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Financial glossary

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  • Accepted bill of exchange

    A bill of exchange that has been accepted by the drawee (the buyer or debtor) by writing on the face of the bill the word “Accepted” (or equivalent) and the drawee’s signature.

  • Accounting

    Set of methods for recording the various items that reflect the economic and financial flows of an economic agent in relation to its environment.

  • Accounting entry

    An individualised written record of a commercial transaction in an accounting journal or ledger.

  • Adjustment

    Process aimed at resolving economic imbalances, such as inflationary pressures, public sector deficits, balance of payments imbalances, excess supply, etc. An adjustment may involve monetary measures, public spending cuts, wage moderation, industrial restructuring, etc.

  • Admission to trading

    The process whereby securities that meet the necessary requirements are authorised to be bought and sold on regulated markets.

  • AIAF

    Asociación de Intermediarios de Activos Financieros, Spain’s benchmark market for corporate debt and private fixed income.

  • Amortisation

    Gradual settlement of a company’s debts.

  • Annual general meeting (AGM)

    A general meeting of shareholders that companies are required by law to hold once a year. At the AGM the shareholders may elect the board of directors, receive the company’s accounts, decide on dividends, vote on proposed resolutions, and ask questions about the company and its management.

  • Appreciation

    An increase in the value of an asset over time.

  • Arbitrage

    Buying or selling of marketable securities in order to make a profit from differences in the price of the same security in two different stock markets.

  • Assets

    Goods and claims belonging to an individual or corporation. In accounting and on a company’s balance sheet, the assets (traditionally on the lefthand side, facing the liabilities) are the entries that reflect investments made in fixed capital, other kinds of long-term assets, goods for resale, inventories (of finished goods), claims of any kind, cash and deposits, and financial assets (investments in securities, public funds, etc.).

  • At par

    At its face or par value, as opposed to “over par” or “under par”. A bond that is trading at par is quoted at 100.

  • Auction

    A mechanism for buying and selling goods or services by inviting bids from potential buyers and awarding the item to the highest bidder.

  • Audit

    Verification and review of the financial statements of an organisation, involving a detailed examination of the accounts and records and an analysis of financial and economic aspects, tax matters, relationships with third parties, guarantees, and consistency of the criteria applied. // Examination of a company’s accounts by independent experts. // The auditing of the accounts of a company or any other public or private body (carried out by a fully qualified auditor or a recognised firm of auditors) allows the auditor to form a professional opinion as to whether the accounts give a true and fair view of the assets and liabilities, financial position and results of operations of the company or organisation over a given period.

  • Aval

    Joint undertaking to pay an obligation in favour of the obligor, granted by a third party. Strictly speaking, it refers exclusively to debt instruments.

  • Balance sheet

    An overall statement of a company’s assets, liabilities and shareholders’ equity. A financial statement that reflects a company’s financial position at any given point in time. A balance sheet is divided into two parts: a) assets, and b) liabilities and equity. The assets are the resources the company has at its disposal, while the liabilities and equity are where those resources came from. The assets normally include cash, bank deposits, notes receivable, trade and other receivables, goods for resale, work in process and finished goods, fixed assets and financial assets. Among the liabilities are paid-in capital, reserves, borrowings, and undistributed profits.

  • Balance sheet analysis

    Examination, comparison and interpretation of the items that make up a balance sheet.

  • Banco de España

    The central bank of Spain, which acts as banker to the Government. It is an issuing institution with the European System of Central Banks, bank of banks, banking system supervisor, and monetary policy advisor.

  • Bank loan

    A loan extended by a credit institution, whereby the money is made available to the borrower for a certain period of time, after which the money must be repaid, in return for payment of interest and fees.

  • Bankruptcy

    The state of an individual or corporation that is found by a court to be insolvent, i.e., to have insufficient assets to meet its debts and liabilities.

  • Bear market

    A market in which prices are falling, or in which investors expect prices to fall.

  • Bearer security

    A security whose ownership is not registered and which is therefore owned by whoever physically holds the paper on which the security is issued.

  • Bearish

    Downward-moving (prices), or expecting a downward movement in prices (investors).

