

Consensus Mechanism

Conservative Investing

Consistent Pricing Process

Consolidated Quotation System (CQS)

Consolidated Tape System (CTS)

Constant Proportion Portfolio Insurance (CPPI)

Consumer Credit Risk

Consumer Price Index (CPI)

Contract Consolidation

Contract Soulte (Cash Settlement)

Control Premium

Controlling (Majority) Shareholder

Convenience Yield

Convergence Trade

Convertible Arbitrage

Convertible Bond

Convertible Issue

Cornering the Market

Corporate Actions

Corporate Bonds

Correlation Coefficient

Cost Accrual Ratio

Counterparty Risk

Covenant-Lite Loan

Covered Interest Arbitrage

Credibility Theory

Credit Agricole

Credit Analysis

Credit Default Swap (CDS)

Credit Enhancement

Credit Rating Agency

Credit Reference

Credit Scorecards

Credit Valuation Adjustment (CVA)

Creditworthiness

Creeping Tender Offer

Crime Victims Fund

Cross Border Listings

Crossing Network

Cryptocurrency Fork

Currency Analytics

Currency Crisis

Currency Hedging

Current Account and Savings Account (CASA) Ratio

Current Asset / Current Accounts

Current Liabilities

Custodial Participant

Cyclical Company

Cyclical Stocks

Cyclically Adjusted Price-to-Earnings (CAPE) Ratio

D

D (Credit Rating)

Dark Cloud Cover

Days Payable Outstanding (DPO)

Days Sales Outstanding (DSO)

Death Spiral Financing

Debt Service Coverage Ratio (DSCR)

Debt Service Ratio (DSR)

Debt-to-Capital Ratio

Debt-to-Equity Ratio

Debt-to-GDP Ratio

Debt-to-Income Ratio (DTI)

Debtor Collection Period

Decentralized Application (dApp)

Decentralized Autonomous Organization (DAO)

Decentralized Exchanges (DEX)

Deep Discount Bond

Defensive Stocks

Deferred Revenue

DeFi (Decentralized Finance)

Delist Worthless

Demand Guarantee

Dematerialization

Derivatives Market

Designation Scheme

Digital Banking

Direct Investment

Direct Market Access

Direct Participation Program

Direct Public Offering

Directors Dealings

Discounted Cash Flow (DCF)

Discounted Maximum Loss

Displaced Moving Average (DMA)

Distortion Risk Measure

Diversification

Dividend Distribution Tax

Dividend Future

Dividend Imputation

Dividend Indices

Dividend Payout Ratio

Dividend Policy

Dividend Puzzle

Dividend Recapitalization

Dividend Reinvestment Plan

Dividend Rights Issue

Dividend Stripping

Dividends Received Deduction

Domestic Market

Dragon King Theory

Dynamic Risk Measure

E

Earnings Estimate

Earnings Guidance

Earnings Response Coefficient

Economic Capital

Economic Indicators

Economic Value Added (EVA)

Economies of Scale

Effective Annual Rate (EAR)

Effective Gross Income (EGI)

Efficiency Ratio

Efficient Market Hypothesis (EMH)

Electricity Price Area

Electronic Communication Network (ECN)

Electronic Trading

Endogenous Risk

Enterprise Risk Management (ERM)

Enterprise Value (EV)

Entropic Risk Measure

Entropic Value at Risk (EVaR)

Equalising Dividend

Equation of Exchange

Equity Capital Markets

Equity Carve-Out

Equity Premium Puzzle

Equity Valuation

Equity-Linked Note (ELN)

Ethereum Virtual Machine (EVM)

Euro Money Market

Euro Stoxx 50 Index

European Central Bank (ECB)

European Depositary Receipts (EDRs)

European Market Infrastructure Regulation (EMIR)

European Securities and Markets Authority (ESMA)

European Systemic Risk Board (ESRB)

EV/GCI (Enterprise Value to Gross Cash Income)

EV/Sales (Enterprise Value to Sales)

Event-Driven Investing

Exchange Rate Risk

Exchange-Traded Fund (ETF)

Exchange-Traded Note (ETN)

Exchange-Traded Products (ETP)

Exercised Option

Expansion Option

Expectations Hypothesis

Expected Monetary Value (EMV)

