Are you a new investor? Then you’re not expected to make investment decisions like professionals. Lack of confidence boosting knowledge of financial terms is going to get in the way of making informed investment decisions.

It’s important to overcome this ‘handicap’ by learning meanings and applications of key financial terms.


47 Financial terms and their meanings.

Annual report .

This is the yearly audited record of a company that is distributed to shareholders. The yearly audited report shows the company’s performance and condition.


2. Appreciation.


This the increase in the value of a non-physical, liquid asset known as financial asset. Examples of a financial asset are cash, bank deposits, stocks, mutual funds and bonds.


3. Asset allocation

4. Average maturity.


A bond has a maturity date when the principal amount falls due for repayment. A portfolio may have bonds with different maturity periods. Average maturity is the weighted average of maturities of bonds held in a portfolio.


5. Balanced fund/Blended fund.


This is a type of mutual fund that is a combination of both stocks and bonds. A balanced fund is used by investors to achieve diversification for their long term investments.

6. Bear market.


A bear market is when the market is down twenty percent or more for at least a period of two months. Bears often occur when investors choose to sell rather than buy. They often do this in periods of economic slowdown.


7. Blue chip.


A blue chip is a company with a national reputation for being well established, reliable and for having the capacity to make profit in good and bad economic conditions.


8. Bid and Ask/Bid and Offer.


This is the best potential quotation that gives the price at which buyers and sellers are willing to buy and sell security at a given time. The bid price is what an investor is willing to pay for a security while the ask price is the price an investor is willing to sell.

9. Bull market.


A bull market is when securities are on the rise for sustained periods. Bull markets occur when investment prices continue to rise for a sustained period during as a result of soaring consumer confidence.


10. Bond.

Bonds are units of debt issued and secured by com9. es as tradeable assets. Debtholders are paid a fixed interest rate.. Bonds are less risky and less volatile than stocks and Interest rates on bonds are often higher than savings rates at banks.

11. Bond fund/Debt Fund.


A bond fund is an investment in a pool of government, convertible, corporate and other debt instruments to generate monthly income for investors.

12. Capital gain.


Capital gain is the profit earned on the sale of either an intangible asset or a tangible asset which has increased in value over the holding period.

13. Capital gains reinvest NAV.


Capital Gains Reinvest Nav is positive the difference between the purchase price and the sale price of the asset which is automatically invested in the majority of the securities.


14. Capital loss.

When a capital asset which has decreased in value is sold at a price lower than the original purchase price, a loss called, capital loss is incurred

15. Common stock.

shares entitling their holder to dividends that vary in amount and may even be missed, depending on the fortunes of the company; ordinary shares.

16. Diversification.


Is an investment strategy that reduces the effect of volatility in a portfolio. It’s the process of owning different investments that perform well at different times.

7. Dividend .

Dividend is a reward a company gives to its shareholders. Dividend may be in the form of cash, stocks or any other form depending on the dividend policy.

18. Dividend yield.

A dividend yield is an annual percentage of return earned by a mutual fund. It measures the real rate of return by comparing the dividend to the market price of a share it’s calculated by dividing gross dividend per share by market price per share

19. Earnings Per Share (EPS).

EPS indicates how much of a company’s profit can be attributed to each common share in the company. EPS serves as an indicator of a company’s profitability.

https://ayietim.com/2022/01/24/47-financial-terms-beginner-investors-should-know/