Chapter 16: Glossary of Investment Terms

This glossary provides definitions for key financial and investment terms used throughout Investi.

If you’re unsure about any concept while using tools like the
Equities Screener or analysing
Company Pages, refer back here.

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📌 How to Use This Page

📚 Basic Investment Terms

Investment

An asset purchased with the expectation of generating income or appreciation over time.

Trading

Buying and selling financial instruments for short-term profit.

Speculation

High-risk investing based on uncertain or incomplete information.

Risk

The possibility of losing money or not achieving expected returns.

Return

The gain or loss on an investment over time.

Diversification

Spreading investments across assets to reduce risk.

Volatility

The degree of variation in price over time.

📈 Equity Terms

Share / Equity

Ownership in a company.

Market Capitalisation

Total value of a company’s shares.

P/E Ratio

Price / Earnings Per Share — measures valuation.

P/B Ratio

Price / Book Value — compares market value to assets.

Dividend Yield

Annual dividend divided by share price.

EPS (Earnings Per Share)

Profit allocated per share.

📊 Bond Terms

Bond

A loan made to a company or government.

Coupon

The interest rate paid by a bond.

Yield

Return generated from a bond.

Yield to Maturity (YTM)

Total return if held until maturity.

Current Yield

Coupon divided by current price.

Duration

Sensitivity of a bond to interest rate changes.

Convexity

Measures how duration changes as interest rates move.

Credit Spread

Difference between a bond’s yield and a risk-free rate.

📊 Profit & Loss Terms

Revenue

Total income generated by a company.

Cost of Sales

Direct costs of producing goods or services.

Gross Profit

Revenue minus cost of sales.

Operating Expenses

Costs not directly tied to production.

Operating Income

Profit from core operations.

PBT (Profit Before Tax)

Profit before taxes are deducted.

PAT (Profit After Tax)

Final net profit.

📊 Balance Sheet Terms

Assets

Resources owned by a company.

Current Assets

Assets convertible to cash within a year.

Non-Current Assets

Long-term assets.

Liabilities

Obligations owed by the company.

Current Liabilities

Short-term obligations.

Non-Current Liabilities

Long-term debt.

Equity

Shareholders’ ownership in the company.

Working Capital

Current Assets − Current Liabilities.

💰 Cash Flow Terms

Cash Flow

Movement of cash in and out of a business.

Operating Cash Flow

Cash generated from core operations.

Investing Cash Flow

Cash used for investments.

Financing Cash Flow

Cash related to funding activities.

Free Cash Flow

Cash remaining after investments.

📉 Technical Analysis Terms

Trend

General direction of price movement.

SMA

Simple Moving Average.

EMA

Exponential Moving Average.

RSI

Momentum indicator (overbought/oversold).

MACD

Trend-following indicator.

Stochastic

Momentum oscillator.

Momentum

Speed of price movement.

Candlestick

Chart showing OHLC prices.

📊 Market Terms

Bid

Highest price a buyer is willing to pay.

Ask

Lowest price a seller will accept.

Spread

Difference between bid and ask.

Liquidity

Ease of buying or selling an asset.

Volume

Number of units traded.

OHLC

Open, High, Low, Close prices.

🏦 Banking & Insurance Terms

Net Interest Income

Interest earned minus interest paid.

Impairment Charge

Loss from bad loans.

Premium

Payment made for insurance coverage.

Claims

Payments made by insurers.

Combined Ratio

Measures insurance profitability.

🔗 Related Guides

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15. Funds