  • BOE

    Boletín Oficial del Estado, a Spanish government publication in which new laws and decrees, the outcome of public tenders, details of government grants and other matters are published, together with advertisements for public-sector posts and contracts.

  • Bond

    A type of debt security issued by public and private entities. Most bonds are bearer bonds, are negotiable and pay either fixed interest or a floating rate of interest based on a benchmark index.

  • Bonus

    A reward paid for achieving certain business goals or financial results.

  • Book entry

    A system of tracking ownership of securities where no certificate is given to investors.

  • Borrowing

    Means by which companies obtain outside financing, i.e., raise funds from outside sources in order to carry on their business.

  • Break-even point

    The point at which a business’s revenues equal its costs, i.e., the point beyond which the business becomes profitable.

  • Broker

    An individual or firm that acts as an intermediary between buyers and sellers in various fields, especially commodities, loans, real estate and securities.

  • Bubble

    High-volume trade in property, securities, assets, etc. at prices well above their intrinsic value. Bubbles are largely attributable to speculation, which gives rise to an excessively steep and prolonged increase in the price of an asset. After a time, when there are no more willing buyers, there is a massive sell-off of the asset, at which point the bubble “bursts”.

  • Bull market

    A market in which prices are rising, or in which investors expect prices to rise.

  • Bullish

    Upward-moving (prices), or expecting an upward movement in prices (investors).

  • Business cycle

    Fluctuation of economic activity, usually in three phases: expansion, recession and recovery. The fluctuations are observed in the successive expansions and contractions of the different branches of economic activity.

  • Capital

    In general terms, the financial resources which an economic entity or subject has at its disposal in order to make an investment or carry on an activity. // A balance sheet account that records the contributions made by a company’s shareholders.

  • Capital adequacy ratio

    Ratio of a bank’s capital to its risk-weighted assets. It is a measure of a bank’s financial strength or capacity to absorb losses.

  • Capital gain

    Profit obtained on disposal of a capital asset.

  • Capital increase

    Decision taken by the General Meeting of a public limited company, or by its Board of Directors acting under an authority given by the General Meeting, to issue new shares, so as increase the company’s registered capital.

  • Capital ratio

    The ratio of a bank’s capital to its risk-weighted assets. Regulators stipulate a minimum capital ratio in order to ensure that financial institutions hold sufficient capital in relation to their level of risk.

  • Capitalisation

    Injection of capital into a company, or conversion of a company’s reserves into new shares. // Treatment of a cost, for accounting purposes, as an asset rather than as an expense.

  • Cash

    In accounting, the name of the account in which inflows and outflows of cash are recorded. The cash account is shown on the asset side of the balance sheet.

  • Cash flow

    Profit + depreciation.

  • CECA

    Confederación Española de Cajas de Ahorros, the Spanish Confederation of Savings Banks.

  • CIF

    Código de identificación fiscal, the tax identification code of a business in Spain.

  • CNMV

    Comisión Nacional del Mercado de Valores, the Spanish National Securities Market Commission, a body attached to the Ministry of Economy and Finance that is responsible for the supervision and inspection of the primary and secondary securities markets, securities dealers and brokers, and collective investment undertakings, ensuring transparency, proper price discovery and investor protection.

  • Consolidated balance sheet

    Balance sheet of a group of companies. The parent of a group holds shares that give it the power to govern the financial and operating policies of its subsidiaries.

  • Consumer price index (CPI)

    An index that measures the level of prices of consumer goods and services in a particular country.

  • Corporate bond

    A debt security issued by a corporation in order to raise money. Corporate bonds usually have a maturity of at least one year and pay a fixed rate of interest (coupon). Some corporate bonds may be convertible into shares (convertible bonds). Unlike shares, bonds do not give their holder an equity stake (i.e., a share of ownership) in the company, although bond holders may form an association to defend their rights if their rights are threatened by the company’s actions.

  • Cost

    Expenditure incurred in the production of a good or service.

