Financial-Investment-Banking Jargons Part-3

• Rate of Return: A percentage showing the amount of investment gain or loss against the initial investment.
• Real Interest Rate: The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.
• Redemption Value: The value of a bond when redeemed.
• Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.
• Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
• Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.
• Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.
• Return: Amount of investment gain or loss.
• Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
• Risk-Averse, Risk-Neutral, Risk-Taking:
  Risk-averse describes an investor who requires greater return in exchange for greater risk.
  Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
  Risk-taking describes an investor who will accept a lower return in exchange for greater risk.
• Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.
• Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.
• Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.
• Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.
• Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.
• Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
• Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.
• Subordinated Bond: An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.
• Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.
• Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.
• Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)
• Time Horizon: The duration of time an investment is intended for.
• Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.
• Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.
• Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.
• Valuation: Process by which an investor determines the worth of a security using risk and return concept.
• Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.
• Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.
• Yield (Internal rate of Return): The compound annual rate of return earned by an investment
• Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.
• Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.