Investing.
Stocks, funds, bonds, and the mechanics of putting money to work. Clear definitions for the words behind your brokerage account and the market headlines.
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12b-1 Fee
A 12b-1 fee is a yearly charge some mutual funds take out of your money to cover marketing and distribution costs.
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Accrued interest
Accrued interest is the interest a bond has earned since its last payment; a buyer pays it to the seller when a bond changes hands between payments.
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Agency bond
An agency bond is debt issued by a government-sponsored enterprise or federal agency, offering slightly higher yield than Treasuries with very high safety.
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Bond ETF
A bond ETF is a fund that holds many bonds and trades on an exchange like a stock, giving easy, diversified access to fixed income.
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Brokerage account
A regular taxable investment account where you can buy and sell stocks, bonds, ETFs, and mutual funds.
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Business development company (BDC)
A BDC is a company that lends to and invests in small and mid-size private businesses, and it trades like a stock, often paying a high dividend.
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Closed-end fund (CEF)
A closed-end fund issues a fixed number of shares that trade on an exchange, often at a price above or below the value of its holdings.
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Commodity ETF
A commodity ETF gives exposure to raw materials like oil, gold, or grain, often by holding futures contracts rather than the physical goods.
Most read in Investing
Stock
A small slice of ownership in a company that trades on a public market.
Index fund
A fund that doesn't try to beat the market.
ETF (Exchange-Traded Fund)
A basket of investments (usually hundreds or thousands) that you can buy as a single…
Futures
A futures contract is an agreement to buy or sell something at a set price on a future…
Diversification
Spreading your money across many investments so no single one can wreck the whole thing.
All investing terms, A to Z
# 5 terms
10-K / 8-K filing
The 10-K is a company's audited annual report to the SEC; the 8-K is the filing for material events between scheduled reports.
12b-1 Fee★
A 12b-1 fee is a yearly charge some mutual funds take out of your money to cover marketing and distribution costs.
13D vs 13G filing
Both report a stake above the SEC beneficial ownership threshold: 13D is the activist version, 13G the short form for passive holders.
13F filing
A quarterly SEC report where large institutional managers disclose the U.S. stocks they held at the end of the quarter.
52-week high / low
The 52-week high and low are the highest and lowest prices a stock has traded at over the past year, a common quick gauge of its range.
A 20 terms
Accredited investor
An SEC designation for investors who meet income, net worth, or credential thresholds. Required for many private investments.
Accretion / dilution
Whether an acquisition raises or lowers the buyer's earnings per share, the first test most deal announcements are judged on.
Accrued interest★
Accrued interest is the interest a bond has earned since its last payment; a buyer pays it to the seller when a bond changes hands between payments.
Adjusted earnings
Adjusted earnings are profit after a company removes items it calls one-time or unusual, so the number is chosen by the company, not by accounting rules.
After-hours / pre-market trading
After-hours and pre-market trading happen outside normal exchange hours, with thinner volume, wider spreads, and bigger price swings.
Agency bond★
An agency bond is debt issued by a government-sponsored enterprise or federal agency, offering slightly higher yield than Treasuries with very high safety.
Airdrop (crypto)
Free tokens sent to wallets to promote a project or reward early users, sometimes genuine and sometimes the opening move of a scam.
Algorithmic trading
Trading run by computer programs that decide timing, size, and price from preset rules instead of a person clicking buy and sell.
Alpha
Alpha is the extra return an investment earns above (or below) what its benchmark index returned, after accounting for risk.
Altcoin
Any cryptocurrency other than bitcoin, ranging from large established networks to tokens someone created in an afternoon.
Alternative asset
An alternative asset is an investment outside the usual mix of stocks, bonds, and cash, such as real estate, commodities, art, or private equity.
American depositary receipt (ADR)
An ADR is a certificate traded on a U.S. exchange that represents shares of a foreign company, letting Americans buy foreign stocks in dollars.
Analyst price target
An analyst's published guess at what a stock will be worth within a set period, usually twelve months, based on their own model.
Angel investing
Individuals putting their own money into very early startups in exchange for equity, usually before any venture fund gets involved.
Annual return
Annual return is how much an investment gained or lost over one year, written as a percentage of what you started with.
Ask
The ask is the lowest price a seller is currently willing to accept for a security, the other side of every quoted price.
Asset
An asset is anything you own that has value and could be turned into cash, like savings, stocks, a car, or a house.
Asset allocation
The mix of stocks, bonds, and cash you hold, often one of the biggest long-term decisions in investing.
AUM
Assets Under Management. The total dollars a fund, advisor, or firm invests on behalf of clients.
Average daily volume
Average daily volume, or ADV, is the number of contracts or shares traded in a period divided by the number of trading days in it.
B 20 terms
Backwardation
A futures market where prices for later delivery dates sit below the price for immediate delivery.
Bear market
When a stock market index falls 20% or more from its recent peak.
Bear put spread
A capped-risk options position used when someone expects a moderate fall in a stock's price before a set date.
Beneficial ownership
Who actually controls or profits from a security, as opposed to whose name appears on the account or registration.
Beta
How much a stock moves relative to the broad market. Beta of 1 moves with the market; 1.5 swings 1.5 times as much.
Bid
The bid is the highest price a buyer is currently willing to pay for a security, one side of every quoted price.
Bid-ask spread
The bid is the highest price a buyer will pay. The ask is the lowest a seller will accept. Their gap is the spread.
Bitcoin
Bitcoin is the first and largest cryptocurrency, a digital money that runs on a public network with no bank or government in the middle.
