Stephane Couturier for Pictet

Glossary

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

A
Absolute return
An absolute return strategy aims to deliver positive real returns on an investment, irrespective of whether markets are rising, falling or flat.

Alternatives
‘Alternatives’ is a catch-all term for assets that are not shares, bonds, mainstream property or cash. It can include anything from hedge funds, managed futures, commodities and derivatives, to specialised investment areas such as fine wine and stamps. Together they form their own asset class.

Amortisation
Accounting process whereby the cost of creating an intangible asset is spread over this asset’s expected useful life. For example, if a company buys a trademark in 2015 for 10,000 euros and expects to use it for ten years, the systematic amortisation cost will be 1,000 euros a year for 10 years.

Appetite for risk
Each investor will have a unique appetite for risk, or 'risk profile.' Risk appetites should take into account both willingness and financial ability to accept large swings in the value of your investment. To identify a risk appetite, one must consider many factors, such as the time horizons for your investments, your age, your future earning capacity, and the presence of other assets such as a home or a pension.

Asset
A generic term to indicate a tangible or intangible financial resource or item. In very broad terms, it indicates anything with an economic value. When reference is made to 'company assets,' the focus is on the combination of goods, equipment and instruments that are paramount for the operation of the company, and make up its overall value.

Asset allocation
A strategy that aims to balance the risks and rewards required by each investor. By specifying the weightings of asset classes that are assigned to your portfolio, asset allocation can be used to tailor the portfolio's investing approach to each individual's goals. Asset allocation normally uses the three main asset types; equities, fixed income and cash, and weightings of these can be used to create more aggressive or defensive styles of investing.

Asset class
An asset class is a classification for a group of investable securities that possess similar characteristics. The three main asset classes are equities, which are stocks or shares in public companies; fixed income, which are bonds or debt repayments, and cash. In addition, Alternatives constitutes a further asset class of non-mainstream assets, such as hedge funds, commodities, derivatives, wine or art, among many others.

Asset management
This term indicates all the activities and techniques involved in managing individuals’ and companies’ assets. Asset management professionals select financial instruments in order to create a portfolio for their clients that might achieve the best return for a given level of risk. Financial asset management refers to the management of shares, bonds and cash while non-financial asset management refers to real estate or wealth in general.


B
Bailout
This term indicates providing financial support to a State or a company which faces the risk of bankruptcy. In the former case, an independent entity - such as the European Union, the International Monetary Fund or the ECB (which together are commonly referred to as the 'Troika') - steps in to provide credit in exchange for the implementation of plans to restructure the country’s debt. In the latter case, the State or a bank steps in to save a company from bankruptcy. Generally, depending on the seriousness of the situation, this objective is pursued through the injection of liquidity, the provision of ad hoc low-interest loans or tax breaks.

Balanced portfolio
A balanced portfolio is an investment strategy that is the result of Asset Allocation. A balanced portfolio is generally divided equally between equity and fixed income, and aims to provide the investor with both capital growth from equities, and income from fixed income, whilst diversifying risk over two different asset classes.

Bank of Japan
The central bank of Japan is an institution independent of government which sets the country’s monetary policy, issues banknotes and coins, and operates for the stability of Japan’s financial system.

Benchmark
An index used as a yardstick against which the performance of a security, an asset or a market is measured. In asset management, benchmarks are used to measure the average risk and the return of a fund or an investment. 

Bond
A bond is a debt instrument which allows companies, sovereigns or public entities to raise funds by acting as an IOU. The State issues bonds to finance public expenditure and resulting debt. Bonds, which come with a maturity date, entail the repayment of the capital lent plus (fixed or floating) interest to the lender. Every bond has a rating attributed by specialised agencies which investors use to evaluate the borrower’s ability to repay its debt at maturity. A low rating for the bond means that the issuer may not be able to repay its debt, which leads the issuer to pay a higher interest rate to encourage investors to buy it.

