Assessing and understanding the risks associated with investment is one of the biggest decisions an investor has to make. It’s important to know how to measure, understand and express the level of risk that you face when investing. One of the most common ways to do this is by using a statistical measure known as… [Read More]
Definitions of Investment and Stock Market Terms
Please refer to the basic stock market terms here.
The definitions here expand and augment the list referenced above. These definitions are of interest to intermediate and advanced readers, specially for practicing investors in the stock market. We go into sufficient detail necessary to make the concept clear, and give examples where necessary.
Risk Premium Definition The risk premium is the minimum amount of money that a person is willing to accept as compensation for taking on a risky or volatile investment. So, in investing, it is the minimum amount of money by which the expected return on a risky investment exceeds the known return on a non-risky… [Read More]
Diversification Definition When looking to invest, you’ll often be advised to “diversify” your portfolio. But exactly what is diversification? In short, diversification of a portfolio is a risk-management technique. A diverse portfolio is comprised of a variety of types of investments, instead of just one or two. The thought process and rationale behind portfolio diversification… [Read More]
PEG ratio is often used to bridge the gap between value and growth. Most value investors tend to consider the P/E ratio as one of the more important qualifying metric to find a value stock. However, the P/E ratio often does not tell the complete story. A stock may sell for a low price to… [Read More]
Whether you are looking at investing or just want to get a better handle on finances, there are a lot of important terms to know. One of these terms is the debt to equity ratio. This is also called the debt/equity ratio, D/E ratio or simply referred to as “risk.” To help you with your… [Read More]
As an investor, you want to make sure that your money is being spent wisely. Some companies do better with investment capital than others do, and knowing your money is going to be well-spent is a great incentive to invest in that particular business. This is where “return on equity” comes in. Return on Equity… [Read More]
When considering which companies to invest in, there are a lot of factors to look over. It can confusing or intimidating at first, but the more you know, the more able you are to make wise decisions with your money. One of these factors that might seem confusing as first is “Return on Assets.” Read… [Read More]
An investment portfolio is basically a collection of assets owned by an individual or institution designed to grow in value or provide income. Typically, an investment portfolio is well-diversified, and may contain many different types of assets, including cash, real estate, and gold. Most commonly, however, an investment portfolio will contain stocks and bonds whose… [Read More]
In the world of investing, a knowledge of some of the basic terms crucial to managing your money successfully. One of those terms is “Mutual Fund.” If you’re not familiar with the definition of mutual fund or how mutual funds can work for you, read on to learn more. What is a Mutual Fund? A… [Read More]
You’ve no doubt heard the term “stock index” before. Whenever financial news is talked about, stock indices are a big part of the discussion. But, what does the term mean, and what do you need to know about them? If you’ve wanted to know more about stock indices, read on. What is a Stock Index?… [Read More]