Financial Markets and Investment Strategies, Sintesi del corso di Inglese Commerciale

Scarica Financial Markets and Investment Strategies e più Sintesi del corso in PDF di Inglese Commerciale solo su Docsity! 1. TO WHOM IT MAY CONCERN: used at the beginning of a letter, notice, or testimonial when the identity of the reader or readers is unknown. 2. PLEASE FIND ATTACHED: is a phrase that prompts the reader to check and review the file or files attached to an email. 3. FYI: "For your information," and is often used in forwarding E-mail or printed material to colleagues or friends. 4. ASAP: as soon as possible, without delay; promptly. 5. CV: The CV presents a full history of your academic credentials, so the length of the document is variable. 6. RESUME: a resume presents a concise picture of your skills and qualifications for a specific position, so length tends to be shorter and dictated by years of experience 7. MOVING YOU TO BCC: When you place email addresses in the BCC field of a message, those addresses are invisible to the recipients of the email. 8. I’M CC’ING SOMEBODY IN AN E-MAIL: any email addresses that you place in the To field or the CC field are visible to everyone who receives the message. 9. TEAM BUILDING: Team building is the process of turning a group of individual contributing employees into a cohesive team—a group of people organized to work together to meet the needs of their customers by accomplishing their purpose and goals. 10. COOPERATION: the action or process of working together to the same end. Cooperation, on the other hand, could just mean that you've given me help on something I'm working on and that I'm ultimately responsible for. 11. COLLABORATION: Collaboration implies shared ownership and interest in a specific outcome. If you and I collaborate on a project, we have shared authorship. 12. START FROM SCRATCH: to begin from a point at which nothing has been done yet 13. 9 TO 5: A nine-to-five job is one that you do during normal office hours, for example a job in a factory or an office. 14. SET DEADLINES / MEET DEADLINES: decide on a date when something must be finished ,to meet deadlines: to finish work on time, by the agreed date 15. TO GIVE THE GREENLIGHT: permission to start or continue something (such as a project) His boss finally gave him the green light to start the new project. 16. BEHIND SCHEDULE / AHEAD OF SCHEDULE: later than planned or expected/ doing or finishing something earlier than planned 17. ELEVATOR PITCH : is a brief, persuasive speech that you use to spark interest in what your organization does. 18. TO CATCH UP: to reach the same level or quality as someone or something else 19. STAY ON BUDGET / GO OVER BUDGET: not spending more money than had been planned for/ beyond the amount of money than had been planned for 20. SIGN OFF ON (SOMETHING): to give a final message at the end of a letter or when communicating by radio, or at the end of a television or radio programme 21. TO BE AHEAD OF THE CURVE: faster about doing something than other people, companies, etc. 22. A BALLPARK FIGURE: is a rough numerical estimate or approximation of the value of something that is otherwise unknown. 23. TO KICK OFF: to start something 24. WHITE COLLAR: relating to people who work in offices, doing work that needs mental rather than physical effort 25. TO LOOK AT THE BIG PICTURE: To consider the general, overall, or long-term scope of something, as opposed to specific details or immediate preoccupations. 26. TO PLAY BY THE BOOK: To act or operate in strict accordance with the rules or regulations. 27. TO CALL IT A DAY: decide or agree to stop doing something. 28. TO CORNER THE MARKET: If a company corners the market in a particular type of product, it is more successful than any other company at selling the product 29. GET IN ON THE GROUND FLOOR: involved in something at the very beginning 30. TO THINK OUTSIDE THE BOX: thinking creatively, freely, and off the beaten path 31. TO TOUCH BASE: to talk to someone for a short time to find out how they are or what they think about something 32. WORD OF MOUTH: the process of telling people you know about a particular product or service 33. A YES MAN: is a person who agrees with everything that is said 34. RED TAPE: official rules and processes that seem unnecessary and delay results 35. TO PLAY HARDBALL: to negotiate in a really aggressive manner and no give up easily 36. DOWNSIZING: is the permanent reduction of a company's labor force through the elimination of unproductive workers or divisions. 37. TO LET GO: to fire 38. TO SET ONE'S FOOT IN THE DOOR: to make the first step toward a goal by gaining entry into an organization, a career, 39. TO BE ON THE SAME PAGE: agreeing about something 40. TO DROP THE BALL: to make a mistake, especially by not taking action or dealing with something that should have been planned for 41. TO BE IN THE BLACK: to being financially solvent or profitable, or sometimes more generally, just not in debt. 42. TO BE IN THE RED: to be in debt, running a deficit, or generally just not making money—being cash negative 43. MY HANDS ARE TIED: used to say that someone is unable to act freely because something (such as a rule or law) prevents it 44. STAFF SHAKEUP: A thorough, often drastic reorganization, as of the personnel in a business or government. 45. OUTSOURCING: s the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff. 46. TARGET DEMOGRAPHIC: a type of market segmentation according to family size, religion, gender, age, ethnicity, education, and even income. 47. END USER: the person or organization that uses a product or service 48. MISSION STATEMENT: is a single sentence or short paragraph that is used by a company to explain its existence. 49. RETURN ON INVESTMENT (ROI): is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. 50. FROM THE GROUND UP: affecting or involving everything or everyone, starting with the most basic things or the least important people (All systems would be replaced from the ground up) STOCKS  MARKET CAPITALIZATION: Market capitalization, or "market cap", is the aggregate market value of a company represented in a dollar amount. Since it represents the “market” value of a company, it is computed based on the current market price (CMP) of its shares and the total number of outstanding shares. Market cap is also used to compare and categorize the size of companies among investors and analysts.  OUTSTANDING SHARES: Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders. Outstanding shares are shown on a company’s balance sheet under the heading “Capital Stock.” The number of outstanding shares is used in calculating key metrics such as a company’s market capitalization, as well as its earnings per share (EPS) and cash flow per share (CFPS). A company's number of outstanding shares is not static and may fluctuate wildly over time.  FLOATING SHARES: Floating stock is the number of shares available for trading of a particular stock. Low float stocks are those with a low number of shares. Floating stock is calculated by subtracting closely-held shares and restricted stock from a firm’s total outstanding shares. Closely-held shares are those owned by insiders, major shareholders, and employees. Restricted stock refers to insider shares that cannot be traded because of a temporary restriction, such as the lock-up period after an initial public offering (IPO). A stock with a small float will generally be more volatile than a stock with a large float. This is because, with fewer shares available, it may be harder to find a buyer or seller. This results in larger spreads and often lower volume.  