Bond fund
A bond fund is an investment vehicle. Asset management companies invest in government and corporate bonds, depending on their yields and maturities. Bond funds can be short dated, and keep their investments for up to two years, or medium/long term and, accordingly, invest for more than two years.

Broker
An intermediary or advisor who buys and sells securities solely for his own clients. 


C
Capital gain
The positive difference between the selling price and the purchase price of a financial instrument.

Cash flow
This indicates the difference between cash inflows and outflows of a company in an accounting period. Alternatively, it is the sum of net profit plus amortisation, depreciation and other provisions.

Closed-end fund
This is a mutual fund with a fixed number of shares/units which can be purchased by both institutional and retail investors. Investors can exit closed-end funds only at a pre-established maturity date, unlike open-end funds, whose shares/units can be sold at any given time. Typically, a closed-end fund’s maturity is 10 to 15 years.  

Commodities
This refers to raw materials of any kind that are traded in any organised exchange. Each commodity retains a singular purpose and their broad use is why they are used often as the assets that underlie derivatives. Agricultural commodities – such as tea, coffee, soy, rise and wheat – are called soft commodities while those that are extracted from the earth – such as gold, silver, platinum, aluminium and oil – are called hard commodities.  

Contrarian
A contrarian investor assumes an investment style that is opposite to prevailing market trends. They believe that market sentiment has a crowd mentality and an overemphatic influence on pricing. Therefore they try to invest in securities that are 'perceived' to be performing poorly, in the belief that their price is cheap compared to their actual value, and that they can sell them for a higher price when sentiment changes. 

Convertible bond
A financial instrument that, at maturity, allows the investor to recoup the principal investment as back either cash or as shares of the issuer company.

Corporate bond
A bond issued by companies. Corporate bonds generally offer higher yields than government bonds because there’s a perceived higher risk of a company defaulting on the interest payments. The lower the company’s credit quality, the higher the interest you're paid. This is because you are potentially taking on more risk.

Correlation
Correlation is something that all investors should bear in mind. When an investment is made in different assets, it is important to take into account the correlation that they have with each other and with the market in which they are traded, so as to create a diversified portfolio, with the right weights. This diversification can help reduce the risk of losses by spreading your investments. If two instruments have a low correlation, it means that their market patterns are not closely related, thus the movements of one of them should not affect the movements of the other. However, this asset correlation can vary over time and it is not at all assured that investments can’t move together, which may happen, especially when volatility is high. 

Coupon
This is the interest paid on a bond to a bondholder until maturity. The coupon can be paid at different intervals, depending on the terms and conditions of the bond agreement: it can be paid yearly, half-yearly or quarterly. Note that not all bonds have coupons, such as zero-coupon bonds which do not pay interest but cost less than their face value, which is what is paid out on maturity. 

Credit risk 
It is the risk that a borrower fails to honour his obligation to repay principal cost and its interest. The higher the credit risk, the higher the yield required to compensate for such greater risk exposure. 

Currency & currency fluctuations
Currency is a form of money used as a medium of exchange. Often currencies are specific to a country, and are issued by that nation's government. Exchange rates, the price for which one nation's currency can be exchanged for another's, are used to match the respective values of these currencies. Since currency exchange rates are always changing, and often funds must buy stocks of foreign companies in their local currency, investors' returns can be affected by fluctuations in currency exchange rates. 


D
Deflation
Deflation occurs when the price level of goods becomes lower. It is not necessarily a negative event, because in a deflation lower prices are in large part due to excess supply. On the other hand though, if deflation depends on a lower demand level, it means that consumption is stagnating and the economy is slowing down.

Depreciation
Depreciation is the decrease in the value of an asset. It is an accounting process whereby the cost of a tangible asset spread is over this asset’s expected useful life. For example, if a company buys a machine in 2015 for 10,000 euros, and expects to use it for ten years, the systematic depreciation expense will be 1,000 euros a year for 10 years. 