Bitcoin halving
A scheduled event that cuts the new bitcoin paid to miners in half, slowing how fast fresh supply enters circulation.
Black swan event
A rare, high-impact event that prevailing risk models did not see coming and that everyone explains as obvious afterward.
Black-Scholes model
A math model that prices an option from the stock price, strike, time left, interest rates, and expected volatility.
Blockchain
A shared digital ledger that records transactions across many computers at once, so no single party controls it and past entries are hard to change.
Bond
A loan you make to a government or company in exchange for interest and your money back at the end.
Bond Duration
Bond duration measures how much a bond's price moves when interest rates change, expressed as a number of years.
Bond ETF★
A bond ETF is a fund that holds many bonds and trades on an exchange like a stock, giving easy, diversified access to fixed income.
Bond Ladder
A bond ladder is a set of bonds that mature in different years, so some of your money frees up at regular intervals.
Brokerage account★
A regular taxable investment account where you can buy and sell stocks, bonds, ETFs, and mutual funds.
Bull call spread
A capped-risk options position used when someone expects a moderate rise in a stock's price before a set date.
Bull market
A long stretch of rising stock prices, the opposite of a bear market.
Business development company (BDC)★
A BDC is a company that lends to and invests in small and mid-size private businesses, and it trades like a stock, often paying a high dividend.
C 45 terms
CAGR (compound annual growth rate)
The steady annual rate that would take a starting value to an ending value over a period, smoothing out the bumps in between.
Call option
A contract giving the buyer the right to buy 100 shares of a stock at a set strike price by a set expiration date.
Callable Bond
A callable bond lets the issuer pay you back early, usually when interest rates drop and they can borrow more cheaply.
Cap table
The record of who owns what slice of a company, listing every share, option, and convertible note plus the percentage each holder has.
Capital
Capital is the money or wealth you have available to put to work, whether to invest, start a business, or buy something that earns more later.
Cash account vs margin account
A cash account lets you trade only with your own money; a margin account lets you borrow from the broker to buy more, adding risk.
Cash conversion cycle
The number of days between paying suppliers and collecting from customers, measuring how long cash is tied up in the business.
Cash-secured put
Selling a put option while holding enough cash to buy the shares if they are assigned to you at the strike price.
CBDC (central bank digital currency)
A digital form of a country's official money issued by its central bank, held as a direct claim on the state rather than on a private bank.
Circuit breaker (markets)
A market-wide rule that halts all trading for a set time when a broad index falls by preset percentages during a session.
Clawback provision
A contract term that forces money already paid out, usually a manager's profit share or a bonus, to be returned when later results fall short.
Closed-end fund (CEF)★
A closed-end fund issues a fixed number of shares that trade on an exchange, often at a price above or below the value of its holdings.
Collateralized debt obligation (CDO)
A security backed by a pool of loans or bonds, sliced into tranches that take losses in a set order, riskiest layer first.
Collectible
A collectible is a physical item like art, wine, or trading cards bought as an investment, hoping it rises in value over time.
Commercial paper
Short-term unsecured IOUs that large companies sell to investors to cover near-term cash needs, usually maturing in under nine months.
Commodity
A raw material or basic good (gold, oil, wheat, copper) often traded via ETFs or futures contracts.
Commodity ETF★
A commodity ETF gives exposure to raw materials like oil, gold, or grain, often by holding futures contracts rather than the physical goods.
Comparable company analysis
Valuing a business by looking at what the market currently pays for similar companies, then applying those multiples to its own numbers.
Concentration risk
The danger that comes from having too much of a portfolio's value in one holding, sector, or source.
Consensus estimate
The average of the forecasts analysts publish for a company's revenue or earnings, used as the bar a quarterly report gets measured against.
Contango
A futures market where prices for later delivery dates sit above the price for immediate delivery.
Convertible arbitrage
A fund strategy that buys a convertible bond and shorts the same company's stock, aiming to profit from mispricing rather than direction.
Convertible bond★
A convertible bond is a corporate bond that can be exchanged for a set number of the company's shares, blending bond income with stock upside.
Convertible preferred stock★
Convertible preferred stock is a preferred share that pays a fixed dividend and can be converted into a set number of common shares.
Convexity
A measure of how a bond's price sensitivity to interest rates itself changes as those rates move.
Corporate spin-off
A spin-off is when a company splits off part of itself into a new, independent company and gives shareholders stock in it.
Correction
A drop of 10% or more from a recent market high. Less severe than a bear market's 20% decline.
Correlation
Correlation measures how closely two investments move together, on a scale from +1 (in lockstep) to -1 (opposite directions).
Cost of debt
The effective interest rate a company pays on its borrowings, usually measured after the tax deduction for interest.
Cost of equity
The return shareholders expect for putting money into a company, and the rate a business has to beat to be worth their capital.
Coupon
A coupon is the fixed interest payment a bond makes to its holder, usually stated as an annual percentage of the bond's face value.
Coupon Rate
The coupon rate is the fixed annual interest a bond pays, stated as a percentage of its original face value.
Covered call
Selling a call option against shares you already own, collecting a premium in exchange for capping the upside.
Credit default swap (CDS)
A contract that pays out if a specific borrower defaults, in exchange for regular premium payments.
Credit Ratings
Credit ratings are grades from rating agencies that estimate how likely a borrower is to pay back a bond on time.
Credit spread
The extra yield a borrower must pay above a government bond of similar maturity to compensate for default risk.
Crypto custody
Who holds the private keys to your crypto. A custodian can hold them for you, or you hold them yourself and carry the whole risk.