BLUE CHIP/LARGE CAP: Large-cap (sometimes called "big cap") refers to a company with a market capitalization value of more than $10 billion. Large cap is a shortened version of the term "large market capitalization." Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share. A company's stock is generally classified as large-cap, mid-cap, small-cap, or micro-cap  MID CAP: Mid-cap (or mid-capitalization) is the term that is used to designate companies with a market cap (capitalization)—or market value—between $2 and $10 billion. As the name implies, a mid-cap company falls in the middle between large-cap (or big-cap) and small-cap companies. Classifications, such as large-cap, mid-cap, and small-cap are approximations of a company's current value; as such, they may change over time.  SMALL CAP: A small-cap stock is a stock from a public company whose total market value, or market capitalization, is about $300 million to $2 billion. The precise figures vary. Small-cap stock investors are generally looking for up-and-coming young companies that are growing fast. That is, they're looking for the large-cap stocks of the future.  MICRO CAP: A micro-cap is a publicly-traded company in the U.S. that has a market capitalization between approximately $50 million and $300 million. Micro-cap companies have greater market capitalization than nano caps, and less than small-, mid-, large- and mega-cap corporations. Companies with larger market capitalization do not automatically have stock prices that are higher than those companies with smaller market capitalizations.  CAPITAL GAINS: The term capital gain refers to the increase in the value of a capital asset when it is sold Put simply, a capital gain occurs when you sell an asset for more than what you originally paid for it. Almost any type of asset you own is a capital asset whether that's a type of investment (like a stock, bond, or real estate) or something purchased for personal use (like furniture or a boat). Capital gains are realized when you sell an asset by subtracting the original purchase price from the sale price. The Internal Revenue Service (IRS) taxes individuals on capital gains in certain circumstances.  DIVIDENDS: A dividend is the distribution of a company's earnings to its shareholders and is determined by the company's board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock. The dividend yield is the dividend per share and is expressed as dividend/price as a percentage of a company's share price, such as 2.5%. Common shareholders of dividend-paying companies are eligible to receive a distribution as long as they own the stock before the ex-dividend date.  PAYOUT RATIO: The payout ratio is a financial metric showing the proportion of earnings a company pays its shareholders in the form of dividends, expressed as a percentage of the company's total earnings. On some occasions, the payout ratio refers to the dividends paid out as a percentage of a company's cash flow. The payout ratio is also known as the dividend payout ratio.  BUYBACK: A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.  DIVIDEND YIELD: The dividend yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price. The reciprocal of the dividend yield is the price/dividend or the dividend payout ratio.  P/E RATIO-EARNING YIELD: The price-to-earnings ratio is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. P/E ratios are used by investors and analysts to determine the relative value of a company's shares in an apples- to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time. P/E may be estimated on a trailing (backward-looking) or forward (projected) basis.  QUARTERLY: A quarterly earnings report is a quarterly filing made by public companies to report their performance. Earnings reports include items such as net income, earnings per share, earnings from continuing operations, and net sales. By analyzing quarterly earnings reports, investors can begin to gauge the financial health of the company and determine whether it deserves their investment. Fundamental analysts believe that good investments are identified with hard work in the form of ratio and performance analysis. Particular attention is paid to the trend in ratios gleaned from the quarterly earnings reports over time, rather than solely the single data point from each report. One of the most anticipated numbers for analysis is earnings per share because it pro  EARNING REPORT: The earnings yield refers to the earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (the inverse of the P/E ratio) shows the percentage of a company's earnings per share. Earnings yield is used by many investment managers to determine optimal asset allocations and is used by investors to determine which assets seem underpriced or overpriced.  TRADING SESSION: A trading session is a period of time that matches the primary daytime trading hours for a given locale. This phrase will refer to different hours, depending on the markets and locations being discussed. Generally a single day of business in the local financial market, from that market’s opening bell to its closing bell, is the trading session that the individual investor or trader will reference. The markets for forex, futures, stocks, and bonds all have different characteristics that define their respective trading sessions for a given day, and the primary trading hours naturally differ from one country to another due to contrasting time zones.  OPENING BELL: The opening bell refers to the moment a securities exchange opens for its normal daily trading session. The time and conditions of the opening bell differ from one exchange to another. The most famous opening bell is the one used by the New York Stock Exchange to signal the start of trading.  PREMARKET: Pre-market trading is the period of trading activity that occurs before the regular market session. The pre-market trading session typically occurs between 8 a.m. and 9:30 a.m. EST each trading day. Many investors and traders watch the pre-market trading activity to judge the strength and direction of the market in anticipation of the regular trading session. Pre-market trading can only be executed with limited orders through an "electronic market" like an alternative trading system (ATS) or electronic communication network (ECN). Market makers are not permitted to execute orders until the 9:30 a.m. EST opening bell.  AFTERHOURS: After-hours trading starts at 4 p.m. U.S. Eastern Time after the major U.S. stock exchanges close. The after-hours trading session can run as late as 8 p.m., though volume typically thins out much earlier in the session. Trading in the after-hours is conducted through electronic communication networks (ECNs).  LIMIT ORDER: A limit order is a type of order to purchase or sell a security at a specified price or better. For buy limit orders, the order will be executed only at the limit price or a lower one, while for sell limit orders, the order will be executed only at the limit price or a higher one. This stipulation allows traders to better control the prices they trade. By using a buy limit order, the investor is guaranteed to pay that price or less. While the price is guaranteed, the filling of the order is not, and limit orders will not be executed unless the security price meets the order qualifications. If the asset does not reach the specified price, the order is not filled and the investor may miss out on the trading opportunity. This can be contrasted with a market order, whereby a trade is executed at the prevailing market price without any price limit specified.  