  • Cost of capital

    The average cost to a company of the capital it uses in its operations. A company’s cost of capital will generally be made up of interest and finance costs (on loans, credit, etc.) and the remuneration of capital (dividends and other economic benefits paid to shareholders).

  • Coupon

    Periodic interest payment received by the holder of a bond. Historically, bonds were issued in the form of paper certificates, with several coupons printed on them, each coupon entitling the holder to a payment of interest at the scheduled date.

  • Crash

    A sudden steep decline in stock prices.

  • Credit

    The granting of resources (money, or goods and services) by one person (the creditor or lender) to another (the debtor or borrower) in return for a promise to pay for those resources at a later date.

  • Credit rating

    An assessment of the creditworthiness of an individual or corporation. Credit ratings are commonly assigned by credit rating agencies.

  • Debt

    Capital, such as bonds or bank loans, supplied to a company by a lender, which the company promises to repay with interest.

  • Debt security

    A debt instrument such as a bond, debenture or promissory note which is issued with a promise of repayment on a certain date at a specified rate of interest. If under certain conditions it can be converted into shares, it is known as a convertible debt security.

  • Defer

    Postpone (payment, income, tax).

  • Demand deposit

    A bank deposit from which cash may be withdrawn at any time without notice.

  • Deposit

    A quantity of money in the form of cash or financial assets paid into a credit institution by a customer to be held in custody by the institution, earning interest.

  • Depreciation

    A decrease in the value of an asset over time. // A method of allocating the cost of acquiring long-term assets over the useful life of the assets. // Percent reduction in the value of an asset recorded on the balance sheet each year, so that the current value of the asset, which declines with use or obsolescence, is faithfully reflected.

  • Dividend

    An amount of money per share paid by a company to its shareholders out of the company’s distributable earnings, i.e., earnings after reserves, amortisation and depreciation and income tax.

  • Dividend yield

    The amount a compay’s shareholders receive in dividends in a given year in relation to the current share price. It is a measure of the return to the shareholder.

  • Drawee

    Individual or corporation on whom a bill of exchange is drawn. The drawee is the party who must pay the amount of the bill at maturity.

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  • Earnings per share (EPS)

    A company’s total earnings or net income divided by its shares outstanding. EPS can be used to compare companies for investment purposes.

  • EBIT

    Earnings before interest and taxes.

  • Economic rent

    In economics, any payment to a factor of production above the minimum level below which the factor would not be willing to produce anything.

  • EFTA

    European Free Trade Association.

  • Equity

    The capital and reserves of a company. Equity represents the company’s own funds, as opposed to borrowed funds, or debt capital. It comprises all the financial resources owned by the company: capital, reserves and provisions. In financial analysis equity is equivalent to “net assets”.

  • Equity arbitrage

    An investment strategy used prior to mergers and acquisitions, in which an investor short-sells the shares of the acquiring company and buys the shares of the target company in the expectation that the shares of the acquiring company will fall in value once the merger or acquisition is completed and that those of the acquired company will gain, thus making a profit on both sides.

  • Euribor

    Euro Interbank Offered Rate, the rate at which Euro interbank term deposits are offered by one prime bank to another prime bank within the EMU zone.

  • European Central Bank

    The central bank of the single currency, the euro. Its main function is to maintain price stability in the euro area and so maintain purchasing power. It is governed by the statutes of the European System of Central Banks, which is a protocol annexed to the Treaty establishing the European Community.

  • Exchange rate

    The value of one currency in terms of another currency, usually expressed in terms of the quantity of one currency required to purchase one unit of the other currency.

  • Exchange value

    In economic theory, the worth of one good or service expressed in terms of the worth of another.

  • Extraordinary general meeting

    A general meeting other than the annual general meeting, usually held to debate special issues concerning the company. The calling and conduct of extraordinary general meetings is regulated by company law.

  • Face value

    The value shown on the face of a security certificate or stated by the issuer.

  • Fair value

    A rational and unbiased estimate of the potential market price of a good, service, or asset.

  • Finance

    To provide the economic resources that are needed in order to form a company, execute a project or conduct a commercial transaction.

  • Finance costs

    In the income statement of a company or in the national budget, interest expense and other borrowing costs.

