Definitions:

1. Acquisition: The process by which one company purchases another company or its
assets. Acquisitions can be friendly or hostile, depending on whether the target company
consents.
2. Active Investment Strategy: A portfolio management strategy where investors aim to
outperform the market index by actively making buy and sell decisions based on analysis.
3. Actuary: A professional who uses mathematics, statistics, and financial theory to assess
and manage risk, often working in insurance, pensions, or investment sectors.
4. Agency Cost: The costs incurred due to conflicts of interest between shareholders and
management, including monitoring costs and the loss of value due to managerial
decisions not aligning with shareholder interests.
5. Agency Problem: A situation where the interests of a company's management conflict
with the interests of its shareholders, potentially leading to inefficiencies.
6. American Option: A type of financial derivative that can be exercised at any time before
or on the expiration date, unlike European options, which can only be exercised at
expiration.
7. Amortization: The process of gradually paying off a debt over time in regular
installments or spreading out the cost of an intangible asset over its useful life.
8. Analyst: A professional who studies financial data, markets, or companies to provide
recommendations or insights to investors or management.
9. Angel Investor: An affluent individual who provides capital for a business start-up, often
in exchange for convertible debt or ownership equity.
10. AGM (Annual General Meeting): A yearly meeting of shareholders where the
company's performance is discussed, directors are elected, and key resolutions are voted
on.
11. Annuity: A financial product that pays out a fixed stream of payments to an individual,
typically used as an income stream for retirees.
12. Arbitrage: The practice of taking advantage of price differences between markets to
make a profit without risk, typically by simultaneously buying and selling an asset.
13. Arbitrageur: A trader who engages in arbitrage, exploiting inefficiencies in the market
to generate profits.
14. Arithmetic Mean: The sum of a set of numbers divided by the number of elements in the
set, commonly known as the average.
15. Ask Price: The price at which a seller is willing to sell a security or commodity in the
market.
16. Asset: Any resource owned by an individual or organization that holds economic value or
can provide future benefits.
17. ATM (At the Money): A situation in options trading where the option's strike price is
equal to the market price of the underlying asset.
18. Auction Market: A marketplace where buyers and sellers come together to bid on an
asset, and the price is determined by supply and demand.
19. Audit: An independent examination of financial records and practices to ensure accuracy
and compliance with accounting standards and regulations.
20. Accounts Payable: Short-term liabilities or money owed by a business to its suppliers or
creditors for goods and services received.
21. Accounts Receivable (Book Debt): The amount of money owed to a business by its
customers for goods or services delivered but not yet paid for.
22. Accruals: Revenues or expenses that are recorded in financial statements when they are
incurred, rather than when cash is exchanged.
23. Bad Debt: A debt that is unlikely to be collected from a customer or borrower, often
written off as an expense.
24. Balance of Trade: The difference between the value of a country’s exports and imports
over a period of time. A positive balance indicates a trade surplus, while a negative
balance indicates a trade deficit.
25. Balance of Payment (BOP): A comprehensive record of all economic transactions
between residents of a country and the rest of the world over a specific period, including
trade, investment, and financial transfers.
26. Balance Sheet: A financial statement that summarizes a company’s assets, liabilities, and
shareholders’ equity at a specific point in time.
27. Balloon Payment Method: A loan repayment method where small periodic payments
are made initially, followed by a large lump sum (balloon payment) at the end.
28. Bank Run: A situation where many depositors withdraw their money simultaneously due
to fears that the bank may collapse, potentially leading to insolvency.
29. Bank Reconciliation: The process of comparing a company’s financial records with
bank statements to ensure accuracy and identify discrepancies.
30. Bankruptcy Risk: The likelihood that a company will be unable to meet its financial
obligations and be forced into bankruptcy.
31. Banker’s Acceptance: A short-term credit instrument guaranteed by a bank, used in
international trade transactions.
32. Barter Trade: A system of exchange where goods and services are traded directly
without using money.
33. Basis Point (BPS): A unit of measure used in finance, equal to 0.01% (1/100th of a
percentage point), commonly used to express interest rate changes.
34. Bear Market: A market condition in which prices of securities decline over an extended
period, usually by 20% or more, leading to pessimistic investor sentiment.
35. Behavioral Finance: A field of study that examines how psychological influences and
biases affect financial decisions and market outcomes.
36. BO Account (Beneficiary Owner Account): A dematerialized account required to trade
securities electronically in stock exchanges.