MARKET ORDER: A market order is an instruction by an investor to a broker to buy or sell stock shares, bonds, or other assets at the best available price in the current financial market. It is the default choice for buying and selling for most investors most of the time. If the asset is a large-cap stock or a popular exchange-traded fund (ETF), there will be plenty of willing buyers and sellers out there. That means that a market order will be completed nearly instantaneously at a price very close to the latest posted price that the investor can see. A limit order, which instructs the broker to buy or sell only at a certain price, is the main alternative to the market order for most individual investors.  TICKER SYMBOL: A stock symbol is a unique series of letters assigned to a security for trading purposes. Stocks listed on the New York Stock Exchange (NYSE) can have four or fewer letters. Nasdaq-listed securities can have up to five characters. Symbols are just a shorthand way of describing a company's stock, so there is no significant difference between those that have three letters and those that have four or five. Stock symbols are also known as ticker symbols. REAL ESTATE  ADJUSTABLE RATE MORTGAGE: An adjustable-rate mortgage (ARM) is a home loan with a variable interest rate. With an ARM, the initial interest rate is fixed for a period of time. After that, the interest rate applied on the outstanding balance resets periodically, at yearly or even monthly intervals. ARMs are also called variable-rate mortgages or floating mortgages. The interest rate for ARMs is reset based on a benchmark or index, plus an additional spread called an ARM margin. The typical index that is used in ARMs has been the London Interbank Offered Rate (LIBOR).  FIXED RATE MORTGAGE: The term “fixed-rate mortgage” refers to a home loan that has a fixed interest rate for the entire term of the loan. This means that the mortgage carries a constant interest rate from beginning to end. Fixed-rate mortgages are popular products for consumers who want to know how much they’ll pay every month.  COMMERCIAL REAL ESTATE: Commercial real estate (CRE) is property used exclusively for business-related purposes or to provide a work space rather than a living space, which would instead constitute residential real estate. Most often, commercial real estate is leased to tenants to conduct income-generating activities. This broad category of real estate can include everything from a single storefront to a huge shopping center. Commercial real estate comes in a variety of forms. It can be anything from an office building to a residential duplex, or even a restaurant or warehouse. Individuals, companies, and corporate interests can make money from commercial real estate by leasing it out, or holding it and reselling it. Commercial real estate includes several categories, such as retailers of all kinds: office space, hotels and resorts, strip malls, restaurants, and healthcare facilities.  COLLATERALIZED DEBT OBLIGATIONS (CDO): A collateralized debt obligation (CDO) is a complex structured finance product that is backed by a pool of loans and other assets and sold to institutional investors. A CDO is a particular type of derivative because, as its name implies, its value is derived from another underlying asset. These assets become the collateral if the loan defaults.  MORTGAGE BACKED SECURITY: A mortgage-backed security (MBS) is an investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them. Investors in MBS receive periodic payments similar to bond coupon payments.  MORTGAGE: A mortgage is a type of loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest. The property then serves as collateral to secure the loan. A borrower must apply for a mortgage through their preferred lender and ensure that they meet several requirements, including minimum credit scores and down payments. Mortgage applications go through a rigorous underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.  HOME MORTGAGE: A home mortgage is a loan given by a bank, mortgage company, or other financial institution for the purchase of a residence—a primary residence, a secondary residence, or an investment residence—in contrast to a piece of commercial or industrial property. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the final loan payment has been made and other terms of the mortgage have been met.  HOME EQUITY: Home equity is the value of a homeowner’s financial interest in their home. In other words, it is the actual property’s current market value less any liens that are attached to that property. The amount of equity in a house fluctuates over time as more payments are made on the mortgage and market forces impact the property's current value. Home equity can represent more than a mortgage loan being paid off. It is an asset that homeowners can borrow against to meet important financial needs such as paying off high-cost debt or paying college tuition.  TOMBSTONE: A tombstone is a written advertisement of a public offering placed by investment bankers who are underwriting the issue. It gives basic details about the issue and lists each of the underwriting groups involved in the deal. The tombstone provides investors with some general information and directs the prospective investors to a link where they can obtain a prospectus.  REPUTATIONAL RISK: Reputational risk is a threat or danger to the good name or standing of a business or entity. Reputational risk can occur in the following ways: -Directly, as the result of the actions of the company -Indirectly, due to the actions of an employee or employees -Tangentially, through other peripheral parties, such as joint venture partners or suppliers In addition to having good governance practices and transparency, companies need to be socially responsible and environmentally conscious to avoid or minimize reputational risk.  CHINESE WALLS: The term Chinese wall, as it is used in the business world, describes a virtual barrier intended to block the exchange of information between departments if it might result in business activities that are ethically or legally questionable. In the United States, corporations, brokerage firms, investment banks, and retail banks have used Chinese walls to describe situations where there is a need to maintain confidentiality in order to prevent conflicts of interest. Over the years, large financial institutions have used Chinese wall policies as a means to self-regulate their business dealings by creating ethical boundaries between departments. However, these efforts have not always been effective. Thus, the Securities and Exchange Commission (SEC) has enacted regulations governing how financial institutions share information. The SEC has implemented fines, penalties, and legal consequences for companies that break these regulations.  COMMERCIAL BANK: The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.  UNIVERSAL BANKING: Universal banking is a system in which banks provide a wide variety of comprehensive financial services, including those tailored to retail, commercial, and investment services. Universal banking is common in some European countries, including Switzerland. Universal banking became more common in the United States starting in 1999 when the Gramm-Leach-Bliley Act (GLBA) repealed the restrictions preventing commercial banks from offering investment banking services. Proponents of universal banking argue that it helps banks better diversify risk. Detractors think dividing up banking operations is a less risky strategy.  