Derivatives
In the broadest sense, a derivative is a financial instrument whose price or value is calculated in relation to other market-traded assets or instruments. These other assets or instruments are called “underlyings” and may include indices, interest rates, government bonds, shares or commodities such as gold or oil. Derivatives are regarded as speculative instruments and are highly volatile, that is why potential gains or losses are very high. Due to their nature they can also be used as hedges against the risk of volatility of the underlying assets. Derivatives are widely traded in the over-the-counter market, outside of the scope of standard market regulations enacted by market supervisors, thus both parties negotiate freely and directly the type of contract and the relevant terms and conditions. The most common derivatives include futures, options, warrants, ETFs and swaps. 

Diversification
Diversification is a risk management technique that uses a variety of investments and asset classes within a portfolio. The method contends that by holding investments that all react to certain market scenarios in different ways, the portfolio can minimise the risk of large, unwanted swings in value. Diversification results in a portfolio that possesses less risk than any of its individual constituent investments. 

Dividends
Part of a company’s earnings distributed to the company’s shareholders at the end of the year. Upon proposal of the board of directors, the shareholders may decide whether to pay dividends or to retain earnings to fund future investments or to cover past losses. Dividends can be paid in cash or with other shares. In the latter case the shareholder increases their share capital without receiving any cash payment. 

Drawdown
This is an indicator that provides information on investment performance. The drawdown reflects the reduction of invested capital and can be calculated in absolute or in percentage terms. In essence it is the widest fluctuation between a peak and its subsequent trough reached at a given time of the life of an investment, giving an insight into the manager’s strategy. 

Due diligence
This expression indicates the process of gathering information on a company, including determining financial conditions, operating results and cash flows. In general, all the circumstances of a company are attempted to be determined in view of an acquisition. In fact, before acquiring a company, the potential buyer is well advised to perform such due diligence to determine the company’s real, rather than ‘on-paper,’ conditions.  

Duration
Duration is a measure of the sensitivity of fixed-income instrument to changes in interest rates. Duration reflects the number of years necessary for the investor to recover its investment, on the basis of the interest paid. It is calculated as the weighted average maturity of the bond’s cash flows collected by the investor. A rule of thumb is the bigger the duration number, the greater the interest-rate risk or reward for bond prices.


E
Economic indicators
Economic indicators are items of macroeconomic data that provide guidance on the direction and intensity of the development of a given economic variable.  

Eonia
Eonia is an acronym of Euro OverNight Index Average and is an interbank interest rate for 1-day loans in the Eurozone. It is calculated by the ECB as the weighted average of the overnight rates of the main European banks. It is also the reference rate for different derivative instruments. 

Euribor
Euribor is an acronym of Euro Interbank Offered Rate. This is the average interbank interest rate at which a large panel of banks in the Euro Area (about 60 banks) lend funds to each other. Every business day at 11:00 a.m. the Euribor Panel Steering Committee sets the interest rate calculated on the basis of data received from the panel banks and discloses it to the market. There are 8 different Euribors, reflecting maturities ranging from 1 week to 12 months. 

European Central Bank
Commonly referred to by its acronym, the ECB is tasked with maintaining price stability in the Eurozone and to keep its target inflation just below 2%. To pursue its mandate, it sets monetary policy objectives, issues banknotes and intervenes in foreign exchange markets. It is an independent body managed by the governing council, the executive board and the general council. 

Exchange Traded Funds (ETF)
These are special types of indexed investment funds which are listed on the stock exchange just like a share. Unlike shares, however, they are passively managed and are intended to replicate an index or a combination of indices. In this way investors can take advantage of its two main strengths: risk diversification (typical of a fund) and the transparent flexibility of real-time trading (typical of shares). 


F
Financial circumstances
Financial circumstances refer to an assessment of the state of an investor' finances, including everything from current cash, long term assets or future income projections. A knowledge of your financial circumstances is necessary in order to understand limits of your investment plans.

Financial goals
Financial goals or investment objectives are the targets an investor would like to achieve from their investments, such as buying a house or retirement planning. A knowledge of your financial circumstances and goals is necessary in order to create your investment objectives. 