  • Finance lease

    A method of financing the purchase of assets (buildings, plant, machinery, vehicles, etc.). The lessor (a finance company) purchases the asset and leases it to the lessee in return for rental payments covering the cost of acquisition of the asset, interest and any tax payable. At the end of the lease period the lessee has the option to acquire ownership of the asset.

  • Financial analysis

    Process of testing the rationality of a company’s basic decisions, the choice of financial means and the use of these means in investments that will enable the company to achieve the goals it has set itself. It consists of examining the company’s balance sheet, subjecting it to close critical scrutiny in order to assess the company’s exact situation, looking at the company’s cash, the state of its receivables and payables, and the financing of its fixed assets.

  • Financial instrument

    A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments include, among others, cash, deposits, commercial paper, bonds, shares and derivative securities.

  • Fixed assets

    A company’s long-term investments, plus deferred expenses (establishment costs, capital increase expenses, etc.).

  • Fixed capital

    The part of total capital that is invested in fixed assets and is not immediately used up in the production process. The part of a company’s assets that takes the form of lasting resources such as factories, machinery, transport equipment, etc., in contrast to circulating capital.

  • Flotation

    The sale of a company’s shares on the stock market for the first time, converting what was a private company into a public company.

  • General Chart of Accounts

    In Spain, the national accounting plan, which came into force in 1973 and was subsequently supplemented with adaptations for application to different industries. Its purpose is to impose consistency in companies’ financial statements and facilitate a variety of financial and fiscal measures, etc.

  • General meeting

    A meeting of the shareholders of a company to debate company matters. The general meeting is regulated by company law. It has the power to elect directors and set guidelines for directors’ actions, receive the accounts, etc. In recent years, it has been usual for the general meeting to follow the recommendations of the board of directors, except in crisis situations, where confrontation may arise.

  • Government bond

    A debt security issued by a national government.

  • Gross profit

    The difference between revenue and expenses for the year before deducting depreciation and amortisation.

  • Gross tax base

    The assessed value of a taxpayer’s assets, investments or income that is subject to taxation. It is the quantity used to assess a taxpayer’s ability to pay.

  • Growth

    In economics, an increase in a variable, especially gross domestic product (GDP), the rate of which may give an idea of the rate of expansion of an economy.

  • Guaranteed bill of exchange

    A bill of exchange to which the drawee’s bank has added its guarantee.

  • Haircut

    Percentage deduction from the value—as assessed by the lending side of a transaction—of an asset used as collateral.

  • Hedge fund

    A high-risk, speculative investment fund.

  • Holding company

    A company whose purpose is not to produce or sell goods or services but to hold shares in other companies over which it exercises control.

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  • Inflation

    An overall general increase in the prices of goods and services in an economy over a period of time. One measure of inflation is the inflation rate, i.e., the annualized percentage change in a general price index.

  • Initial public offering (IPO)

    The first offering of a company’s shares to the public.

  • Insolvency

    Situation where a debtor is unable to pay its debt.

  • Interest rate

    Cost paid by borrowers for the use of the money they borrow. Generally, expressed as a percentage of the amount borrowed for a period of one year.

  • Internal rate of return

    The interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. It is an indicator of the yield of an investment and can used to compare and rank investment projects.

  • International Monetary Fund (IMF)

    An agency of the United Nations Organization (UN) whose purpose is to promote international monetary cooperation and facilitate balanced growth of world trade by creating a multilateral payment system for current transactions and removing restrictions on international trade.

  • International monetary system

    Set of agreements, conventions, rules and institutions, around the International Monetary Fund, that guide financial relationships between the national economies that belong to the system.

  • Investment bank

    A type of bank whose principal activity is the financing of companies through the placement of securities with the public.

  • Issue

    To circulate securities so that they are available to buyers. In a general sense, to create and circulate currency, cheques, bills of exchange, trade bills and marketable securities.

  • Issue value

    Price at which a security was issued.

  • Issued capital

    The part of a company’s authorised capital that has been issued and allotted to shareholders in the form of shares.

  • Jumbo bond

    A very high-value bond issue.

