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GLOSSARY

Types Of Financial Securities:


Share/Stock: Ownership share in a company, which gives the right to a portion of its profits.

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.

Bond: Loan made to a business or government, with the promise of repayment with interest.

Contingent convertible bond (or AT1 / Coco): Type of bond that can be converted into shares if the financial health of the issuer deteriorates.

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.

Call date: Date on which the issuer of a bond can repay it.

Duration: A weighted average of a bond's cash flows, used to compare different bonds.

Sensitivity: Measurement of the impact of a change in interest rates on the value of a bond or fund.

Volatility: Measurement of variations in the price of a financial asset.

Beta: Measurement of the sensitivity of an asset in relation to the overall market.

Spread: Difference between two rates or two prices.

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.

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.

Value Investing: Investment strategy which consists of investing in assets whose price is lower than their intrinsic value.

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.

Correlation: Measure of the relationship between the prices of two assets.

Track record: History of an investment's performance.

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.

Top-down: An investment strategy that begins by analyzing overall economic conditions before choosing specific sectors or securities.

Long only management: Investment strategy which consists of purchasing assets in anticipation of a rise in prices.

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.

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