Crypto exchange★
A crypto exchange is a platform where people buy, sell, and trade cryptocurrencies, usually charging a fee on each transaction.
Crypto mining
Crypto mining is the process where computers compete to add new transactions to a blockchain and are rewarded with newly created coins.
Crypto on-ramp / off-ramp
The services that turn regular money into crypto (on-ramp) and crypto back into regular money (off-ramp), with fees and ID checks.
Cryptocurrency
A digital asset whose ownership is tracked on a blockchain, a public distributed database secured by cryptography.
Cryptocurrency wallet
A cryptocurrency wallet is a tool that stores the keys needed to access and move your crypto; it holds the keys, not the coins themselves.
Currency ETF
A currency ETF tracks the value of a foreign currency or a basket of them against the dollar, letting you invest in exchange-rate moves.
Current ratio
Current assets divided by current liabilities. A quick check on whether a company can cover the bills due within a year.
Custodial vs non-custodial wallet
A custodial wallet holds your keys for you, like an exchange account; a non-custodial wallet puts the keys, and the responsibility, in your hands.
D 24 terms
Dark pool
A private trading venue where large orders are matched without displaying bids and offers to the public before the trade happens.
Days to cover
An estimate of how many trading days short sellers would need to buy back their shares at recent average volume.
Debt service coverage ratio
Cash available for debt payments divided by the interest and principal due, showing whether income covers the full loan bill.
Debt-to-equity ratio
A company's borrowings divided by shareholders' equity, showing how much of the business is funded by lenders versus owners.
Decentralized exchange (DEX)
A crypto trading venue that runs on smart contracts, so trades settle wallet to wallet without a company holding your coins.
Declaration date
The day a company's board formally announces a dividend, setting the amount and the dates that decide who gets paid.
DeFi
DeFi, or decentralized finance, is financial services like lending and trading run by code on a blockchain instead of by banks or brokers.
Delta (option)
The estimated change in an option's price for a one dollar move in the underlying stock.
Derivative
A financial contract whose value comes from the price of something else, such as a stock, rate, or commodity.
Direct lending
A private credit approach where a fund lends straight to a mid-sized company and keeps the whole loan instead of selling pieces to a market.
Direct Listing
A direct listing is when a company starts trading its existing shares on an exchange without raising new money or hiring banks to sell new stock.
Discounted cash flow (DCF)
A valuation method that estimates future cash a business will produce and converts it into what that cash is worth today.
Distressed debt investing
Buying the bonds or loans of a company near bankruptcy at a deep discount, betting on recovery or on control of the reorganized firm.
Distributions to paid-in (DPI)
A private fund measure of cash actually returned to investors divided by the cash they put in, counting money in hand rather than paper value.
Diversification
Spreading your money across many investments so no single one can wreck the whole thing.
Dividend★
A cash payment a company sends to shareholders, usually quarterly.
Dividend Payout Ratio
The dividend payout ratio is the share of a company's profit it pays out as dividends instead of keeping to reinvest.
Dow Jones (DJIA)
An index of 30 large, established U.S. companies. Older and narrower than the S&P 500 but widely quoted.
Downside risk
A measure of loss potential that counts only movements below a target, ignoring upside swings.
Drawdown
The peak-to-trough decline of an investment, expressed as a percentage from its all-time high.
DRIP★
A DRIP (dividend reinvestment plan) automatically uses your dividends to buy more shares instead of paying you cash.
Dry powder
Money a fund has been promised by its investors but has not spent yet, held in reserve for future deals.
Due diligence
The investigation a buyer or investor runs before committing money, checking that a business is what it claims to be.
DuPont analysis
A method that splits return on equity into three drivers: profit margin, asset turnover, and financial leverage.
E 23 terms
Earnings growth rate
How fast a company's profit is rising or falling, stated as a percentage change from one period to the matching period before it.
Earnings guidance
A company's own forecast of future results, such as revenue or earnings per share, given voluntarily alongside reported numbers.
Earnings Per Share
Earnings per share, or EPS, is a company's profit divided by its number of shares, a common measure of how much it earns for each share you own.
Earnings surprise
The gap between a company's reported earnings and what Wall Street analysts expected, which often moves the stock price more than the earnings do.
Earnout
Part of an acquisition price paid later, only if the acquired business hits agreed targets after the deal closes.
EBIT (operating income)
Profit from running the business, counted before interest and taxes are subtracted but after all operating costs.
EBITDA
Earnings before interest, taxes, depreciation, and amortization, a measure of operating profit before financing and accounting charges.
Efficient frontier
The curve of portfolios offering the highest expected return for each level of risk taken.
Efficient market hypothesis (EMH)
The idea that asset prices already reflect the information available, making it hard to beat the market consistently.
Enterprise value
The value of a whole company including its debt, roughly what a buyer would pay for the business and its obligations together.
EPS
Earnings per share. A company's net profit divided by shares outstanding. The denominator of the P/E ratio.
Equity
Equity is the value of what you own outright: your ownership stake in a company through stock, or the share of an asset that is truly yours after debts.
Equity crowdfunding (Reg CF)
A federal rule that lets small companies sell shares to ordinary investors online, with capped amounts and required disclosures.
ESPP (Employee Stock Purchase Plan)
A workplace plan that lets you buy your company's stock at a discount, usually through payroll deductions.
ETF (Exchange-Traded Fund)
A basket of investments (usually hundreds or thousands) that you can buy as a single share on the stock market.