Fund manager
A fund manager is responsible for implementing a fund's investing strategy and managing its portfolio trading activities. This allows investors to delegate their investment decisions to a professional. Fund managers are paid a fee for their work, decided either as a percentage of the fund's average assets under management (AUM) or as a performance related fee. 

Fund
A fund is a shared investment, run by professionals, that allows you to pool your money with other investors.
Read our article: What is a fund ?

Funds of funds
A "fund of funds" (FOF) is an investment strategy whereby the fund invests in other investment funds, rather than investing directly in stocks, bonds or other securities. By investing in an array of other funds, each with their own portfolio holdings, FOFs can achieve broad diversification benefits. However, due to the increased fund structures involved in the process, fees can often be higher than usual investment funds. 

Futures
In broad terms futures are contracts whereby one party commits with another party to buy or sell an instrument, commodity or asset at specified terms and conditions. This type of contract is often entered into in order to ‘hedge,’ or protect, against risks that might arise from future trading activities involving the underlying instrument, commodity or asset. A special type of futures contract is the financial future, a derivative whose value is closely related to the value of its underlying. 


G
Government bonds
Government bonds are issued by governments. They are widely regarded as the safest type of bond to invest in, since they’re backed by the governments. However, they generally offer lower interest rates than bonds issued by companies. Governments usually issue bonds in their own currency and carry varying levels of risk depending on the economic situation locally. Since foreign government bonds are often issued in their own currency, if your domestic currency differs to theirs, your investment will fluctuate as exchange rates move.

Growth
There are usually two main reasons for investing: to earn regular income, or grow your money over time. Putting your money into savings accounts may help to generate an income through interest, but it can only provide growth if this interest is reinvested in the account. A better way to grow your capital would be to invest in securities, such as equities. Once you’re happy with the growth your investment has achieved, you can sell it at a profit and have your initial investment, plus any proceeds, returned to you.



H
Hedge fund
A speculative investment fund which, to achieve its targets, deals in assets with high risk/return profiles. 

Hedging techniques
A hedge is an investment that is much like an insurance policy, and is used to reduce the potential risk of an adverse price movement in an asset. Using derivatives is the most common form of hedging, where you purchase both an asset now and the option to sell it later, or vice versa, in order to guarantee some return on your investment. Much like an insurance policy, by purchasing options on top of the actual assets, you will incur small costs to hedge your investments. 

High yield bond
High yield bonds are offered by issuers (a sovereign or a company) which carry a high risk of default. Typically, junk bonds are rated BBB- or less by credit ratings agencies. 


I
Income
There are usually two main reasons for investing: to grow your money over time, or to earn regular income from it. Investing for income is a good way to supplement other forms of income such as wages or a pension. However, like any other form of investment, it carries a level of risk. Income can be generated from various asset classes, mainly: cash, bonds, equities, property.

Inflation
There is inflation when the prices of goods and services undergo a long-term increase. Unless this increase is matched by rising salaries, consumers lose purchasing power.  

Information ratio
It is an indicator of the risk/return profile, making it possible to determine a portfolio manager’s ability to achieve returns in proportion to risk that is higher than the benchmark. In addition, the information ratio helps to distinguish between more active managers from the more passive ones. Unlike the Shape ratio, the information ratio takes the benchmark’s return as reference. 

Initial investment
First deposit made into a financial instrument or portfolio which establishes your ownership of the account.

Initial Public Offering (IPO)
It is the process by which a company lists its shares in a stock exchange and becomes a publicly-traded company. 

Interest
Interest is the charge for the privilege of borrowing money, typically expressed as annual percentage rate.

Interest rate risk
This risk arises from the changes in interest rates to which a financial institution or a financial product is exposed. 

Intermediary
A company or an individual that operates in financial markets by matching counterparties to a transaction. A broker operates on behalf of third parties without taking a position. A financial intermediary is an institution that brings together liquidity-rich and liquidity-poor parties, such as investors and companies. 