  • Junk bonds

    Bonds rated ‘BB’ or lower on account of its high default risk. // Bonds issued by companies created to carry out certain financial transactions, especially to acquire other companies using techniques such as hostile takeover bids; or bonds issued by companies whose ability to meet their debt obligations is in doubt. Junk bonds tend to offer high yields.

  • Key reversal day

    A sharp one-day reversal of a price trend in stock market trading, interpreted as a sign of an imminent change of trend.

  • Keynesian

    Relating to a school of macreconomic thought founded on the work of John Maynard Keynes, especially his book “The General Theory of Employment, Interest and Money”. Keynesian thought centres on an analysis of the causes and consequences of aggregate demand and how aggregate demand relates to the level of employment and revenue or income. Its ultimate goal is to overcome periods of crisis and recession through control of the state budget (fiscal policy).

  • Kite cheque

    Cheque written without funds.

  • Kite flying

    The use of accommodation bills or other forms of raising money on credit, not supported by assets, in order to appear affluent or credit-worthy.

  • Knock down

    To declare sold at an auction by a blow of the auctioneer’s hammer or gavel.

  • Know-how

    Technical and practical knowledge. // Knowledge, techniques and skills of an organisation to implement, develop, or optimise projects, processes, functions, etc., both in the creation of products and services and in production, marketing, logistics, etc. // The term also applies to advanced technology transfer.

  • Liabilities

    In accounting, the right-hand side of the balance sheet, on which the company’s capital, reserves, profit for the year and other obligations to third parties are recorded.

  • Liquidity

    The ease and speed with which an asset can be converted into cash. // Money available for spending and investing.

  • Long term

    Generally speaking, a long period of time, for the purpose of loans, planning, etc. // In macroeconomics, the time period that allows all the economic variables to adjust to changes. It is defined in opposition to the short term.

  • Loss

    In accounting, a situation where the expenses in a company’s income statement are greater than the revenue.

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  • M1, M2, M3

    There are different measures of the money supply. M1 comprises cash and money held in current accounts; M2 comprises M1 plus small savings deposits, certificates of deposit and non-institutional money market funds; M3 comprises M2 plus large savings deposits and institutuional money market funds.

  • Management buy-in (MBI)

    Purchase of a company by a management team from outside the company, usually with private equity funding.

  • Margin

    Collateral that the holder of a financial instrument has to deposit in order to cover some or all of the credit risk of its counterparty.

  • Market capitalisation

    A publicly traded company’s share price multiplied by the number of shares outstanding, giving the total value of the company’s issued shares.

  • Market price

    The price at which a good can be bought or sold in the market. // In securities markets, a security’s last reported sale price (if on an exchange) or its current bid and ask prices.

  • Maturity

    Time period at the end of which a loan or other financial instrument must be repaid with interest.

  • Monetary base

    The sum of notes and coins in circulation and banks’ deposits with the central bank. The monetary base therefore reflects the amount of immediately available funds.

  • Monetary system

    Set of legal and institutional mechanisms by which the supply of money in a country’s economy is regulated.

  • Money laundering

    The practice of engaging in financial transactions in order to conceal the source and destination of the money involved in the transactions.

  • Mortgage

    A conveyance of a legal or equitable interest in land, with a provision for redemption. Upon repayment of the loan secured by the mortgage, the conveyance becomes void. // A loan secured by a legal or equitable interest in land.


    North American Free Trade Agreement. An agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.


    National Association of Security Dealer’s Active Quotations. An electronic quotation system that provides price quotations to market participants about the more actively traded common stock issues in the OTC market. About 4000 common stock issues are included in the Nasdaq system.

  • Nationalise

    To transfer a private company or private assets to public ownership.

  • Net profit (in US English, net income)

    Gross profit after deducting depreciation and amortisation and taxes.

  • Net tax base

    The gross tax base less any deductible items. It is the result of deducting from the gross tax base any benefits designed to tailor the tax to the circumstances of the individual taxpayer or to support a particular economic policy. If there are no deductible items, the net tax base must be equal to the gross tax base.