Ethereum
Ethereum is a blockchain network that runs programs called smart contracts, with its own cryptocurrency, Ether, used to pay for activity on it.
EV/EBITDA
Enterprise value divided by EBITDA, a multiple that prices the whole business, debt included, against its operating cash earnings.
Event-driven strategy
A strategy that trades around corporate events such as mergers, bankruptcies, and spin-offs rather than long-term business value.
Ex-Dividend Date
The ex-dividend date is the cutoff: buy a stock on or after it and you do not get the upcoming dividend, the seller does.
Exchange-traded note (ETN)
An ETN is a debt note from a bank that tracks an index and trades like an ETF, but it carries the risk that the issuing bank fails.
Exercise and assignment
Exercise is the option holder acting on the contract; assignment is the seller being required to deliver.
Expense ratio★
The annual percentage a fund keeps to run itself, paid silently out of your returns.
Expiration date (options)
The scheduled date on which an option contract ends. After it, the contract is settled under exchange and clearing rules and stops existing.
F 15 terms
Factor investing
Building portfolios around measurable traits, like value or size, that have historically explained returns.
Fee drag★
Fee drag is the cumulative bite that investment fees take out of your returns as they compound against you over years.
Fiat currency★
Money that has value because a government issues it and people accept it, not because it can be swapped for gold or silver.
Fiduciary★
A legal standard requiring an advisor to act in the client's best interest. Not all advisors are fiduciaries.
FINRA
The Financial Industry Regulatory Authority. A self-regulator overseeing U.S. brokerage firms and their reps.
Floating-rate note★
A floating-rate note is a bond whose interest resets periodically with a benchmark rate, so its payments rise and fall as rates change.
Follow-on offering
A sale of additional shares by a company that is already public, usually to raise cash after its initial offering.
Forward contract
A private agreement to buy or sell an asset at a set price on a set future date, with custom terms.
Forward P/E
A stock's price divided by analysts' estimated earnings per share for the year ahead, so the bottom half is a forecast.
Fractional Shares
Fractional shares let you buy a portion of one share, so you can invest a fixed dollar amount even in a high-priced stock.
Free cash flow
The cash a company has left after paying for operations and the buildings and equipment it buys. The money actually available to its owners.
Front running
Trading ahead of a known customer order to profit from the price move it will cause, which is prohibited conduct for brokers.
Fund of funds★
A fund of funds invests in other funds rather than directly in stocks or bonds, adding a second layer of fees on top of the underlying ones.
Fund Turnover Ratio
A fund's turnover ratio shows how much of its holdings it bought and sold in a year, hinting at trading costs and possible tax bills.
Futures
A futures contract is an agreement to buy or sell something at a set price on a future date, used to hedge or to speculate.
G 14 terms
Gamma (option)
How fast an option's delta changes when the underlying stock moves one dollar.
Gas fees★
Gas fees are the payments you make to a blockchain network to process your transaction, rising and falling with how busy the network is.
Gate provision
A fund rule that caps how much investors can withdraw in one period, slowing redemptions so the manager does not have to dump assets.
General partner (GP)
The partner that runs a fund, picks the investments, and carries unlimited liability, in exchange for management fees and a share of profits.
Glide path
The schedule by which a portfolio shifts from higher-risk to lower-risk holdings as a target date approaches.
Global macro strategy
A strategy that trades currencies, rates, commodities, and index positions on views about economies and policy, long or short.
Gold
Gold is a precious metal held as an investment, valued as a store of wealth and a hedge, that pays no interest or dividends.
Good-faith violation / free-riding
A good-faith violation happens in a cash account when you sell a security you bought with funds that had not yet settled, breaking settlement rules.
Good-Til-Canceled Order
A good-til-canceled order stays active until it fills or you cancel it, instead of expiring at the end of the trading day.
Growth equity
Minority stakes bought in companies that already have real revenue and want money to expand, sitting between venture capital and buyouts.
Growth stock
A stock priced for high expected future earnings growth. Usually pays no dividend; profits are reinvested.
Growth vs Value Investing
Growth investing buys companies expected to expand fast, while value investing buys companies that look cheap relative to what they earn.
Guidance
Guidance is a company's own forecast of what it expects to earn or sell in future periods, given to investors alongside its results.
Gwei / satoshi
Small units of crypto: a satoshi is one hundred-millionth of a bitcoin, and a gwei is one billionth of an ether.
H 7 terms
Hedge fund
A pooled investment fund using complex strategies (shorting, borrowed money, derivatives), open mostly to accredited and institutional investors.
High-frequency trading (HFT)
Automated trading that uses speed, co-located servers, and tiny holding periods to capture very small price differences at huge volume.
High-water mark
A rule that blocks a fund manager from charging performance fees again until the fund climbs back above its previous peak value.
High-Yield Bonds
High-yield bonds, also called junk bonds, pay higher interest because the issuer has a higher risk of not paying you back.
Hostile takeover
An attempt to buy control of a company that its board opposes, taken directly to shareholders instead.
Hot wallet vs cold wallet
A hot wallet is connected to the internet for easy access; a cold wallet stays offline for stronger protection against theft.
Hurdle rate
The minimum return an investment must clear before it gets approved, the bar a project has to jump.
I 14 terms
Idiosyncratic risk
The risk unique to one company or asset, separate from whatever is moving the broader market.
In the money / out of the money
Shorthand for whether an option would be worth exercising right now, based on where the stock sits against the strike.
Index fund
A fund that doesn't try to beat the market. It just owns the whole market and matches it.
Infrastructure investing
Putting money into long-lived physical assets like toll roads, pipelines, and power grids that earn steady, often regulated, cash flows.