Investment
An investment is a monetary asset purchased with the hope that the asset will provide income in the future or will be sold at a higher price for a profit. 

Investment needs
Investment needs are the restictions an investor places on the style of their investment strategies, such as socially-responsible investing or an inability to invest in certain countries. An acute understanding of your investment needs is necessary when planning your investments. 

Investment objectives
Investment objectives or financial goals are the targets an investor would like to achieve from their investments, such as buying a house or retirement planning. A knowledge of your financial circumstances and goals is necessary in order to create your investment objectives. 

Investment strategies
An investment strategy is the combination of asset allocation, styles, sectors and geographic locations with which an investment manager can choose to invest your money. Providing a financial adviser with information concerning your investment objectives, financial goals and circumstances, and risk appetite will allow him to devise an appropriate investment strategy to meet your needs. 


J
Joint venture
A contract between two companies, which is limited in time and is designed to achieve a specific objective. The arrangements, rules and roles of the ventures are set out in a specific agreement.


L
Leverage
Leverage is how much debt you can add to your available money in order to finance a project or purchase. For instance, using £100 of money, or capital, and £400 of debt to make a purchase means your degree of leverage is 4. Leverage is used to increase your potential return on investment. 

Libor
Libor is an acronym of London Interbank Offered Rate; the interest rate which banks in London charge for interbank loans. It is calculated by a panel of sixteen banks and currencies such as US dollar, euro, sterling pound, yen, Australian dollar, Canadian dollar, Swiss franc, New Zealand dollar and Swedish krona. 

Long position
The name can be misleading, as it has nothing to do with the holding period of the investment. A long position starts with the purchase of a security and ends with its sale. A long position is usually taken in a share when the price of this share is expected to rise. On the other hand, a short position is opened, in view of expected falling prices, by selling a share and then closed with its purchase.  


M
Management fees
Fees paid by clients to asset management companies or asset managers to compensate them for their investment advisory or management services. They are calculated as a percentage of invested capital and may vary depending on the level of effort required of the manager. Investments made in funds that do not require close supervision involve low fees, as is the case with European bond funds for example. On the other hand, if the fund includes shares from all over the world, then the manager’s supervision effort will be greater and consequently, so will the fees.  

Market risk
Market risk refers to changes in the value of an instrument or a portfolio of financial instruments related to unexpected changes in market conditions. The main market risks include: foreign exchange risk, interest rate risk, equity risk, commodity risk, volatility risk. 

Merger & Acquisition
Often referred to as M&A, this expression includes different types of transactions whose outcome is a merger between different companies. With a merger two or more companies are combined to give rise to a new entity. An acquisition is a merger of a company into another company, with the 'acquirer' preserving its legal identity after the 'acquiree' has been absorbed. 

Mutual funds
Collective investment schemes established to pool the resources of investors who, in turn, own a share of the scheme proportionate to their investment. This means that profits and losses are allocated to investors on the basis of the number of shares/units held. Investors do not manage investments directly but delegate this task to a specialist, an asset management company, which sets the fund’s investment strategies. 


N
NAV
NAV is an acronym of net asset value. It is obtained by dividing the total value of a fund’s assets (cash + price x quantity of the fund’s shares) by the number of shares/units outstanding. It is the price that an investor should pay to purchase other fund shares/units or should collect if he sold such shares/units. In a property fund, it is the difference between assets and liabilities. 


O
Offshore
‘Offshore’ is an expression originating in the 1920s, when US ships travelled to international waters to collect their cargo to elude prohibition laws. By extension, the term defines States and companies that enable other companies and individuals to avoid the (often tax and financial) laws of their countries. 
 
Options
Options are derivative financial instruments which, for a premium, give the holder the right to buy or sell, on a given date, an asset (called underlying) at a pre-established strike price. The option that gives the holder the right to buy the asset is referred to as call option. The call option holder expects prices to rise. On the other hand, if the investor believes that prices are falling, he can buy a put option which, (for a premium) will give him the right to sell the underlying at the strike price at the given date. 