37. Beta Coefficient: A measure of a stock’s volatility relative to the overall market. A beta
greater than 1 indicates higher volatility than the market, while a beta less than 1
indicates lower volatility.
38. Bid Price: The highest price a buyer is willing to pay for a security in the market.
39. Bill of Exchange: A written order from one party to another, requiring the payment of a
fixed amount of money at a specified date.
40. Bill of Lading: A shipping document issued by a carrier to acknowledge receipt of goods
for transportation.
41. Black-Scholes Option Pricing Model: A mathematical model used to determine the fair
price of options based on variables like stock price, strike price, volatility, time to
expiration, and risk-free rate.
42. Blue Chip Company: A well-established, financially stable company with a history of
consistent performance and reliable returns.
43. Bond: A fixed-income security issued by governments or corporations that pays periodic
interest and returns the principal at maturity.
44. Bond Indenture: A legal contract between a bond issuer and bondholders outlining the
terms and conditions of the bond.
45. Bonus Share: Additional shares issued to existing shareholders at no cost, typically as a
reward for holding the company’s stock.
46. Bootstrapping: A self-funding strategy where a business grows using its own profits
rather than seeking external financing.
47. Break-even Analysis: A financial calculation that determines the level of sales required
to cover total costs (fixed and variable) without generating profit or loss.
48. Bridge Loan: A short-term loan used to bridge the gap between two financing
arrangements, often used in real estate transactions.
49. Broker: An individual or firm that acts as an intermediary between buyers and sellers in
financial markets.
50. Budget: A financial plan that estimates income and expenses over a specified period.
51. Budget Deficit: A situation where a government’s or organization’s expenses exceed its
revenues.
52. Bull Market: A market condition characterized by rising security prices and positive
investor sentiment.
53. Bullet Loan: A type of loan where the principal is repaid in full at maturity, with interest
paid periodically.
54. Business Cycle: The natural fluctuations in economic activity over time, including
expansion, peak, contraction, and trough phases.
55. Business Plan: A formal document outlining a company’s goals, strategies, market
analysis, and financial projections.
56. Business Risk: The risk associated with the potential loss of profits due to market
fluctuations, competition, or operational issues.
57. Buy Limit Order: An order to buy a security at a specified price or lower.
58. Call Option: A financial contract that gives the buyer the right (but not the obligation) to
buy an asset at a predetermined price within a specified time.
59. Call Money Rate: The interest rate charged on short-term, overnight loans between
financial institutions.
60. Capital Asset Pricing Model (CAPM): A model used to determine the expected return
on an investment based on its risk relative to the market.
61. Capital Budgeting: The process of evaluating and selecting long-term investment
projects that will generate future cash flows.
62. Capital Gain: The profit earned from the sale of an asset that has increased in value.
63. Capital Market: A financial market where long-term securities such as stocks and bonds
are traded.
64. Covariance: A statistical measure of the relationship between two asset returns,
indicating whether they move together or in opposite directions.
65. Credit Crunch: A financial crisis characterized by a sharp reduction in the availability of
credit or loans.
66. Credit Rating: An assessment of the creditworthiness of an individual, company, or
government.
67. Credit Risk: The risk of financial loss due to a borrower’s failure to repay a loan.
68. Current Asset: Assets that are expected to be converted into cash within a year, such as
accounts receivable and inventory.
69. Current Liabilities: Financial obligations due within a year, such as short-term loans
and accounts payable.
70. Current Yield: A bond’s annual coupon payment divided by its market price, expressed
as a percentage.
71. Dealers: Individuals or firms that buy and sell securities for their own accounts rather
than on behalf of clients.
72. Depreciation: The allocation of an asset’s cost over its useful life, representing the
reduction in its value due to wear and tear.
73. Dividend: A portion of a company’s earnings distributed to shareholders as a reward for
their investment.
74. EPS (Earnings Per Share): A financial metric that measures a company’s profitability
by dividing net income by the total number of outstanding shares.
75. Equity: Ownership interest in a company, represented by shares.
76. Ex-Ante: A term referring to forecasts or expectations based on anticipated future events.
77. Ex-Post: A term referring to actual results after an event has occurred.
78. Real Interest Rate: The nominal interest rate adjusted for inflation, reflecting the true
cost of borrowing.
79. Factoring: A financial transaction where a company sells its accounts receivable to a
third party at a discount for immediate cash flow.
80. Financial Assets: Assets that derive value from contractual claims, such as stocks,
bonds, and bank deposits.