The sum of currency in circulation, checkable deposits and traveler's checks.
M1 plus savings deposits, time deposits and money market mutual funds.h4>Market capitalization
It is the value ypu obtain when multiply the outstanding shares of a company by the price of a share unit.
Market orders are orders to buy or sell a contract/security at the current best price, whatever that price may be.
Risk associated with stock prices, interest rates and exchange rates.
Try to profit from markets based on short-term forecasts.
Market value index
Index tracking the market based on the evolution of securities market values.
Maximum drawdown is the percentage decrease in investment from its highest level to its lowest.
Management buyout happens when a firm is sold to the management.
Mega cap (ultra cap)
Stocks with a market value over $25 billion.
Stocks with a market value under $250 million.
Stocks with a market value between $1 billion to $5 billion.
Money Market funds
Money market funds invest in short term paper like treasury bills (short term bonds, less than one year maturity). They are very safe but provide a modest performance. The performance for money market funds is correlated with short-term interests.
The sum of currency, checking account funds and traveler's checks.
Monte Carlo simulation
A method consisting of generating random outcomes in order to estimate VAR.
Mortgage backed securities
Fixed income securities representing claim in a pool of mortgages.
In a mutual fund, investors are pooling money. The fund is a legal entity guaranteeing the proper management to investors. The management of the money is delegated to a fund manager.
Net Asset Value (NAV)
The net asset value is calculated by summing the portfolio assets less any liabilities (like the fees). The net asset value of a mutual fund is calculated periodically (every days, every months for example).
Open Ended Funds
The majority of mutual funds are open funds. Open funds continuously issue shares.
(Sales-cost of good sold-operating expenses)/sales
Operating profit margin
Measures how much profit is generated per sale.
Any risk arising from deficiencies in procedures, infrastructure, technology, resources, supervision or trade data.
A option gives the right, but not the obligation, to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time.
An investment approach in which the portfolio construction is not altered by short term expectations. Indexing is an example of passive investment.
Dividend per share/ earning per share
Price earning to growth ratio: Price earning/Annual EPS growth. The PEG ratio measures the relation between stock price, earning per share and company growth.
Pooled funds invested in order to provide retirement income.
Plain vanilla swap
An interest rate swap in which on party pays a fixed rate and the other pays a floating rate, all in the same currency.
All the securities held by an individual or corporation for investment purposes.
Price multiples are ratios of stock’s market price to some fundamental variable.
Price earning ratio
The price-earning ratio is very simple it is the Market value per share/ earning per share. If the PE is 10, this mean the investor is ready to pay 10 times the current earnings. Each industry has its level of PE but as a yardstick, PE under 10 is considered cheap and PE over 20 is considered expensive.
Price to book value
The price to book value ratio is the market value per share/total tangible assets- total liabilities. Again each industry has its own level of PB. But as a general thing a PB less than 1 means the total market value is less than the book value (which is good). The company could be cheap or meeting some difficulties.
Price to cash flow
The price to cash flow is bit more advanced. It is calculated the following way: Market value per share/cash flow per share. The interesting point is that it removes the effect of depreciation and other non-cash factors.
Price weighted index
Index tracking the market based on the evolution of individual security’s prices.
Private ownership in a non publicly traded company.
A legal document issued by a company about an investment.
(Current assets-inventory)/current liabilities
Inflation adjusted return.
Net receivable sales/Average net receivable
Calculates how many times the account receivables have been collected during an accounting period.
A downturn in economic activity with a declining GDP and rising unemployment.
Real estate investment trusts are pools of money invested in real estate properties and/or real estate debt. They trade like equities and pay out at least 90% of their income in dividends.
Restrictive fiscal policy
A increase in tax rates and/or reduction in government expenditures.
Restrictive monetary policy
Measures designed to reduce the general level of prices (rate of inflation).
Return on assets
Net earnings/Total assets
Risk management includes various aspects: Identifying, measuring and taking actions that bring the actual level of risk to a desired level.
Return on equity: Net earnings/owner’s equity. ROE measures the profits for each dollar invested.
A tax favored retirement plan. Contributions are not tax deductible but accumulation and capital withdraw is free of taxes.
Roth IRA (US)
Return on invested capital: Net earnings/(owner’s equity + long-term debt)