Insider transaction (Form 4)
The SEC filing that corporate officers, directors, and large owners must submit to report their trades in the company's own stock.
Interest coverage ratio
Operating income divided by interest expense, showing how many times over a company's profit covers the interest it owes.
Internal rate of return (IRR)
The discount rate at which an investment's future cash flows exactly equal its cost, expressed as an annual percentage return.
International Fund
An international fund is a mutual fund or ETF that invests in companies outside your home country, adding global diversification to a portfolio.
Interval fund
A fund that does not trade on an exchange and buys back only a limited slice of shares at set intervals, usually each quarter.
Intrinsic vs extrinsic value
The two parts of an option's price: the value it would have if exercised now, and everything paid for time and uncertainty.
Inverse ETF★
An inverse ETF aims to move opposite to an index each day, rising when the index falls, using derivatives, and it also resets daily.
Investment-grade rating
A credit rating in the top tiers of the scale, meaning the rating agency sees a relatively low chance the borrower misses payments.
IPO
The first time a private company sells its shares on a public stock exchange, so anyone can buy them.
Iron condor
A four-leg options position that pays off when a stock stays inside a set price range through expiration day.
L 16 terms
LEAPS
Exchange-listed stock options with expiration dates far in the future, generally more than a year away.
Level 2 quotes
Level 2 quotes show the full order book, the competing buy and sell orders at different prices, beyond the single best bid and ask.
Leverage
Using borrowed money to fund something. It raises how much you can control and raises what you can lose, in the same proportion.
Leveraged buyout (LBO)
Buying a company mostly with borrowed money, where the debt is repaid out of the acquired company's own cash flow.
Leveraged ETF★
A leveraged ETF uses borrowing and derivatives to aim for a multiple, like 2x or 3x, of an index's daily return, and it resets every day.
Leveraged loan
A floating-rate loan to a company that already carries heavy debt, usually secured by assets and sold to a group of institutional lenders.
Liability
A liability is money you owe to someone else, like a loan, a credit card balance, or an unpaid bill.
Limit Order
A limit order buys or sells a stock only at your set price or better, giving you price control but no guarantee it fills.
Limit up / limit down
A rule that blocks trades outside a moving price band around a stock's recent average, pausing it if the price stays at the edge.
Limited partner (LP)
An investor who supplies money to a fund but does not run it, with losses capped at the amount committed.
Liquidity
How quickly an asset can be turned into cash without losing value.
Load vs No-Load Funds★
A load fund charges a sales commission when you buy or sell, while a no-load fund charges no such commission, so more of your money stays invested.
Lock-Up Period
A lock-up period is a set window after a company goes public when insiders are barred from selling their shares.
Long-short equity
A strategy that buys stocks expected to rise while short selling stocks expected to fall, aiming to profit from the gap between them.
Lump sum
A lump sum is a single large amount of money paid or invested all at once, rather than spread out over time.
Lump-sum vs dollar-cost-averaging★
Two ways to invest a pile of cash: all at once as a lump sum, or spread out over time through dollar-cost averaging.
M 23 terms
Managed futures (CTA)
A strategy that trades futures contracts across many markets, usually following price trends, and can bet on prices falling as easily as rising.
Margin
Borrowing from your broker to buy more securities than your cash supports. Amplifies gains and losses.
Margin Call
A margin call is a demand from your broker to add money or sell holdings when the value in your margin account drops below the required minimum.
Market cap
Market capitalization. A company's stock price times its total shares outstanding. The market's estimate of total equity value.
Market data fees
Market data fees are what an exchange charges for its record of prices and trades, usually a monthly fee for each screen or device that shows the data.
Market depth (level 2)
A view of the resting buy and sell orders beyond the best quote, showing how much size sits at each price level.
Market Index
A market index is a single number that tracks the combined value of a chosen group of stocks or bonds, used as a scorecard for a part of the market.
Market maker
A firm that continuously quotes both a buy price and a sell price for a security, earning the spread for standing ready to trade.
Market Order
A market order buys or sells a stock right away at the best available price, prioritizing speed over an exact price.
Market-cap sizes (large, mid, small)
Stocks grouped by total company value: large-cap above $10 billion, mid-cap $2 to $10 billion, small-cap below $2 billion.
Market-neutral strategy
A strategy that balances long and short positions so returns depend on stock selection rather than on market direction.
Maturity
The date a bond, CD, or other fixed-term investment ends and you get your original money back.
Maximum Drawdown
Maximum drawdown is the biggest drop from a peak to a low point an investment took before climbing back, measured as a percentage.
Merger arbitrage
Buying a target company's shares after a deal is announced to capture the gap between the market price and the agreed takeover price.
Mezzanine financing
Debt that ranks below senior loans and often converts to equity, paying a higher rate because it is repaid last if the borrower fails.
Micro-cap
A publicly traded company with a very small total market value, below the small-cap tier.
Modern portfolio theory (MPT)
The framework that says risk and return should be judged for a whole portfolio, not one holding at a time.
Modified duration
An estimate of how much a bond's price changes for a one percentage point change in yield.
Monte Carlo simulation
A method that runs thousands of randomized scenarios to show a range of possible financial outcomes.
Mortgage-backed security (MBS)
An investment built from a bundle of home loans. Investors buy it and collect the homeowners' mortgage payments as their return.
Moving average
A moving average smooths a price into an average over a recent window of days, a common tool for spotting a stock's trend.
Municipal Bonds
Municipal bonds are loans you make to a state or local government, and the interest is often free from federal income tax.