Expected Return

Expected Shortfall

Expiration Date

Expire Dividend Right

Exponential Utility

Exposure Factor

External Financing

Extreme Value Theory

F

Failure to Deliver

Fair Value Accounting

Federal Reserve

Financial Adviser

Financial Betting

Financial Condition Report

Financial Crisis Inquiry Commission

Financial Crisis of 2007–2008

Financial Forecasting

Financial Information eXchange (FIX)

Financial Institution (FI)

Financial Integration

Financial Market

Financial Market Participants

Financial Model

Financial Planner

Financial Product (Instrument)

Financial Quote

Financial Ratio

Financial Regulation

Financial Report

Financial Result

Financial Risk Modelling

Financial Services

Financial Signal Processing

Financial Stability Board (FSB)

Financial Stability Oversight Council (FSOC)

Financial Statement

Financial Times Stock Exchange (FTSE)

Fixed Income Arbitrage

Fixed-Asset Turnover

Fixed-Income Attribution

Flight-to-Liquidity

Flow-through Share

Food Speculation

Foreign Exchange (Forex, FX)

Foreign Exchange Hedge

Foreign Exchange Risk

Forward Contract

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

Founding Partner

Fractional-Reserve Banking

Free Cash Flow (FCF)

Freelance Economy

Frequency Identification

Frictionless Market

Fuel Price Risk Management

Fund Governance

Fundamental Analysis

Funds Management

Futures Contract

G

Gaming Finance (GameFi)

Gemini Exchange

General Partner (GP)

General Standard

Generic Advertising

Geographical Diversification

Global Depositary Receipts (GDRs)

Global Financial Centres Index

Global Financial Centres Index

Global Industry Classification Standard (GICS)

Global Industry Classification Standard (GICS)

Global Labor Arbitrage

Global Registered Share (GRS)

Global Saving Glut

Gold-Silver Ratio

Golden Handcuffs

Golden Handshake

Golden Parachute

Goods-in-Process

Government Bond

Government Investment Pool

Government Risk

Great Depression

Great Recession

Greater Fool Theory

Gross Asset Value

Gross Dealer Concession

Gross Dividends

Gross Domestic Product (GDP)

Gross Profit Margin

H

Hedge Fund Manager

Hedging Strategy

Helicopter Money

High Mark Credit Information Services

High Speed Vendor Feed

High-Margin Securities

High-Yield Stocks

Historic Pricing

Historical Returns

Historical Simulation

Holding Period Risk

Holy Grail Distribution

Horizontal Merger

Hostile Takeover

Hot Debt Periods

Hot Equity Periods

Humped Yield Curve

Hybrid Security

Hyperbolic Absolute Risk Aversion (HARA)

I

Illiquid Assets

Immediate or Cancel (IOC)

Immediate Order

Impact Investing

Implementation Shortfall

Implicit Contract Theory

Implied Repo Rate

Implied Volatility

Imports and Exports

Incremental Capital-Output Ratio (ICOR)

Index Arbitrage

Index Cohesive Force

Index-Linked Bond

Indication of Interest (IOI)

Indirect Bidder

Indirect Finance

Industry Classification Benchmark (ICB)

Infection Ratio

Inflation Accounting

Inflation-Indexed Security

Information Ratio

Information Technology (IT)

Initial Public Offering (IPO)

Insider Trading

Institutional Investor

Intangible Asset

Intellectual Capital

Inter-dealer Broker

Interbank Lending Market

Interest Rate Risk

Interest Rate Swap

Interest-Crediting Methods

Intermarket Analysis

Intermarket Sweep Order (ISO)

Internal Contradictions of Capital Accumulation

Internal Financing

Internal Models Approach for Market Risk

International Exposure Indices

International Monetary Fund (IMF)

International Retail Service

International Securities Exchange (ISE)

International Securities Identification Number (ISIN)

Interpositioning

Intrinsic Value

Inventory Turnover

Investment Bank

Investment Climate

Investment Control

Investment Fund

Investment Management

Investment Outsourcing

Investment Policy Statement (IPS)

Investment Strategy

Investment Thesis

Investor Sentiment

Isoelastic Utility

Issue (Process)

Issue Forward Split

J

Jurisdictional Arbitrage

K

K-factor (Actuarial)

Kamikaze Defence

Key Economic Indicator

Knockdown Price

L

Lead Underwriter

LEAPS (Long-Term Equity Anticipation Securities)

Leveraged Buyout (LBO)

Leveraged Recapitalization

Liability-Driven Investment (LDI)

Limited Partner (LP)

Limits to Arbitrage

Liquid Alternative Investment

Liquidating Distribution

Liquidation Approach

Liquidation Preference

Liquidation Value

Liquidity at Risk (LaR)