FEDERAL OPEN MARKET COMMITTEE (FOMC): The term Federal Open Market Committee (FOMC) refers to the branch of the Federal Reserve System (FRS) that determines the direction of monetary policy in the United States by directing open market operations (OMOs). The committee is made up of 12 members, including seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents on a rotating basis  MONETARY POLICY: Monetary policy is a set of tools used by a nation's central bank to control the overall money supply and promote economic growth and employ strategies such as revising interest rates and changing bank reserve requirements. In the United States, the Federal Reserve Bank implements monetary policy through a dual mandate to achieve maximum employment while keeping inflation in check.  MONETARY RESERVE: A monetary reserve is the holdings of currencies, precious metals, and other highly liquid assets used to redeem national currencies and bank deposits and to meet current and near-term financial obligations by a country’s central bank, government treasury, or other monetary authority. These holdings facilitate the regulation of the country’s currency and money supply, as well as help manage liquidity for transactions in global markets. Reserves are an asset in a country’s balance of payments. In addition to domestic reserves, central banks typically hold foreign currency reserves as well. The U.S. dollar is the dominant reserve asset, so most countries’ central banks hold much of their reserves in U.S. dollars  BANK RESERVES: Bank reserves are the cash minimums that financial institutions must have on hand in order to meet central bank requirements. This is real paper money that must be kept by the bank in a vault on-site or held in its account at the central bank. Cash reserves requirements are intended to ensure that every bank can meet any large and unexpected demand for withdrawals. In the U.S., the Federal Reserve dictates the amount of cash, called the reserve ratio, that each bank must maintain. Historically, the reserve rate has ranged from zero to 10% of bank deposits.  EXCESS RESERVES: Excess reserves are capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls. For commercial banks, excess reserves are measured against standard reserve requirement amounts set by central banking authorities. These required reserve ratios set the minimum liquid deposits (such as cash) that must be in reserve at a bank; more is considered excess. Excess reserves may also be known as secondary reserves.  EUROPEAN CENTRAL BANK (ECB): The European Central Bank (ECB) is the central bank responsible for monetary policy of the European Union (EU) member countries that have adopted the euro currency. This currency union is known as the eurozone and currently includes 19 countries. The ECB's primary objective is price stability in the euro area. MACRO  NON FARM PAYROLL: Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications. This is measured by the Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the U.S. about their payrolls. The BLS reports the nonfarm payroll numbers to the public on a monthly basis through the closely followed “Employment Situation” report. In addition to farm workers, nonfarm payrolls data also excludes some government workers, private households, proprietors, and non-profit employees.  CONSUMER PRICE INDEX: The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending.  The CPI is one of the most popular measures of inflation and deflation. The CPI report uses a different survey methodology, prices sample and index weights than the producer price index (PPI), which measures change in the prices received by U.S. producers of goods and services.  LEADING INDICATOR: A leading indicator is any measurable or observable variable of interest that predicts a change or movement in another data series, process, trend, or other phenomenon of interest before it occurs. Leading economic indicators are used to forecast changes before the rest of the economy begins to move in a particular direction and help market observers and policymakers predict significant changes in the economy. Leading indicators can be useful to help forecast the timing, magnitude, and duration of future economic and business conditions. A leading indicator may be contrasted with a lagging indicator.  LAGGING INDICATOR: A lagging indicator is an observable or measurable factor that changes sometime after the economic, financial, or business variable with which it is correlated changes. Lagging indicators confirm trends and changes in trends. Lagging indicators can be useful for gauging the trend of the general economy, as tools in business operations and strategy, or as signals to buy or sell assets in financial markets.  MICHIGAN CONSUMER SENTIMENT INDEX: The Michigan Consumer Sentiment Index (MCSI) is a monthly survey of consumer confidence levels in the United States conducted by the University of Michigan. The survey is based on telephone interviews that gather information on consumer expectations for the economy. Consumer sentiment is a statistical measurement of the overall health of the economy as determined by consumer opinion. It takes into account people's feelings toward their current financial health, the health of the economy in the short term, and the prospects for longer-term economic growth, and is widely considered to be a useful economic indicator.  DEFICIT: In financial terms, a deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets. A deficit is synonymous with a shortfall or loss and is the opposite of a surplus. A deficit can occur when a government, company, or person spends more than it receives in a given period, usually a year.  GDP: Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health. Though GDP is typically calculated on an annual basis, it is sometimes calculated on a quarterly basis as well. In the U.S., for example, the government releases an annualized GDP estimate for each fiscal quarter and also for the calendar year. The individual data sets included in this report are given in real terms, so the data is adjusted for price changes and is, therefore, net of inflation.  COST OF LIVING: The cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period. The cost of living is often used to compare how expensive it is to live in one city versus another. The cost of living is tied to wages. If expenses are higher in a city, such as New York, for example, salary levels must be higher so that people can afford to live in that city.  PERSONAL INCOME: Personal income refers to all income collectively received by all individuals or households in a country. Personal income includes compensation from a number of sources, including salaries, wages, and bonuses received from employment or self-employment, dividends and distributions received from investments, rental receipts from real estate investments, and profit sharing from businesses  PURCHASING POWER: Purchasing power is the value of a currency expressed in terms of the number of goods or services that one unit of money can buy. It can weaken over time due to inflation. That's because rising prices effectively decrease the number of goods or services you can buy. Purchasing power is also known as a currency's buying power. In investment terms, purchasing or buying power is the dollar amount of credit available to a customer based on the existing marginable securities in the customer's brokerage account.  