  • Object of a company

    The object of a company is the business, activity or trade for which the company has been set up. A company’s object or objects are stated in its articles of association or bylaws.

  • Object of a tax

    The object of a tax is the activity or tangible thing that is being taxed. For example, the object of a sales tax is the activity of the sale.

  • On account

    Partial payment of a debt; or delivery of a fraction of the purchase price.

  • Operating lease

    A lease arrangement in which the lessee pays for the right to use an asset without acquiring ownership of the asset. In an operating lease, the lease payments are accounted for as an operating expense and no assets or liabilities are recorded on the lessee’s balance sheet.

  • Operating profit

    Profit obtained from a company’s normal activities, without considering interest or taxes.

  • Over par, above par

    Above the face value. A security that is trading over par is being bought and sold for more than its face value.

  • Par value

    Face value of a share or bond.

  • Pay off

    To settle (a debt).

  • Payback period

    The length of time it will take to recover the cost of an investment.

  • PBT

    Profit before tax.

  • Poison pill

    A strategy used by a corporation’s board of directors to discourage hostile takeovers by giving shareholders special share purchase rights that make the company’s stock less attractive to a potential acquirer.

  • Preferred shares, preferred stock

    Shares that have a dividend that is paid before any dividend is paid to common shareholders.

  • Private Banking

    Banking activity aimed at managing the assets of private customers (normally high income customers), typically offering comprehensive financial, tax and legal advisory services.

  • Pro rata allotment

    Where an issue is oversubscribed, the allotment of shares to each investor in proportion to the amount of shares requested.

  • Profit

    Difference between revenue and expenses in a transaction. // The net amount earned by a company after deducting the cost of goods consumed, expenses and taxes.

  • Promissory note

    A negotiable instrument by which one party promises to pay a stated sum of money to another party on demand or at a specified future date.

  • Property management

    The operation of a property as a business, including rental, rent collection, maintenance, etc. Property management companies oversee all of the logistics that go along with renting or leasing property for profit.

  • Public offering

    An offering of shares or other securities of a company to the public in order to raise capital.

  • Public spending

    Expenditure incurred by the public sector of a country, i.e., all levels of government and government agencies, in their budgets and through extrabudgetary funds.

  • Public tender offer

    A solicitation by an individual or corporation to purchase a substantial percentage of a company’s registered shares from the current shareholders, so as to obtain control of the company.

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  • Quick ratio

    Current assets less inventories divided by current liabilities. It is a measure of a company’s ability to meet its short-term obligations.

  • Rate of return

    The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost.

  • Rating agency

    A body that assigns credit ratings to issuers of debt instruments and the debt instruments themselves, based on their risk. In the international capital markets issuers are rated according to their solvency and capacity to repay their debts. Two of the best known rating agencies are Moody’s and Standard & Poor’s.

  • Ratio

    A ratio expresses the relationship between two numbers. Ratios are used to compare different amounts of things, e.g., risk and return, debt and equity, loans and deposits.

  • Rebate

    A refund of a percentage of the amount paid for goods purchased in large quantity. Rebates are used as sales promotions.

  • Redemption

    Return of the principal amount invested in a fixed income security at or before maturity // Sale of units in an investment fund.

  • Repayment

    The return of borrowed funds on certain terms and conditions, which in the case of transferable securities will be the terms and conditions of the issue prospectus.

  • Repurchase agreement

    A short-term secured loan, in which a seller agrees to sell a security to a buyer at a specified price, with a commitment to buy the security back at a later date for another specified price, which will be higher than the original selling price. The buyer effectively acts as a lender, while the difference between the selling price and the buying price effectively represents interest.

  • Return

    The yield, revenue, or profit accruing from an investment, transaction, or venture.

  • Rights issue

    An issue by a company to its existing shareholders of rights to buy additional shares in the company (usually at a discount), in proportion to their current shareholding.

  • Saving

    Surplus of income over current expenditure. When consumption expenditure is equal to or less than income, saving occurs. // In macroeconomics, the part of income that is not consumed but is used to meet future needs, especially investment needs. // In the national accounts, gross saving is the change in the net worth of the economic agents (including depreciation and amortisation) over a certain period. // Normally, net saving implies deducting depreciation and amortisation from fixed capital.