Over-the-counter (OTC)
‘Over-the-counter’ is an unregulated market, in the sense that it is not governed by regulations enforced by financial market supervisors. Negotiations are conducted directly between the interested parties. 


P
Past performance
Past performance is the track record of a fund. Past performance is useful for analysing how the fund reacted to previous market swings, but should not be viewed as an indication of future performance.

Pension funds
These funds are intended to provide a supplementary pension to their participants. They are considered institutional investors, thanks to the large pool of assets under their management. Pension funds can be occupational – i.e. available only to a certain category of workers – or open, with no restrictions for membership. 

Performance
Performance is an indication of a fund's return, and can be assessed on any given time frame since inception. Performance can be measured according to the objectives of the fund, such as growth, income or total return. However, whilst performance indicates returns, it does not indicate the risk taken to achieve these returns.
 
Performance fees
Fees paid by clients to managers when their returns are in excess of the average returns of the market in which the fund invests. The greater the extra returns, the higher the fees. The fees are calculated as a percentage of the difference between the fund’s return and the benchmark’s return. 

Portfolio
A portfolio is a grouping of an investor or finance professional's investment holdings, and can include assets such as stocks or their funds counterparts, such as mutual funds. Portfolios are held directly by investors and/or managed by financial professionals. Prudence suggests that investors should construct an investment portfolio in accordance with their appetite for risk and investment objectives. 

Preferred shares
Preferred shares, or preferred stock, act like common stock in a company with additional benefits. For instance, preferred shares often have a higher claim on the assets and earnings of a company in the event of bankruptcy. Additionally, their dividends are usually paid out before that of common stock. However, these shares are usually more expensive and do not possess voting rights. 

Premium
A premium is a sum added to an ordinary price of an asset in order to gain access to additional benefits, such as an option, hedge or insurance. 

Private equity
Private equity funds are those funds that invest in unlisted, or ‘private,’ companies to enable their growth and development. Private equity funds can invest in the start-up phase of a company (activities typical of venture capitalists or business angels) or at any other stage of a company’s growth cycle. 

Profit
Profit is the amount of capital left over from selling a product when you deduct the original expense of the product, and the costs associated with selling it, such as taxes or wages. 

Property
Property can be held as an investment to either generate an income or to grow your initial investment over time. Property falls under two categories, either domestic property (houses and apartments) or commercial property, such as office buildings and factories. 



Q
Quantitative easing
This is an unconventional monetary policy adopted by central banks to boost the economy. The central bank buys securities in the market, usually government bonds, by creating money. The new money, which is used by the central bank to inject liquidity in the economy, is not necessarily printed but can be created electronically, as book entries in the central bank’s accounts. The Quantitative Easing has the effect of keeping interest rates low. The increase of the economic activity is fostered by the increased liquidity and the lower cost of funds. In theory, the QE should also facilitate access to credit, thus stimulating economic growth.


R
Rating
A measurement used by rating agencies to indicate the creditworthiness of an issuer. It is a scoring system based on a scale of letters. The best-known rating agencies are Standard & Poor’s, Moody’s and Fitch. Supervision over the rating agencies is the responsibility of the competent authority in the state of origin. 

Real estate fund
A real estate fund is a collective investment pool that invests in the securities of public real estate companies. A real-estate investment trust is an investment vehicle that operates like a company, offering shares in the trust on a public exchange, and owns commercial real estate. It then distributes the rents from these properties to its shareholders in the form of dividends. 

Rebalance
During the lifespan of an investment portfolio, some asset classes will grow or shrink in value and in risk at differing rates than others. In order for a fund manager to keep the asset allocation of the fund within the guidelines and objectives required by the investor, they may have to 'rebalance' the asset class weightings, by selling some of one off and buying more of the other. 

Risk
Risk is the likelihood that the actual outcome of your investment will differ to the expected return. Investments with higher degree of risk increase the possibility that your investment will over or underperform your expectations. Risk is often measured through the frequency and extent of deviations from the average historical performance, known as the standard deviation. Investors must have a good grasp of what risk is prior to investing. 