CONSUMER DEBT: Consumer debt consists of personal debts that are owed as a result of purchasing goods that are used for individual or household consumption. Credit card debt, student loans, auto loans, mortgages, and payday loans are all examples of consumer debt. These stand in contrast to other debts that are used for investments in running a business or debt incurred through government operations.  ECONOMIC CYCLE: The term economic cycle refers to the fluctuations of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending, can help to determine the current stage of the economic cycle. Understanding the economic cycle can help investors and businesses understand when to make investments and when to pull their money out, as it has a direct impact on everything from stocks and bonds, as well as profits and corporate earnings. FUNDS, ETFS, PORTFOLIO MANAGEMENT  INDEX: An index is a method to track the performance of a group of assets in a standardized way. Indexes typically measure the performance of a basket of securities intended to replicate a certain area of the market. These could be constructed as a broad-based index that captures the entire market, such as the Standard & Poor's 500 Index or Dow Jones Industrial Average (DJIA), or more specialized such as indexes that track a particular industry or segment such as the Russell 2000 Index, which tracks only small-cap stocks.  GICS SECTORS: The Global Industry Classification Standard (GICS) is a method for assigning companies to a specific economic sector and industry group that best defines its business operations. It is one of two rival systems that are used by investors, analysts, and economists to compare competing companies. GICS was developed jointly by Morgan Stanley Capital International (MSCI) and Standard & Poor's. The GICS methodology is used by the MSCI indexes, which include U.S. and international stocks, as well as by a large portion of the professional investment management community.  ENERGY: The energy sector is a category of stocks that relate to producing or supplying energy. The energy sector or industry includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, and refining. The energy industry also includes integrated power utility companies such as renewable energy and coal  MATERIALS: The basic materials sector is an industry category made up of businesses engaged in the discovery, development, and processing of raw materials. The sector includes companies engaged in mining and metal refining, chemical products, and forestry products. Within this sector are the companies that supply most of the materials used in construction. That makes the companies and their stocks sensitive to changes in the business cycle. They tend to thrive when the economy is strong. The category is sometimes referred to simply as the materials sector.  INDUSTRIALS: The industrial goods sector includes stocks of companies that mainly produce capital goods used in manufacturing, resource extraction, and construction. Businesses in the industrial goods sector make and sell machinery, equipment, and supplies that are used to produce other goods rather than sold directly to consumers.  CONSUMER DISCRETIONATY: Consumer discretionary is a term for classifying goods and services that are considered non-essential by consumers, but desirable if their available income is sufficient to purchase them. Examples of consumer discretionary products can include durable goods, high-end apparel, entertainment, leisure activities, and automobiles. Companies that supply these types of goods and services are usually either called consumer discretionaries or consumer cyclicals.  CONSUMER STAPLES: The term consumer staples refers to a set of essential products used by consumers. This category includes things like foods and beverages, household goods, and hygiene products as well as alcohol and Fundamental analysts study anything that can affect the security's value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management. The end goal is to determine a number that an investor can compare with a security's current price to see whether the security is undervalued or overvalued by other investors.  TECHNICAL ANALYSIS: Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysis, which attempts to evaluate a security's value based on business results such as sales and earnings, technical analysis focuses on the study of price and volume.  TOP DOWN: Top-down investing is an investment analysis approach that focuses on the macro factors of the economy, such as GDP, employment, taxation, interest rates, etc. before examining micro factors such as specific sectors or companies.  BOTTOM UP: Bottom-up investing is an investment approach that focuses on analyzing individual stocks and de- emphasizes the significance of macroeconomic and market cycles. In other words, bottom-up investing typically involves focusing on a specific company's fundamentals, such as revenue or earnings, versus the industry or the overall economy. The bottom-up investing approach assumes individual companies can perform well even in an industry that is underperforming, at least on a relative basis. Bottom-up investing forces investors to consider microeconomic factors, including a company's overall financial health, financial statements, the products and services offered, supply, and demand. For example, a company's unique marketing strategy or organizational structure may be a leading indicator that causes a bottom-up investor to invest. Alternatively, accounting irregularities on a particular company's financial statements may indicate problems for a firm in an otherwise booming industry sector.  HNWI: The term high-net-worth individual (HWNI) refers to a financial industry classification denoting an individual with liquid assets above a certain figure. People who fall into this category generally have at least $1 million in liquid financial assets. The assets held by these individuals must be easily liquidated and cannot include things like property or fine art. HNWIs often seek the assistance of financial professionals in order to manage their money. Their high net worth often qualifies these individuals for additional benefits and opportunities.  UHNWI: Ultra-high-net-worth individuals (UHNWI) are people with investable assets of at least $30 million. They comprise the wealthiest people in the world and control a tremendous amount of global wealth. This group of people is small but continues to grow. It totaled 521,653 individuals globally in 2020, up 2.4% from 2019, according to Knight Frank's The Wealth Report, published in 2021. The U.S. has the most UHNWIs in the world by a large margin  PRIVATE BANKING: Private banking consists of personalized financial services and products offered to the high- net-worth individual (HNWI) clients of a retail bank or other financial institution. It includes a wide range of wealth management services, and all provided under one roof. Services include investing and portfolio management, tax services, insurance, and trust and estate planning. While private banking is aimed at an exclusive clientele, consumer banks and brokerages of every size offer it. This offering is usually through special departments, dubbed "private banking" or "wealth management" divisions.  ASSETS UNDER MANAGEMENT: Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company. In the calculation of AUM, some financial institutions include bank deposits, mutual funds, and cash in their calculations. Others limit it to funds under discretionary management, where the investor assigns authority to the company to trade on their behalf. Overall, AUM is only one aspect used in evaluating a company or investment. It is also usually considered in conjunction with management performance and management experience. However, investors often consider higher investment inflows and higher AUM comparisons as a positive indicator of quality and management experience.  