Dictionary


G-L

GDP

The value of all final goods and services produced within a country during a specific period.

GNP

The value of all final goods and services produced by citizen of a country during a specific period.

Gross profit margin

Revenue-COGS /Revenue or Gross profit/sales

The gross profit margin shows the basic cost structure of the firm.

Hedge funds

Pooled investment vehicle generally less regulated. Hedge funds use various strategies, hedged or not.

Hedging

Strategy looking for reducing or eliminating risk.

High yield

Sub-strategy focusing on high dividend stocks with prospects of maintaining or increasing dividend.

High-water mark

A net asset value level that a fund must exceed before any performance fees are paid to the fund manager.

Implied volatility

The volatility derived from the price of an option and a particular option-pricing model.

Index

A statistical measure of the market that represents the value of a basket of securities.

Inflation

An increase in the general level of prices.

Information ratio

It is a measure of risk adjusted performance. Mean active return to the tracking risk.

Intrinsic value

It is what a company is worth under an analysis of the company’s financial position.

Institutional investors

Companies or legal entities that serve as financial intermediaries between individual and financial markets.

Inventory turnover

Sales/Inventory

Investment policy statement

A written document that sets out the client characteristics such as return objectives, risk tolerance, time horizon, liquidity needs, tax considerations regulatory requirements and other circumstances.

Investment risk

Risks due to the nature of markets, investment manager styles and strategies, securities held and derivatives used.

IPO

Initial Public Offering is when a firm’s equity is offered to public sale.

Junk bonds

Bonds with a credit rating of BB or lower. These bonds usually pay high yields in order to compensate investors for greater risks.

Large cap

Stocks with a market value between $5 billion to $25 billion.

Leveraged buyout

When an investor acquires a significant portion of company's equity using a high percentage of debt by issuing for example high yield bonds.

LIBOR

London Inter Bank Offer Rate: The Eurodollar rate at which London banks lend dollars to other London banks.

Liquidity

Liquidity refers to how quickly you can convert a particular asset in cash.

Liquidity risk

A risk of value loss because you need to sell non liquid assets to meet liquidity requirements.

Liquidation value

The liquidation value is what a company would be worth if the company was liquidated and the assets were sold.

Limit order

Limit orders are orders to buy or sell a contract/securities at a specific or better price.

Lock up period

A minimum initial period for an investment during which you cannot withdraw your investment.

Long run

A sufficient long period to enable decision makers to adjust fully to a market change.

Long-term debt to equity ratio

Long-term debt/Shareholder equity

This ratio excludes the short-term liabilities. For example a company can roll over continuously its short-term commitment. In this case it is more long term financing.


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