Investor's glossary: financial terms in plain English
Stock market terms with the formula, the calculation method and a list of pitfalls. Every multiple is explained once and surfaces as a tooltip.
- Put-call parityThe strict relationship between the prices of a call and a put sharing one strike and one expiry.
- Qualified audit opinionThe auditor signs off the accounts but with a reservation: on one specific area evidence was unobtainable, or the auditor disagrees with how it was presented.
- Qualified investorA status under Russian rules that unlocks access to higher-risk instruments.
- Quality investingSelecting companies by the durability of the business: stable return on capital, moderate debt, profit confirmed by cash flow.
- Quantitative easingA central bank buying bonds with money it creates, in order to push long rates down once the short rate is already at zero.
- Quantitative tighteningThe reverse process: the central bank shrinks its bond portfolio and withdraws money from the system.
- Quasi-sovereign issuerA state-controlled company whose debt the market prices with an eye on possible support from its owner.
- Quasi-treasury sharesShares in an issuer registered to a company it controls: legally another party's, economically its own.
- Quick ratioThe current ratio without inventory: what the company would pay with if the warehouse could not be sold.
- Quotation listThe part of the admitted-securities list carrying tighter requirements for issuers.
- QuoteThe price at which a participant is willing to buy or sell a security at a given moment.
- Quote currencyThe second currency in a pair, the one in which the base currency is measured.
- RGBIThe Moscow Exchange government bond index: it tracks the price movement of a basket of OFZ issues.
- ROICReturn on invested capital: what the business earns on every rouble put into it.
- ROIC-WACC spreadThe difference between the return on invested capital and the cost of that capital.
- RTS IndexThe dollar-denominated index of the Russian market: the same basket as the MOEX Russia Index, priced in foreign currency.
- RUONIAThe indicative rate on overnight interbank rouble lending.
- RUSFARThe secured money-market rate, calculated from repo transactions with a central counterparty.
- Random walkA model in which the next change of price does not depend on the changes before it.
- Rating agencyAn organisation that assigns credit ratings to issuers and issues.
- Rating migrationMovements of issuers between steps of the scale over a period: how many were upgraded, how many downgraded, how many defaulted.
- Rating outlookAn agency's indication of the likely direction of the next review: positive, stable or negative.
- Real GDPGDP adjusted for the effect of price changes.
- Real effective exchange rateA currency's rate against a basket of trading partners' currencies, adjusted for the difference in inflation.
- Real estate fundA fund that owns properties and collects rent; the unitholder receives a share of that flow and of the revaluation without owning a building directly.
- Real interest rateThe nominal rate less inflation: how much purchasing power a deposit or a bond actually delivers.
- Real returnReturn adjusted for the change in prices.
- Realising a gainSelling a position that has risen, turning a paper result into cash.
- RebalancingReturning asset weights in a portfolio to their target levels.
- Receipt conversionExchanging depositary receipts for local shares at the established ratio.
- Recency biasGiving excessive weight to the most recent events.
- RecessionA period of sustained contraction in economic activity.
- Record dateThe date on which the register of shareholders entitled to a dividend is fixed.
- Record date versus last day to buyThe difference between the date on which the list of holders is fixed and the last day on which an exchange trade still reaches that list.
- Recoverable amountThe higher of two figures: what the asset will bring in through use, and what it would sell for less the costs of selling.
- Recovery asymmetryThe property whereby recovering from a fall requires a larger gain than the fall itself.
- Recovery periodThe time a portfolio takes to return to its previous peak after a drawdown.
- Recovery rateThe share of the investment holders get back after a default.
- Recurring itemsIncome and expenses that reproduce from period to period and are therefore usable for forecasting the future result.
- RedemptionReturn of the principal on the date set by the terms of the issue; after it the security ceases to exist.
- RedomiciliationA change of a company's jurisdiction, moving its registration to another country.
- Refinancing rateThe historic rate at which a central bank lent to banks; its market role has passed to the modern policy rate, while the old rate survives inside legal texts.
- RefiningThe industrial purification of a precious metal to a stated fineness.
- RegistrarThe organisation that maintains the register of an issuer's security holders.
- Regulatory riskThe risk that rules affecting the economics of a business will change.
- Reinvestment riskThe risk that money received back will have to be reinvested at a lower rate.
- Related party transactionsDealings between a company and parties affiliated with its shareholders or management.
- Relative strength index (RSI)An oscillator measuring the speed and size of recent price movement.
- ReorganisationA change in the legal shape of a company: merger, absorption, division, spin-off or conversion.
- Repatriation of export proceedsThe duty on exporters to bring earned currency home and sell part of it.