Mutual fund
A pool of money from many investors used to buy a basket of stocks or bonds, managed as one fund.
N 7 terms
Nasdaq Composite
An index of every company listed on the Nasdaq exchange. Heavily weighted toward technology.
NAV (Net Asset Value)
NAV, or net asset value, is the per-share value of a fund: its total holdings minus what it owes, divided by the number of shares.
Net Asset Value
Net asset value (NAV) is the per-share price of a fund, found by taking everything it owns minus what it owes, divided by the shares outstanding.
Net debt
Total borrowings minus cash and short-term investments, showing what a company would still owe after emptying its bank accounts.
Net present value (NPV)
The value today of an investment's future cash, minus what it costs up front, stated as a single dollar figure.
NFT
An NFT, or non-fungible token, is a blockchain record that marks one specific digital item as unique and shows who owns it.
NYSE
The NYSE, or New York Stock Exchange, is the largest US stock exchange, a marketplace where shares of thousands of public companies are bought and sold.
O 6 terms
Odd lot vs round lot
A round lot is a standard trading block of 100 shares; an odd lot is any amount that is not a multiple of 100, like 7 or 143 shares.
Open interest
The number of option or futures contracts currently open and not yet closed, exercised, or expired.
Open-end fund
An open-end fund creates and redeems shares on demand at its net asset value, the structure behind most mutual funds and ETFs.
Operating margin
Operating margin is the share of each revenue dollar a company keeps as profit from its core business, before interest and taxes.
Options
Contracts giving the right (not the obligation) to buy or sell something at a set price by a set date.
Order types (market / limit)
A market order trades at whatever price is available now. A limit order trades only at a specified price or better.
P 30 terms
P/E ratio
Price-to-earnings ratio. A stock's price divided by its annual earnings per share. A rough gauge of how expensive the stock is.
Par value / face value★
Par value, or face value, is the amount a bond promises to repay at maturity and the base its interest is calculated on, usually 1,000 dollars.
Participating preferred
A preferred share that collects its promised payout first and then shares what is left with common shareholders, so it gets paid twice.
Passive investing
Passive investing means buying broad, low-cost funds that track a market index and holding them, instead of trying to pick winners or time the market.
Pattern day trader rule
A FINRA rule that flags margin accounts making four or more day trades in five business days and requires a higher equity balance.
Payback period
How long an investment takes to return the cash it cost, measured in years or months until the money is back.
Payment Date
The payment date is the day a declared dividend actually lands in your account as cash or reinvested shares.
Payment for order flow
A wholesale trading firm pays your broker to send it your orders, which is how many brokers fund commission-free trading.
PEG ratio
A price-to-earnings multiple divided by the expected earnings growth rate, an attempt to price a stock against how fast profit is rising.
Plowback (retention) ratio
The share of earnings a company keeps rather than paying out as dividends, the money put back into the business.
Ponzi scheme
A Ponzi scheme is a fraud that pays old investors with money from new investors instead of real profits, until it runs out of new money and collapses.
Portfolio company
A business that a private equity or venture fund owns a stake in, held inside the fund rather than traded on a public exchange.
Portfolio margin★
Portfolio margin is an advanced method that sets borrowing limits based on the overall risk of a portfolio, allowing more leverage than standard rules.
Portfolio turnover★
The share of a fund's holdings that were bought and sold over a year, shown as a percentage.
Pre-market trading
Trading in the hours before the regular session opens, where volume is light, spreads are wide, and prices often reverse at the open.
Precious metals investing★
Precious metals investing means putting money into gold, silver, or platinum, through physical metal, funds, or mining stocks, mainly as a diversifier.
Price Return vs Total Return★
Price return counts only the change in an investment's price, while total return also adds the dividends or interest it paid you.
Price-to-book (P/B)
Share price divided by book value per share, comparing what the market pays against what the accounting books say the company is worth.
Price-to-earnings ratio (P/E)
A stock's price divided by its earnings per share. It shows how much investors are paying for each dollar of a company's profit.
Price-to-sales (P/S)
Market value divided by annual revenue, a multiple that still works when a company has no profit to divide by.
Primary vs Secondary Market
The primary market is where new securities are first sold by the issuer; the secondary market is where investors trade them afterward.
Private credit
Loans made by investment funds instead of banks, negotiated directly with the borrower and usually held to maturity rather than traded.
Private equity
Funds that buy whole companies (often with debt financing), try to improve them, then sell years later.
Private key
A private key is the secret code that proves you own crypto and lets you spend it; anyone who has it controls the funds.
Proof of work vs proof of stake
Two ways a blockchain agrees on its records: proof of work uses computing power and energy; proof of stake uses coins put up as collateral.
Prospectus
A prospectus is the legal document a fund or company must give you that spells out its goals, costs, risks, and how it invests your money.
Protective put
Buying a put option on shares you already own, setting a floor price in exchange for the cost of the premium.
Proxy statement (DEF 14A)
The SEC filing sent before a shareholder meeting that lays out what will be voted on, plus director and executive pay details.
Put option
A contract giving the buyer the right to sell 100 shares of a stock at a set strike price by a set expiration date.
Pyramid scheme
A pyramid scheme is a fraud where you earn mainly by recruiting others to pay in, not by selling a real product, so it collapses when recruiting stops.
Q 2 terms
Qualified purchaser
A legal category for investors holding a large amount of investments, which lets certain private funds accept them without registering.
Quick ratio (acid-test)
A stricter liquidity test than the current ratio, counting only cash, marketable securities, and receivables against current liabilities.