Liquidity Crisis

Loan-Backed Securities (LBS)

Loan-to-Value (LTV) Ratio

Long-Term Rating

Long/Short Equity

Low Latency (Capital Markets)

Low-Margin Securities

Low-Risk Investment

Low-Volatility Anomaly

M

Magic Formula Investing

Maintenance Margin

Making-up Price

Managed Futures Account

Management Buy-In (MBI)

Management Buyout (MBO)

Manager of Managers Fund

Margin of Safety

Marginal Revenue

Mark Twain Effect

Mark-to-Market Accounting

Market Clearing

Market Correction

Market Distortion

Market Efficiency

Market Identifier Code (MIC)

Market If Touched (MIT)

Market Impact Cost

Market Microstructure

Market Moving Information

Market Portfolio

Market Saturation

Market Segmentation

Market Value Added (MVA)

Market-Based Valuation

Marketable Securities

Mergers and Acquisitions (M&A)

MetaTrader 4 (MT4)

Minimum Acceptable Rate of Return (MARR)

Minimum Efficient Scale (MES)

Minority Shareholder

Monetary Policy

Money Market Fund

Most Recent Quarter (MRQ)

Multi-Manager Investment

Multiple Factor Models

Municipal Bond Arbitrage

N

Net Asset Value (NAV)

Net Capital Outflow

Net Credit Sales

Net Debt Repayment

Net Income per Employee

Net Interest Income

Net Interest Margin

Net Interest Spread

Net Operating Assets

Net Operating Income (NOI)

Net Value Asset (NAV)

New York Stock Exchange (NYSE)

Nominal vs Real GDP

Non-Competition Agreement

Non-Disclosure Agreement (NDA)

Non-Fungible Token (NFT)

Non-Operating Income

Non-Performing Loan (NPL)

Non-Renounceable Rights

Non-Solicitation Agreement

Non-Voting Stock

Normalized Earnings

O

One-Time Charge

Onerous Contracts

Open Outcry System

Open Technology Fund (OTF)

Operating Cash Flow (OCF)

Operating Cash Flow Ratio

Operating Partner

Operating Profit

Operating Ratio

Operational Risk

Opinion of Title

Optimal Capital Structure

Optimized Indices

Options Arbitrage

Order Matching System

Ordinary Shares

Organisational Economics

Out of the Money (OTM)

Over-The-Counter (OTC)

Over/Under Trading

Overnight Funding Adjustment

Overnight Market

Own Risk and Solvency Assessment (ORSA)

Ownership Dispersion

P

Paper Valuation

Participating Preferred Stock

Passive Investing

Payment for Order Flow (PFOF)

Payment Schedule

Peer-to-Peer (P2P) Lending

PEG Ratio (Price/Earnings to Growth Ratio)

Percentage Depletion

Performance Attribution

Period of Financial Distress

Pip (Percentage in Point)

Political Arbitrage

Portfolio Diversification

Portfolio Entry

Portfolio Investment

Portfolio Management

Portfolio Margin

Portfolios with Purpose

Position Trading

Pre-Tax Profit Figure

Precautionary Demand

Precious Metals

Preference Shares

Preferred Dividends

Prepayment of Loan

Prestige Bulletin

Price Action Trading

Price Discovery

Price-Growth Flow

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

Price/Cash Flow Ratio

Price/Earnings (P/E Ratio)

Price/Sales Ratio (P/S Ratio)

Primary Dealer Credit Facility (PDCF)

Principal Trade

Profit at Risk (PaR)

Profitability Index (PI)

Projected Sales

Proprietary Trading (Prop Trading)

Proxy Statement

Purchasing Power

Q

Qualified Institutional Placement (QIP)

Quality Investing

Quantitative Easing (QE)

Quarterly Revenue Growth

R

Rate of Return on a Portfolio

Rate of Return Pricing

Rational Behaviour

Rational Herding

RD (Credit Rating)

Re-Investment Risk

Real-Time Economy

Redemption Mechanism

Redundant Assets

Refinancing Risk

Registered Share

Regulatory (Regulated, Controlled) Market

Reinvestment Risk

Relative Strength Index (RSI)

Relative Valuation

Replicating Portfolio

Replicating Strategy

Representative Money

Repurchase Agreement (Repo)

Reserve Currency

Reserve Requirement

Residual Income Valuation (RIV)