MANAGEMENT FEE: A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting stocks and managing the portfolio. It can also include other items such as investor relations (IR) expenses and the administration costs of the fund.  TOTAL EXPENSE RATIO (TER) : The total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment fund, such as a mutual fund. These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, auditor fees, and other operational expenses. The total cost of the fund is divided by the fund's total assets to arrive at a percentage amount, which represents the TER. TER is also known as the net expense ratio or after reimbursement expense ratio.  REDEMPTION: Depending on the context, the term redemption has different uses in the finance and business world. In finance, redemption refers to the repayment of any fixed-income security at or before the asset's maturity date. Bonds are the most common type of fixed-income security, but others include certificates of deposit (CDs), Treasury notes (T-notes), and preferred shares. Another use of the term redemption is in the context of coupons and gift cards, which consumers may redeem for products and services.  DIVERSIFICATION: Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk. The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security.  SETTLEMENT DATE: The settlement date is the date when a trade is final, and the buyer must make payment to the seller while the seller delivers the assets to the buyer. The settlement date for stocks and bonds is usually two business days after the execution date (T+2). For government securities and options, it's the next business day (T+1). In spot foreign exchange (FX), the date is two business days after the transaction date. Options contracts and other derivatives also have settlement dates for trades in addition to a contract's expiration dates. Settlement date may also refer to the payment date of benefits from a life insurance policy  NET ASSET VALUE (NAV): The NAV return is the change in the net asset value of a mutual fund or ETF over a given time period. The NAV return of a mutual fund is one measure of return and can be different than the total return or the market return that investors realize because these products can trade at a premium or discount in the market to the fund's computed NAV. DERIVATIVES  AT THE MONEY: At the money (ATM) is a situation where an option's strike price is identical to the current market price of the underlying security. An ATM option has a delta of ±0.50, positive if it is a call, negative for a put. Both call and put options can be simultaneously ATM. For example, if XYZ stock is trading at $75, then the XYZ 75 call option is ATM and so is the XYZ 75 put option. ATM options have no intrinsic value, but will still have extrinsic or time value prior to expiration, and may be contrasted with either in the money (ITM) or out of the money (OTM) options.  IN THE MONEY: The phrase in the money (ITM) refers to an option that possesses intrinsic value. An option that's in the money is an option that presents a profit opportunity due to the relationship between the strike price and the prevailing market price of the underlying asset. -An in-the-money call option means the option holder can buy the security below its current market price. -An in-the-money put option means the option holder can sell the security above its current market price. -Due to the expenses (such as commissions) involved with options, an option that is ITM does not necessarily mean a trader will make a profit by exercising it. Options can also be at the money (ATM) and out of the money (OTM).  OUT OF THE MONEY: "Out of the money" (OTM) is an expression used to describe an option contract that only contains extrinsic value. These options will have a delta of less than 0.50. An OTM call option will have a strike price that is higher than the market price of the underlying asset. Alternatively, an OTM put option has a strike price that is lower than the market price of the underlying asset. OTM options may be contrasted with in the money (ITM) options.  CALL OPTION: Call options are financial contracts that give the option buyer the right but not the obligation to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset. A call buyer profits when the underlying asset increases in price. A call option may be contrasted with a put option, which gives the holder the right to sell the underlying asset at a specified price on or before expiration.  PUT OPTION: A put option (or “put”) is a contract giving the option buyer the right, but not the obligation, to sell —or sell short—a specified amount of an underlying security at a predetermined price within a specified time frame. This predetermined price at which the buyer of the put option can sell the underlying security is called the strike price. Put options are traded on various underlying assets, including stocks, currencies, bonds, commodities, futures, and indexes. A put option can be contrasted with a call option, which gives the holder the right to buy the underlying security at a specified price, either on or before the expiration date of the option contract.  EXPIRATION DATE: An expiration date in derivatives is the last day that derivative contracts, such as options or futures, are valid. On or before this day, investors will have already decided what to do with their expiring position. Before an option expires, its owners can choose to exercise the option, close the position to realize their profit or loss, or let the contract expire worthless.  STRIKE PRICE: A strike price is a set price at which a derivative contract can be bought or sold when it is exercised. For call options, the strike price is where the security can be bought by the option holder; for put options, the strike price is the price at which the security can be sold. The strike price is also known as the exercise price.  FORWARD RATE AGREEMENT: Forward rate agreements (FRA) are over-the-counter contracts between parties that determine the rate of interest to be paid on an agreed-upon date in the future. In other words, an FRA is an agreement to exchange an interest rate commitment on a notional amount. The FRA determines the rates to be used along with the termination date and notional value. FRAs are cash- settled. The payment is based on the net difference between the interest rate of the contract and the floating rate in the market—the reference rate. The notional amount is not exchanged. It is a cash amount based on the rate differentials and the notional value of the contract.  FUTURES: A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange. The buyer of a futures contract is taking on the obligation to buy and receive the underlying asset when the futures contract expires. The seller of the futures contract is taking on the obligation to provide and deliver the underlying asset at the expiration date.  