GLOSSARY
Types Of Financial Securities:
Share/Stock: Ownership share in a company, which gives the right to a portion of its profits.
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ETF or Exchange Traded Fund: An ETF holds a diversified basket of securities, such as stocks, commodities or bonds, and is designed to track the performance of a specific benchmark index.
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Bond: Loan made to a business or government, with the promise of repayment with interest.
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Contingent convertible bond (or AT1 / Coco): Type of bond that can be converted into shares if the financial health of the issuer deteriorates.
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FRN or Floating Rate Notes or floating rate bond: Type of bond whose interest rate varies over time.
Older generation securities: Financial assets that have been held for a long period of time.
Fixed Income Characteristics:
Maturity: Date on which a financial security will be repaid.
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Call date: Date on which the issuer of a bond can repay it.
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Duration: A weighted average of a bond's cash flows, used to compare different bonds.
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Sensitivity: Measurement of the impact of a change in interest rates on the value of a bond or fund.
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Volatility: Measurement of variations in the price of a financial asset.
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Beta: Measurement of the sensitivity of an asset in relation to the overall market.
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Spread: Difference between two rates or two prices.
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Gross return: Income produced by an investment before deduction of charges and taxes.
Fixed Income Classification:
Investment Grade: Securities considered to present a low risk of non-repayment.
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High Yield or High Yield: Securities offering a high return, but presenting a higher risk.
Financial analysis & Investment strategies:
Valuation: Process of evaluating the value of a financial asset.
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Value Investing: Investment strategy which consists of investing in assets whose price is lower than their intrinsic value.
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Growth Investing: An investment strategy that focuses on stocks of companies expected to grow at an above-average rate compared to other companies in the market, usually implying high-purchase costs, high-earnings records and potential for growth, potential for high risk.
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Correlation: Measure of the relationship between the prices of two assets.
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Track record: History of an investment's performance.
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Annualized performance: Performance of an investment converted on an annual basis.
Bottom-up management or stock picking: Investment strategy that focuses on individual security analysis.
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Top-down: An investment strategy that begins by analyzing overall economic conditions before choosing specific sectors or securities.
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Long only management: Investment strategy which consists of purchasing assets in anticipation of a rise in prices.
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Hedging strategy: Strategy aimed at reducing risk by taking opposing positions in the same instrument.
Types of debt:
Financial subordinated debt: A type of debt that is only repaid after all other debts have been repaid.
Financial operations:
Swap: Financial transaction in which two parties agree to exchange financial flows or assets for a certain period.