- RepoA sale of a security with a commitment to buy it back — in substance a short-term loan against collateral.
- Repo haircutThe difference between the market value of the securities transferred and the cash received: a buffer against a fall in the value of the collateral.
- Reporting periodThe span a set of statements covers: a quarter, a half-year or a year.
- Reserve requirementsThe share of deposits a bank must hold at the central bank instead of lending it out.
- Resistance levelA price around which advances have repeatedly stalled.
- RestatementA revision of previously published figures for past periods, caused by an error, a change of accounting policy, or a change in the group's perimeter.
- Retail investorThe default status of a private client: some instruments open only after a knowledge test, and some do not open at all.
- Retail salesRetail turnover over a period — the most direct available measure of consumer demand.
- Retained earningsAccumulated profit left inside the company after payouts to shareholders.
- Return on assets (ROA)How much profit is generated per unit of the company's total assets.
- Return on capital employedHow much operating profit each unit of capital put into the business — by shareholders and lenders alike — brings in.
- Return on equity (ROE)How much profit a company generates per unit of shareholder capital.
- RevaluationA strengthening of the national currency against others.
- RevenueThe money a company collected from sales over a period, before any expenses are deducted.
- Reversal patternA chart configuration conventionally described as the ending of the preceding movement.
- Reverse repoThe same repo transaction seen from the side lending the money: it buys securities with an obligation to sell them back and earns interest for doing so.
- Reverse splitCombining several shares into one, with the price rising proportionally.
- RhoThe sensitivity of an option's premium to a change in the interest rate.
- Right to call a meetingThe ability of holders with the share of votes prescribed by statute to demand that an extraordinary meeting be held.
- Right-of-use assetLeased property recognised as the company's own asset: it does not own the item but controls its use over the lease term.
- Risk budgetingAllocating permitted dispersion rather than money: it is decided in advance how much of the portfolio's total risk each strategy or position may occupy.
- Risk capacityThe objective ability to absorb a loss without damaging one's plans: set by horizon, stability of income and obligations rather than by willingness to endure.
- Risk contributionThe part of a portfolio's total dispersion attributable to one position, accounting for its relationship with the others — not its share of the money.
- Risk parityA way of setting weights where every asset class contributes an equal share of total risk, rather than every class taking an equal share of the money.
- Risk premiumThe excess of an instrument's yield over the risk-free rate.
- Risk rateThe share of a security's value a broker requires to be held as collateral behind a leveraged position.
- Risk toleranceAn investor's willingness to live through swings in portfolio value without changing decisions: a matter of temperament and experience rather than a computed quantity.
- Risk-free rateThe yield on an instrument whose credit risk is treated as negligible.
- Risk-reward ratioA comparison of the distance to an assumed loss exit with the distance to an assumed profit exit.
- Roll-downThe price gain that comes from a bond ageing and moving onto a shorter — and therefore lower — section of the yield curve.
- Rolling a positionMoving a position from the expiring series into the next one: closing one contract and opening another.
- Round number levelA price with a round ending where orders gather more often simply because people choose such numbers more readily.
- Russian accounting standardsThe domestic accounting standards: statements of a single legal entity.
- Russian default of 1998The state's refusal in August 1998 to pay on its short-term rouble bonds, followed by the abandonment of the currency corridor.
- S&P 500The broad benchmark for US equities: the largest listed companies, weighted by capitalisation in free float.
- Sampling replicationTracking an index by holding a subset of securities that represents its behaviour.
- SanctionsRestrictions imposed by a state or a group of states on individuals, companies, industries or a whole economy.
- Scaling outSelling a position in parts as it rises instead of making one decision to exit: part of the result is secured while the remainder keeps participating.
- Scenario analysisValuing under several internally consistent pictures of the future as a whole, rather than shifting a single parameter.
- ScreenerA tool for filtering securities by numerical criteria.
- SeasonalityRegular within-year swings in a business's results.
- Secondary marketTrading in already issued securities between investors.
- Secondary public offering (SPO)An existing shareholder selling part of their stake to the market.
- Sector indexAn index covering securities from a single industry.
- Sector medianThe middle value of a metric among comparable companies.
- Sector tax changeA revision of tax rates and rules that alters the economics of companies in a sector.
- Securities lendingBorrowing securities for a time against an obligation to return the same ones and to pay the lender.
- Securities transferMoving securities from a custody account at one depository to an account at another without selling them on the market.
- SecuritisationTurning uniform monetary claims — loans, lease payments, receivables — into tradable bonds.
- SecurityA document or record certifying the property rights of its holder.
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