SWAP: A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything. Usually, the principal does not change hands. Each cash flow comprises one leg of the swap. One cash flow is generally fixed, while the other is variable and based on a benchmark interest rate, floating currency exchange rate, or index price. The most common kind of swap is an interest rate swap. Swaps do not trade on exchanges, and retail investors do not generally engage in swaps. Rather, swaps are over-the-counter (OTC) contracts primarily between businesses or financial institutions that are customized to the needs of both parties. COMMODITIES & FOREX  COMMODITY MARKET: A commodity market is a marketplace for buying, selling, and trading raw materials or primary products. Commodities are often split into two broad categories: hard and soft commodities. Hard commodities include natural resources that must be mined or extracted—such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestock—such as corn, wheat, coffee, sugar, soybeans, and pork.  COMMODITIES: A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. A commodity thus usually refers to a raw material used to manufacture finished goods. A product, on the other hand, is the finished good sold to consumers. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.  SOFT COMMODITIES: A soft commodity refers to futures contracts where the actuals are grown rather than extracted or mined. Soft commodities represent some of the oldest types of futures known to have been actively traded. This group of agricultural products may include products such as soybeans, cocoa, coffee, cotton, sugar, rice, and wheat, as well as all manner of livestock. Soft commodities are sometimes referred to as tropical commodities or food and fiber commodities.  HARD COMMODITIES: Hard commodities include natural resources that must be mined or extracted—such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestock—such as corn, wheat, coffee, sugar, soybeans, and pork.  GOVERNMENT BOND: A government bond is a debt security issued by a government to support government spending and obligations. Government bonds can pay periodic interest payments called coupon payments. Government bonds issued by national governments are often considered low-risk investments since the issuing government backs them. Government bonds may also be known as sovereign debt.  HIGH YIELD BOND: High-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they pay a higher yield than investment-grade bonds to compensate investors. Issuers of high-yield debt tend to be startup companies or capital-intensive firms with high debt ratios. However, some high-yield bonds are fallen angels, which are bonds that lost their good credit ratings.  INVESTMENT GRADE: An investment grade is a rating that signifies a municipal or corporate bond presents a relatively low risk of default. Bond rating firms like Standard & Poor’s and Moody's use different designations, consisting of the upper- and lower-case letters "A" and "B," to identify a bond's credit quality rating. "AAA" and "AA" (high credit quality) and "A" and "BBB" (medium credit quality) are considered investment grade. Credit ratings for bonds below these designations ("BB," "B," "CCC," etc.) are considered low credit quality, and are commonly referred to as "junk bonds."  MORTGAGE BOND: A mortgage bond is secured by a mortgage, or a pool of mortgages, that are typically backed by real estate holdings and real property, such as equipment.  PERPETUITY: A perpetuity is a security that pays for an infinite amount of time. In finance, perpetuity is a constant stream of identical cash flows with no end. The concept of perpetuity is also used in several financial theories, such as in the dividend discount model (DDM).  PRINCIPAL: Principal is most commonly used to refer to the original sum of money borrowed in a loan or put into an investment. It can also refer to the face value of a bond, the owner of a private company, or the chief participant in a transaction.  REAL INTEREST RATE: A real interest rate is an interest rate that has been adjusted to remove the effects of inflation. Once adjusted, it reflects the real cost of funds to a borrower and the real yield to a lender or to an investor. A real interest rate reflects the rate of time preference for current goods over future goods. For an investment, a real interest rate is calculated as the difference between the nominal interest rate and the inflation rate: Real interest rate = nominal interest rate - rate of inflation (expected or actual).  SOLVENCY: Solvency is the ability of a company to meet its long-term debts and financial obligations. Solvency can be an important measure of financial health, since its one way of demonstrating a company’s ability to manage its operations into the foreseeable future. The quickest way to assess a company’s solvency is by checking its shareholders’ equity on the balance sheet, which is the sum of a company’s assets minus liabilities.  TREASURY BILLS: A Treasury Bill (T-Bill) is a short-term U.S. government debt obligation backed by the Treasury Department with a maturity of one year or less. Treasury bills are usually sold in denominations of $1,000. However, some can reach a maximum denomination of $5 million in non-competitive bids. These securities are widely regarded as low-risk and secure investments. The Treasury Department sells T-Bills during auctions using a competitive and non-competitive bidding process. Noncompetitive bids—also known as non-competitive tenders—have a price based on the average of all the competitive bids received. T-Bills tend to have a high tangible net worth.  TIPS: Treasury inflation-protected securities (TIPS) are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation in order to protect investors from a decline in the purchasing power of their money. As inflation rises, rather than their yield increasing, TIPS instead adjust in price (principal amount) in order to maintain their real value.  YIELD CURVE: A yield curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity. There are three main shapes of yield curve shapes: normal (upward sloping curve), inverted (downward sloping curve), and flat.  ZERO COUPON BOND: A zero-coupon bond, also known as an accrual bond, is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value. ACCOUNTING  ACCRUED INCOME: Accrued income is money that's been earned but has yet to be received. Mutual funds or other pooled assets that accumulate income over a period of time—but only pay shareholders once a year—are, by definition, accruing their income. Individual companies can also generate income without actually receiving it, which is the basis of the accrual accounting system.  ACCRUED INTEREST: In accounting, accrued interest refers to the amount of interest that has been incurred, as of a specific date, on a loan or other financial obligation but has not yet been paid out. Accrued interest can either be in the form of accrued interest revenue, for the lender, or accrued interest expense, for the borrower. The term accrued interest also refers to the amount of bond interest that has accumulated since the last time a bond interest payment was made.  AUDITOR: An auditor is a person authorized to review and verify the accuracy of financial records and ensure that companies comply with tax laws. They protect businesses from fraud, point out discrepancies in accounting methods and, on occasion, work on a consultancy basis, helping organizations to spot ways to boost operational efficiency. Auditors work in various capacities within different industries.  BALANCE SHEET: The term balance sheet refers to a financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time. Balance sheets provide the basis for computing rates of return for investors and evaluating a company's capital structure. In short, the balance sheet is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. Balance sheets can be used with other important financial statements to conduct fundamental analysis or calculate financial ratios.  