R 17 terms
R-squared
A statistic from 0 to 100 showing how much of an investment's movement is explained by its benchmark.
Rate per contract
Rate per contract is what an exchange earns, on average, for each contract that trades: its clearing and transaction fees divided by the contracts traded.
Real Yield
Real yield is the return on an investment after subtracting inflation, showing how much your money actually grows in buying power.
Rebalancing
Periodically resetting your investments back to your target mix after the market moves them around.
Record Date
The record date is the day a company checks its shareholder list to decide who qualifies to receive the next dividend.
REIT
Real Estate Investment Trust. A company owning income-producing real estate that distributes most of its income to shareholders.
Relative strength index (RSI)
RSI is a momentum gauge from 0 to 100 that suggests whether a stock may be overbought, above 70, or oversold, below 30.
Repurchase agreement (repo)
A short-term loan dressed as a sale: one side sells securities and agrees to buy them back soon at a slightly higher price.
Return on equity (ROE)
Net income divided by shareholders' equity, showing how much profit a company squeezes out of each dollar owners have in the business.
Rights offering
A rights offering gives existing shareholders the chance to buy new shares, usually at a discount, in proportion to what they already own.
Risk
Risk is the chance that an investment's actual return turns out different from what you expected, including the chance of losing money.
Risk parity
An allocation approach that sizes holdings so each one contributes an equal share of portfolio risk.
Risk-adjusted return
A return figure judged against the amount of risk taken to earn it, rather than the raw percentage alone.
Robo-advisor
An online service that builds and rebalances a diversified ETF portfolio for you, usually for a low percentage fee.
RSU (restricted stock unit)
Restricted stock units: company shares your employer promises you, delivered on a vesting schedule, and taxed as income when they arrive.
Rug pull
A crypto scam where the people behind a token take the pooled money and disappear, leaving holders with a coin they cannot sell.
Russell 2000
The Russell 2000 is a market index that tracks about 2,000 small US companies, widely used as the scorecard for small-cap stocks.
S 44 terms
S&P 500★
An index of about 500 of the largest U.S. publicly traded companies, weighted by market cap. The default benchmark for U.S. stocks.
Same-store sales
A retail measure of sales growth at locations open at least a year, stripping out the boost that comes from opening new stores.
Scenario analysis
Comparing how a portfolio or plan performs under a small number of clearly defined future situations.
SEC
The U.S. Securities and Exchange Commission. The federal regulator over public markets, brokerages, and investment advisers.
Secondary offering
A sale of shares already outstanding, where existing holders sell to the public and the company receives none of the money.
Sector
A sector is a group of companies that do similar kinds of business, like technology, healthcare, or energy.
Sector / thematic ETF
A sector or thematic ETF holds stocks concentrated in one industry or trend, like technology or clean energy, rather than the whole market.
Securities lending★
Securities lending is when your broker lends out shares you own, often to short sellers, sometimes sharing a small fee with you.
Seed phrase
A seed phrase is a list of simple words that backs up a crypto wallet; anyone who has it can restore the wallet and take the funds.
Senior secured debt
Debt that ranks first in line for repayment and is backed by specific collateral the lender can seize if the borrower defaults.
Series EE Savings Bonds★
Series EE savings bonds are low-risk U.S. Treasury bonds that the government guarantees will double in value if held for 20 years.
Settlement
Settlement is the moment a trade actually finalizes: cash and the security officially change hands and the deal is locked in.
Share
A share is one unit of ownership in a company, so owning shares means you own a small piece of that business.
Share classes
Different versions of the same fund or stock, with different fees or voting rights attached to each.
Shares outstanding
Shares outstanding is the total number of a company's shares held by all investors; the freely tradeable portion of it is called the float.
Sharpe ratio
A measure of return per unit of risk. (Portfolio return minus risk-free rate) divided by standard deviation.
Short interest
The number of shares currently sold short and not yet bought back, usually reported as a share count and as a percent of float.
Short interest ratio
Shares sold short divided by average daily volume, the standard way to measure how crowded a short position is in one stock.
Short selling
Borrowing a stock to sell it, hoping to buy it back later at a lower price. Losses are theoretically unlimited.
Short squeeze
A fast price rise that forces short sellers to buy shares back to close their positions, and that buying pushes the price higher still.
Side pocket
A separate account inside a fund holding assets that are hard to value or sell, frozen until they can be priced or sold.
Slippage
The difference between the price you expected on a trade and the price you actually got, from movement or thin liquidity.
Smart contract
Code stored on a blockchain that runs automatically when set conditions are met, moving funds without anyone approving the step.
Sortino ratio
A risk-adjusted return measure that penalizes only downside volatility and ignores upside swings entirely.
SPAC
A SPAC is a shell company that raises money in a stock offering with no business of its own, planning to later merge with a real company to take it public.
Specific Lot Identification
Specific lot identification lets you choose exactly which shares to sell, so you can control the taxable gain or loss on the sale.
Stablecoin
A cryptocurrency designed to track the value of an external asset, usually the U.S. dollar.
Standard deviation
A statistical measure of how widely returns vary around the average. The textbook proxy for volatility.
Stock
A small slice of ownership in a company that trades on a public market.
Stock split
A stock split divides each existing share into more shares at a lower price, without changing the total value of your holding.
Stock warrant
A stock warrant is a company-issued right to buy its shares at a set price before an expiration date, often years away.
Stop-Limit Order
A stop-limit order triggers at one price and then only fills at your limit price or better, adding price control to a stop.