  • Securities portfolio

    Set of fixed income and equity securities owned by an individual or corporation.

  • Securitisation

    The process of converting existing assets or future cash flows into marketable securities, backed by the assets or cash flows.

  • Security

    A financial instrument.

  • Self-financing

    Use of own funds (usually retained earnings and depreciation) to finance investment projects, without resorting to borrowing.

  • Share (in US English, stock)

    Each of the parts into which the share capital of a public limited company is divided. Shares may be registered or bearer shares and can be divided into series, with different rights attaching to each series. A holder of shares has pre-emption rights in successive capital increases, is entitled to receive a share of the company’s earnings (dividend), has a share in the company’s assets and liabilities in the event of a winding-up, and has the right to vote in the General Meeting, provided the minimum holding prescribed by the company’s bylaws for the exercise of this right is met. The shares of companies that meet certain requirements may be bought and sold on the stock exchange. // Security representing a proportional part of a company’s share capital.

  • Share capital (in US English, capital stock)

    The face value, in currency units, of the shares of a public limited company at a given point in time. It is equal to the sum of the founding capital plus any subsequent capital increases. It is also referred to as registered capital.

  • Shareholder (in US English, stockholder)

    Owner of one or more shares of a company.

  • Shareholders’ equity

    Total assets minus total liabilities of a company.

  • Short selling

    Selling of a security that the seller does not own but has promised to deliver.

  • Solvency

    The ability of an individual or corporation to pay its debts.

  • Solvency ratio

    Ratio used to measure the ability of a company to meet its long-term debts. It is calculated as (After Tax Net Profit + Depreciation) / Total liabilities.

  • Speculation

    Practice of engaging in high-risk trading on the stock market in the hope of profiting from fluctuations in the market price of a security.

  • Spread

    The difference between the bid and the ask price of a security or asset.

  • Starting balance sheet

    A company’s first balance sheet, reflecting the share capital and the cash and non-cash contributions made by shareholders.

  • Stock exchange

    A market in which listed securities (shares, bonds, etc.) are traded.

  • Stock index

    An indicator of the value or performance of a stock market as a whole or of a sector of the market. A global stock index represents the performance of large companies across several national stock markets, whereas a national stock index tracks the performance of the stock market of a particular country.

  • Swap

    The exchange of financial instruments with different cash flows.

  • Swap line

    Bilateral currency swaps between central banks.

  • Takeover bid

    An offer to the shareholders of a target company to buy their shares, with the aim of gaining control of the company.

  • Term deposit, time deposit

    A bank deposit from which funds cannot be withdrawn for a certain period of time.

  • Trade balance

    Ratio of exports to imports. It is expressed in terms of the “cover ratio” (exports divided by imports at base 100).

  • Trade bill

    A bill of exchange used to defer payments between buyers and sellers, or between businesses and their suppliers and customers.

  • Trading room

    The office in which a bank’s traders operate on financial markets.

  • Treasury shares

    Own shares held by companies in order to ward off hostile buyers (“sharks”) or influence the price of their shares on the stock exchange.

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  • Under par, below par

    Below the face value. A security that is trading under par can be bought for less than its face value.

  • Use value

    In economic theory, the worth of a good in terms of its ability to satisfy wants.

  • Value

    Measure of the worth of a good that meets human needs, as distinct from “use value” and “exchange value”.

  • Warrant

    A security that gives the holder the right, but not the obligation, to buy an underlying security (often the shares or bonds of the issuing company) at a certain price within a certain time. Warrants are often included in new issues of shares and bonds as means of attracting investors.

  • Warrant bond

    A bond with an attached warrant giving the holder the right to buy shares in the company or a subsidiary for a set price at a set time in the future.

  • World Bank

    An international economic body, founded together with the International Monetary Fund (IMF), whose function is to extend loans on a global scale, but most particularly to developing countries.

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  • Yield

    The annual income provided by an investment, usually expressed as a percentage of its cost or of its current value.

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