Investment Glossary

The implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.

A market condition in which securities prices fall 20% or more from recent highs.

Shares of very large and well-recognized companies with a long history of sound financial performance.

A fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).

A market condition in which prices are rising or are expected to rise.

An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.

Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods.

A risk management strategy that mixes a wide variety of investments within a portfolio.

The distribution of some of a company's earnings to a class of its shareholders, as determined by the company's board of directors.

The portion of a company's profit allocated to each outstanding share of common stock.

A type of pooled investment security that operates much like a mutual fund but trades on stock exchanges.

The marketplace where various national currencies are traded.

Alternative investments using pooled funds that employ different strategies to earn active return, or alpha, for their investors.

A type of mutual fund or unit investment trust with a portfolio constructed to match or track the components of a financial market index.

The process of offering shares of a private corporation to the public in a new stock issuance.

The efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price.

The total value of a company's shares of stock. It is calculated by multiplying the price of a stock by its total number of outstanding shares.

A type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets.

The ratio for valuing a company that measures its current share price relative to its per-share earnings.

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).

A significant decline in economic activity spread across the economy, lasting more than a few months.

A performance measure used to evaluate the efficiency or profitability of an investment.

An investment or trading strategy that speculates on the decline in a stock or other security's price.

A security that represents the ownership of a fraction of a corporation.

A statistical measure of the dispersion of returns for a given security or market index.

The income returned on an investment, such as the interest received from holding a security.