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Any item of economic value owned by an individual or

Asset Allocation
The process of dividing investments among different kinds of
the tradeoff between risk and reward based on an individual’s or
institution’s specific situation and goals.
A debt instrument issued for the purpose of raising capital by
borrowing. A bond is generally a promise to pay a specified
amount of interest for a specified amount of time, and to repay
the principal at maturity.
An individual or firm that acts as an intermediary between a
buyer and a seller, usually charging a commission.
Capital Gain
The amount by which an asset’s selling price exceeds its initial
purchase price.
A physical substance such as food, grains and metals that is
interchangeable with other products of the same type.
A financial instrument whose characteristics and value depend
upon the characteristics and value of an underlying instrument or
asset, typically a commodity, bond, equity or currency.
Due Diligence
The process of investigation, performed by investors, into the
details of a potential investment. For example, an examination of
operations and management and the verification of material
Earnings before interest, taxes, depreciation and amortization is
an approximate measure of a company’s operating cash flow
based on data from the company’s income statement.
The buying and selling of products and services by businesses
and consumers over the Internet.
The study of how the forces of supply and demand affect the
allocation of scarce resources.
Ownership interest in a corporation possessed by shareholders.
Fixed Income Security
A security that pays a specific interest rate, such as a bond or
money market instrument.
Forward Agreement
An agreement to buy or sell a security at an agreed future price.
Futures Contract
An agreement to buy or sell a specific commodity or security at a
specific price on a specific date.
An over-allotment provision to enable an underwriter to issue
more securities at the issue price in order to stabilize the
transaction in the immediate aftermarket.
Growth Stock
The stock of a company which is growing earnings and/or
revenue faster than its industry or the overall market.
A strategy used to offset investment risk.
Hedge Fund
A pooled investment vehicle that uses advanced investment
strategies such as leverage, long, short and/or derivative
positions in both domestic and international markets, with the
goal of generating high returns.
A statistical measure of the changes in a portfolio representing a
market. The Standard & Poor’s 500 is a well-known index that
measures the overall changes in the value of 500 of the most
widely held U.S. stocks.
Initial Public Offering (IPO)
The first sale of stock to the public by a company.
Investment Bank
An institution that acts as an underwriter or agent for
corporations and municipalities issuing securities, but which
does not accept deposits or make loans.
A stock or bond that has been offered for sale by a corporation
or government entity, usually through an underwriter or in a
private placement.
Junk Bond
Slang term for bonds that do not carry an investment-grade
The degree to which an investor or business is utilizing borrowed
money for its investments.
Leveraged Buyout (LBO)
The use of a company’s cash flow to finance the debt incurred
(the “leverage”) in acquiring a company.
The use of borrowed money to purchase securities.
Mergers & Acquisitions (M&A)
The practice of buying, selling, or merging assets, divisions or
entire companies.
National Association of Securities Dealers Automated Quotation
system. NASDAQ is the largest electronic screen-based equity
securities market in the United States.
specified price during a specified period of time.
Price Index
Index that tracks inflation by measuring price changes.
Private Equity
An equity investment in a company that is not traded on a public
stock market. Typically, references to private equity encompass
both early stage (venture) and later stage (buyouts)
Qualitative Analysis
The process of determining the value of an investment or
security, especially a stock, by examining its non-numeric
characteristics, such as management, employee morale,
customer loyalty and brand value.
Quantitative Analysis
The process of determining the value of an investment or a
security by examining its numerical, measurable
characteristics such as revenues, earnings, margins and
market share.
Repurchase Agreement (or “Repo”)
A contract in which the seller of debt securities, usually Treasury
bills, agrees to buy them back at a specified time and price.
Research Analyst
An employee of a bank, brokerage, advisor or mutual fund who
studies companies and makes buy, sell and hold
recommendations, often specializing in a single sector or
An investment instrument, other than an insurance policy or fixed
annuity, issued by a corporation, government or other
organization which offers evidence of debt or equity.
Spot Price
1) The price at which a currency is currently trading in the spot
market. 2) The yield of a zero coupon bond.
An instrument that signifies an ownership position or equity in a
corporation, and represents a claim on its proportionate share in
the corporation’s assets and profits.
Strike Price
Also called the exercise price, it is the price at which an options
holder can buy or sell the underlying instrument.
Tracking Stock
Shares issued by a company that track the performance of a
specific portion of the whole company. A tracking stock
differs from a spin-off in that it does not represent or require any
change in business structure. Holders of a tracking stock are
considered to hold equity in the parent company and not the
specific entity represented by the tracking stock.
A transaction of a security or commodity.
An intermediary between an issuer of a security and the
investing public, usually an investment bank.
Value Stock
A stock that typically trades at a lower price relative to its
fundamentals and is therefore considered undervalued by a
value investor. Value stocks tend to have a high dividend yield,
low price-to-book ratio, and/or low price-to-earnings ratio.
Venture Capital
Funds made available for startup firms and small businesses
with strong growth potential.
The rate of return on an investment, expressed as a percentage.