Stop-Loss Order
A stop-loss order automatically sells a stock once it falls to a price you set, aiming to cap how much you lose.
Straddle
Buying a call and a put at the same strike and expiration, a position that pays off when the stock moves sharply either way.
Strangle
Buying a call and a put at different strikes with the same expiration, a cheaper bet on a large move in either direction.
Stress testing (portfolio)
Running a portfolio through severe but plausible market shocks to see what the damage would be.
Strike price
The fixed price at which an option can be exercised to buy or sell the underlying shares.
STRIPS (zero-coupon Treasury)
A Treasury bond split so each interest payment and the principal trade as separate zero-coupon securities bought at a discount.
Structured product
A packaged investment that combines a bond with a derivative to produce a custom payoff tied to an index.
Subordinated debt
Debt that gets paid only after senior debt is paid in full, so it carries more risk and usually a higher interest rate.
Support and resistance
Support is a price level where a stock has tended to stop falling; resistance is a level where it has tended to stop rising.
Sustainable growth rate
How fast a company can grow using only retained profit, without borrowing more or issuing new shares.
Swap
A contract in which two parties agree to exchange streams of payments over time under an agreed formula.
Systematic risk
The part of investment risk that comes from the whole market and cannot be removed by diversifying.
T 21 terms
Tangible book value
Book value with goodwill and other intangibles removed, leaving the accounting value of hard assets minus what the company owes.
Tax-Loss Harvesting
Tax-loss harvesting is selling an investment that has dropped in value to lock in a loss you can use to lower your tax bill.
Taxable account
A regular brokerage account with no special tax treatment, where you owe tax on dividends, interest, and gains as you receive or realize them.
Tender offer
A tender offer is a public bid to buy shareholders' stock at a set price, usually above market, often to take over or buy back a company.
Terminal value
The estimated value of a business for all the years beyond a forecast window, collapsed into a single figure.
Theta (option)
The estimated amount an option loses in value each day simply because expiration is one day closer.
Three-fund portfolio★
A simple portfolio built from three index funds: total US stock market, international stock, and bonds.
Ticker Symbol
A ticker symbol is the short string of letters that identifies a stock or fund on an exchange, like AAPL for Apple.
Time-weighted vs money-weighted return
Two ways to measure performance: one strips out deposits and withdrawals, the other counts them and reflects your actual result.
Tokenomics
How a crypto token's supply, issuance schedule, and holder incentives are designed, which shapes how many coins exist and who holds them.
Total bond market index fund
A total bond market index fund holds a broad mix of U.S. bonds, government, corporate, and mortgage, for diversified fixed income in one fund.
Total Return★
Total return is your full gain from an investment: the change in price plus any dividends or interest, not just the price move.
Total stock market index fund
A total stock market index fund holds almost every publicly traded U.S. stock, giving broad, one-fund exposure to the whole market.
Total value to paid-in (TVPI)
A private fund measure adding cash already returned to the estimated value still held, divided by the cash investors put in.
Tracking error
How much a fund's returns differ from its benchmark, measured as the volatility of that difference.
Trading Day
A trading day is a day when the stock market is open for buying and selling, normally a weekday that is not a market holiday.
Trading halt
A temporary pause in trading of a security, ordered by an exchange or regulator, so news can spread or a price disorder can settle.
Trailing P/E
A stock's price divided by the earnings per share it actually reported over the last twelve months.
Trailing stop order★
A trailing stop is a sell order that follows a rising price by a set amount or percent and triggers a sale if the price falls back by that much.
Treasury
Debt securities issued by the US federal government, treated as among the safest investments because they are backed by its full faith and credit.
Two and twenty (2/20)★
The classic private fund fee setup: roughly 2 percent of assets charged every year plus roughly 20 percent of the profits.
U 2 terms
Unit investment trust (UIT)
A UIT is a fund that buys a fixed basket of securities, holds them unchanged until a set end date, then dissolves and returns the proceeds.
Unsystematic risk
The part of investment risk tied to one company or industry, which diversification can largely remove.
V 8 terms
Value at risk (VaR)
An estimate of the most a portfolio is likely to lose over a set period at a chosen confidence level.
Value stock
A stock trading at a low price relative to its earnings, book value, or cash flow. Often pays dividends.
Vega (option)
How much an option's price changes when the market's expected future volatility rises or falls by one percentage point.
Venture capital
Funds that invest in early-stage startups, expecting most to fail and a few to become very valuable.
Vertical spread
Any options position that buys one option and sells another of the same type and expiration at a different strike.
Vintage year
The year a private fund starts investing, used to compare it fairly against other funds that began under the same market conditions.
VIX (volatility index)
An index that estimates expected volatility in a broad U.S. stock index over the next 30 days, derived from option prices.
Volatility
How much an investment's price moves around. Often measured by standard deviation of returns.
W 2 terms
Wash trading
Buying and selling the same asset to yourself to fake trading volume or activity, a form of market manipulation that is illegal.
Web3
A label for internet services built on blockchains, where the account is a wallet and ownership of tokens sits with the user, not a platform.
Y 4 terms
Yield
The annual income from an investment as a percentage of its price. Yield rises when price falls.
Yield to call★
Yield to call is the return you would earn on a callable bond if the issuer redeems it early at the first call date, rather than at maturity.
Yield to Maturity
Yield to maturity is the total annual return you earn on a bond if you buy it now and hold it until it matures.
Yield to worst★
Yield to worst is the lowest yield a bond could produce across all its possible early-redemption and maturity scenarios, a conservative estimate.