BOOK VALUE: Book value is equal to the cost of carrying an asset on a company's balance sheet, and firms calculate it netting the asset against its accumulated depreciation. As a result, book value can also be thought of as the net asset value (NAV) of a company, calculated as its total assets minus intangible assets (patents, goodwill) and liabilities. For the initial outlay of an investment, book value may be net or gross of expenses such as trading costs, sales taxes, service charges, and so on. The formula for calculating book value per share is the total common stockholders' equity less the preferred stock, divided by the number of common shares of the company. Book value may also be known as "net book value" and, in the U.K., "net asset value of a firm."  RETURN ON EQUITY (ROE): Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets. ROE is considered a gauge of a corporation's profitability and how efficient it is in generating profits. The higher the ROE, the more efficient a company's management is at generating income and growth from its equity financing.  FREE CASH FLOW (FCF): Free cash flow (FCF) is the cash a company generates after taking into consideration cash outflows that support its operations and maintain its capital assets. In other words, free cash flow is the cash left over after a company pays for its operating expenses (OpEx) and capital expenditures (CapEx). FCF is the money that remains after paying for items such as payroll, rent, and taxes, and a company can use it as it pleases. Knowing how to calculate free cash flow and analyze it will help a company with its cash management. FCF calculation will also provide investors with insight into a company’s financials, helping them make better investment decisions. Free cash flow is an important measurement since it shows how efficient a company is at generating cash. Investors use free cash flow to measure whether a company might have enough cash for dividends or share buybacks. In addition, the more free cash flow a company has, the better it is placed to pay down debt and pursue opportunities that can enhance its business, making it an attractive choice for investors. This article will cover how a company calculates free cash flow and how to interpret that FCF number to choose good investments that will generate a return on your capital.  GOODWILL: Goodwill is an intangible asset that is associated with the purchase of one company by another. Specifically, goodwill is the portion of the purchase price that is higher than the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process. The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and proprietary technology represent some reasons why goodwill exists.  INVENTORY: The term inventory refers to the raw materials used in production as well as the goods produced that are available for sale. A company's inventory represents one of the most important assets it has because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders. There are three types of inventory, including raw materials, work-in-progress, and finished goods. It is categorized as a current asset on a company's balance sheet.  NET PROFIT MARGIN: The net profit margin, or simply net margin, measures how much net income or profit is generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or business segment. Net profit margin is typically expressed as a percentage but can also be represented in decimal form. The net profit margin illustrates how much of each dollar in revenue collected by a company translates into profit.  LEVERAGE RATIO: A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans) or assesses the ability of a company to meet its financial obligations. The leverage ratio category is important because companies rely on a mixture of equity and debt to finance their operations, and knowing the amount of debt held by a company is useful in evaluating whether it can pay off its debts as they come due. Several common leverage ratios are discussed below.  ASSET TURNOVER RATIO: The asset turnover ratio measures the value of a company's sales or revenues relative to the value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with which a company is using its assets to generate revenue. The higher the asset turnover ratio, the more efficient a company is at generating revenue from its assets. Conversely, if a company has a low asset turnover ratio, it indicates it is not efficiently using its assets to generate sales.  INTEREST COVERAGE: The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense during a given period. The interest coverage ratio is sometimes called the times interest earned (TIE) ratio. Lenders, investors, and creditors often use this formula to determine a company's riskiness relative to its current debt or for future borrowing.  GEARING RATIO: Gearing ratios are financial ratios that compare some form of owner's equity (or capital) to debt, or funds borrowed by the company. Gearing is a measurement of the entity’s financial leverage, which demonstrates the degree to which a firm's activities are funded by shareholders' funds versus creditors' funds. The gearing ratio is a measure of financial leverage that demonstrates the degree to which a firm's operations are funded by equity capital versus debt financing  DIVIDEND YIELD: The dividend yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price. The reciprocal of the dividend yield is the price/dividend or the dividend payout ratio. QUANTS  TOTAL RETURN: Total return, when measuring performance, is the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends, and distributions realized over a period. Total return accounts for two categories of return: income including interest paid by fixed-income investments, distributions, or dividends and capital appreciation, representing the change in the market price of an asset.  HOLDING PERIOD RETURN: Holding period return is the total return received from holding an asset or portfolio of assets over a period of time, known as the holding period, generally expressed as a percentage. Holding period return is calculated on the basis of total returns from the asset or portfolio (income plus changes in value). It is particularly useful for comparing returns between investments held for different periods of time.  EXPECTED RETURN: The expected return is the profit or loss that an investor anticipates on an investment that has known historical rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these results.  REQUIRED RATE OF RETURN: The required rate of return (RRR) is the minimum return an investor will accept for owning a company's stock, as compensation for a given level of risk associated with holding the stock. The RRR is also used in corporate finance to analyze the profitability of potential investment projects.  EXCESS RETURN: Excess returns are returns achieved above and beyond the return of a proxy. Excess returns will depend on a designated investment return comparison for analysis. Some of the most basic return comparisons include a riskless rate and benchmarks with similar levels of risk to the investment being analyzed.  RISK ADJUSTED RETURN: A risk-adjusted return is a calculation of the profit or potential profit from an investment that takes into account the degree of risk that must be accepted in order to achieve it. The risk is measured in comparison to that of a virtually risk-free investment—usually U.S. Treasuries. Depending on the method used, the risk calculation is expressed as a number or a rating. Risk-adjusted returns are applied to individual stocks, investment funds, and entire portfolios.