Risk and reward
Risk and reward is the necessary understanding that in order to gain more reward investors have to take on a higher degree of risk, making them more susceptible to the chance of losing some or all of their initial investment. 

Risk profile
Each investor will have their own risk profile that takes into account your willingness and financial ability to accept large swings in the value of your investment. To identify one's risk profile, one must consider many factors, such as the time horizons for your investments, your age, your future earning capacity, and the presence of other assets such as a home or a pension. A risk profile helps a fund manager to create an appropriate investment plan according to your objectives and circumstances. 


S
Sectors
Sectors are a classification system that is used to group the shares of companies or businesses who have related products, services or operating characteristics. Each sector will have a different risk profile, and therefore fund managers often allocate their investment pool in different sector weightings in order to diversify risk.

Securities
Financial assets of any kind traded in financial markets. A distinction is made among debt securities, such as bonds; equity securities, such as ordinary shares; and derivative securities, such as futures. 

Securitisation
Securitisation is a financial practice involving the pooling of assets that will be packaged and used as collateral to issue bonds to be placed in the market. 

Shares
Shares are securities which grant ownership of a portion of a corporation. The larger the number of shares owned, the greater the shareholder’s influence over the company’s life. There are different types of shares, the most important of which are ordinary, preference, savings shares and shares with or without voting rights. 

Sharpe ratio
The Sharpe ratio is a measure of risk-adjusted return. The higher the ratio, the greater the return has been relative to the risk over a period. Accordingly, the best funds are those with the highest Sharpe ratios. 

Short position & short selling
The name can be misleading, as it has nothing to do with the holding period of the investment. A short position is the selling of a borrowed security. The investor does not own any because he expects the share price to fall. The position ends with the purchasing of the instrument to repay the lender, at a hopefully lower rate than it was previously sold. 

Spread
The difference between ask and bid price. Credit spread refers instead to the difference between the yield of a bond and that of another taken as reference. Spreads are determined on the basis of market trading activities. Yields rise and fall depending on the degree of confidence of investors and lenders. 

Stakeholder
Stakeholder is a person or group that has an interest in an organisation. The concept was developed in 1963 by the Stanford Research Institute to indicate those who have an interest in an organisation and who are necessary for the company’s survival. 

Stock picking
The act of picking stocks believed to be good investments to include in a portfolio. 



T
Taxes
Taxes are an involuntary fee on both individuals and corporations that are used by a government entity to pay for public services. Taxes come in many forms, such as income tax, sales tax or property tax. 

Total Expense Ratio (T.E.R.)
Total charges paid by an investor for a fund including management fees, performance fees, and any additional costs such as administrative fees. 

Treasury bonds
Bonds issued by the State from time to time to raise the funds necessary to meet its borrowing requirements. 


U
Underperformance
Many funds have their performances compared to an average performance of their location or sector, known as an index. This index serves as a benchmark to let an investor know whether this fund is over or underperforming the rest of the comparable market. 


V
Value of your investments
The value of your investments changes daily depending on the individual performances of the underlying holdings and currency fluctuations, if applicable. A portfolio will be recalculated to provide an average of the underlying holdings, known as the Net Asset Value, or NAV. This is usually calculated on a daily basis but can be less frequent for more illiquid assets. 

Venture capital
Venture capital is an expression to indicate equity investments to fund the start-up or the growth phase of companies. Typically, a venture capital fund invests in technologically innovative start-ups or growing companies. Usually, venture capital funds invest in companies with a high operational or financial risk. 

Volatility
Market volatility refers to sudden movements in the prices of instruments, commodities or currencies which are hard to predict. Movements take place in a short time frame, are significant and can be both positive and negative. On the other hand, low volatility means that the prices in question are stable in the period considered. 

B- Test name Definitions
B- Test name


B- Test name Definitions
B- Test name



C


Amortisation

Amortisation