Retail Foreign Exchange Trading (Retail Forex)

Retail Price Index (RPI)

Return on Assets (ROA)

Return on Capital Employed (ROCE)

Return on Equity (ROE)

Return on Investment (ROI)

Return on Modeling Effort (ROME)

Return on Net Assets (RONA)

Return on Tangible Equity (ROTE)

Reverse Auction

Reverse Due Diligence

Reverse Greenshoe

Reverse Repurchase Agreement (Reverse Repo)

Risk Diversification

Risk Management

Risk Transformation

Risk vs Reward Ratio

Risk-Adjusted Return on Capital (RAROC)

Risk-Free Asset

Risk-Free Interest Rate

Risk-Neutral Measure

Risk-On Risk-Off (RORO)

Risk-Weighted Asset (RWA)

Roll-Up (Merger)

S

Same-Day Affirmation (SDA)

Savings Account

Scheduled Recast

Seasoned Equity Offering (SEO)

Secondary Market

Secondary Market Offering

Secondary Shares

Securities and Exchange Commission (SEC)

Securities Fraud

Securities Market

Securities Market Participants

Securities Offering

Security Agreement

Security Analysis

Security Interest

Sensitivity Analysis

Sentiment Trading

Sentimental Value

Settlement Date

Shadow Banking System

Share Purchase Issue

Shareholder Equity

Shelf Registration

Short-Term Gain

Short-Term Investment Fund

Short-Term Rating

Smart Contracts

Social Dividend

Social Earnings Ratio

Social Impact Statement

Social Return on Investment (SROI)

Socially Responsible Investing (SRI)

Sovereign Credit Rating

Sovereign Default

Sovereign Investment Fund

Sovereign Wealth Fund

Special Dividend

Specialized Investment Fund (SIF)

Spectral Risk Measure (SRM)

Speculative Attack

Speculative Demand

Split Share Corporation

Spread (Difference)

Stable Value Fund

Standard Deviation

Standardised Approach (Credit Risk)

Statistical Arbitrage

Stimulus Package

Stock Certificate

Stock Correlation Network

Stock Market Bubble

Stock Market Data Systems

Stock Market Prediction

Stock Market Simulator

Stock Selection Criterion

Stock Transfer Agent

Stock Valuation

Stop-Limit Order

Strategic Financial Management

Strategic Sustainable Investing

Strategy Indices

Structured Finance

Structured Investment Vehicle (SIV)

Structured Note

Structured Product

Support and Resistance

Sustainable Growth Rate

Swap Execution Facility (SEF)

Swap Transaction

Synthetic Replication

Systematic Risk

Systematic Trading

T

Tail Risk Parity

Tail Value at Risk (TVaR)

Take-Profit Order

Tangible Assets

Tangible Common Equity (TCE)

Target Date Fund

Tax Transparent Fund (TTF)

Technical Analysis

Telegraphic Transfer (TT)

Terror-Free Investing

The Black Swan Theory

The Congressional Effect

The Financial Revolution

The Four Cs of Buying Diamonds

Time at Risk (TaR)

Time Consistency

Time-Weighted Average Price (TWAP)

Times Interest Earned (TIE)

Too Connected to Fail

Total Expense Ratio (TER)

Total Return Swap

Total Revenue Share

Total Shareholder Return (TSR)

Total Value Locked (TVL)

Trading Capital

Trading Strategy

Transaction Costs

Transferable Securities

Treasury Bills (T-Bills)

Treasury Management

Treasury Yields

Trend Trader/Trading

Tri-Party Agreement

Triangular Arbitrage

Turnaround Stock

Two-Moment Decision Model

U

Uncovered Interest Arbitrage

Underlying Asset

Underwriting Contract

Underwriting Profit

Underwriting Rate

Underwriting Spot

Underwriting Spread

Unit Investment Trust (UIT)

Unsystematic Risk

Untradeable Assets

Upside Potential Ratio

V

Value at Risk (VaR)

Value Investing

Velocity of Money

Venture Capital

Venture Capital Trust (VCT)

Vertical Analysis

Vertical Merger

Virtual Bidding

Volatility Arbitrage

Volatility Risk

Volume-Weighted Average Price (VWAP)

Voting Interest

W

Wealth Management

Weighted Average

Working Capital

X

Y

Year to Date (YTD)

Year-over-Year (YOY)

Yield on Cost (YOC)

Yield to Maturity (YTM)

Z

Zero-Day Option

Zero-Intelligence Trader

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