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Glossary of Finance and Investment Terms

A guide to terms with quizzes and a use-it-in-a-sentence section. Some terms include video tutorials too.
  1. Coverage - See what type of terms are covered.
  2. Unique - Review what makes this glossary different.
  3. The terms - Jump in using the list of words below.
  4. Requests - Reach us on social media with terms you would like to see.
by Paul Alan Davis, CFA
Updated: September 13, 2020
A financial glossary that's light and fun. Is it possible? See for yourself. Links to all terms are provided below.

Outline Back Next

/ factorpad.com / fin / glossary / index.html



What is Included?

This list includes:

...plus more.


How is this Glossary Unique?

The goal is to learn quickly so we supplement a simple text definition with original content.

Quiz

Each term has a minimum of one quiz. (Click box for answer)

The portfolios with the highest return at any level of risk sit on the top edge of the opportunity set. | True or False?

True, this is also known as the efficient frontier

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In a Sentence

Doc:   The opportunity set includes all portfolio combinations of all variable assets.
Mia:   So it's like counting the stars. It only works in theory, right?

Videos

Select videos have 4-5 minute video tutorials easily accessed from your preferred location.

  1. At the YouTube Playlist
  2. Launched from this page (below)
  3. Viewed on the web page dedicated to each term

Video Scripts

Didn't catch something? We include a trimmed-down version of the video tutorial scripts so you can follow along.

Related Terms

And for our binge-watching friends and aspiring math gurus, review our collections of related terms, organized by trained humans.


Glossary of Terms

We currently cover 90 terms on web pages, 28 with video tutorials on YouTube.

Optimized for html5, web pages open in the current browser window. Videos hosted on YouTube open a new window or App.


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- A -

Abnormal return     (exceptional return)
Active return     (relative return)
Alpha       (intercept, constant)
Alpha model     (stock forecast model)
Alpha signal     (alpha)

Arbitrage Pricing Theory     (APT)
Arithmetic return       (average arithmetic return, total arithmetic return)
Autorrelation     (serial correlation, cross-correlation)

- B -

Behavioral Finance     (behavioural finance)
Benchmark   (index, market)
Benchmark return   (index return, market return)
Beta       (beta coefficient)

- C -

Capital Market Line       (CML)
Capital Market Theory     (CMT)
Common stock     (stock, equity, voting share, ordinary share)
Correlation       (correlation coefficient)
Correlation matrix       (correlation table)

Covariance       (joint variability)
Covariance matrix       (variance covariance matrix)
Currency basket     (currency index, forex benchmark)

- D -

Debt security     (bond, note, fixed income)
Demeaned returns    
Derivative security     (financial derivative)
Diversification    
Dividend    

- E -

Efficient Frontier       (portfolio frontier, efficient portfolio)
Equity security     (stock, equities)
Expected return    

- F -

Financial assets     (financial investments)
Financial modeling     (pro-forma statements)
Fixed and variable investment    
Fixed investment    
Forecast return     (anticipated return)

Frequency distribution       (frequency table)
Fundamental analysis     (valuation analysis)

- G -

Geometric return       (geometric mean return, geometric average return)

- H -

Histogram       (frequency chart)
Historical return     (realized return, past return)

- I -

Indifference curve       (indifference function, utility curve, risk tolerance, utility function)
Investment modeling     (systematic investing)

- J -

Jensen's Alpha       (alpha, ex-post alpha, Jensen's measure, Jensen ratio)

- K -

Kurtosis     (excess kurtosis, fourth mathematical moment)

- L -

Liquidity Risk     (funding risk, trading risk)
Log return     (logarithmic return, continuously compounded return)

- M -

Market     (The Market, Market Portfolio)
Market portfolio       (The Market)
Mean     (average)
Mean Variance Optimization     (Mean-Variance, MVO, Mean/Variance Optimization)
Minimum Variance Portfolio       (MVP, lowest risk portfolio)

- N -

Normal distribution     (bell-shaped curve, Gaussian distribution, Gaussian function)

- O -

Opportunity set       (feasible set)
Optimal portfolio     (optimal set)
Optimization     (portfolio optimization, MVO optimization, optimisation)

- P -

Pitch Book       (pitchbook, pitch deck)
Pooled investment     (pooled fund)
Population     (universe)
Population parameter     (population measure)
Portfolio     (investment fund, asset portfolio, portfolio of securities)

Portfolio Possibilities Curve    
Portfolio return     (fund return)
Portfolio risk     (portfolio variability)
Portfolio specific risk     (portfolio residual risk, portfolio unsystematic risk)
Portfolio variance    

- Q -

Quantitative analysis     (bell-shaped curve, Gaussian distribution, Gaussian function)
Quant Model     (quantitative model, quantitative equity portfolio management)

- R -

Real assets     (real investments)
Rebalance     (trade, re-weight, re-allocate)
Risk     (variability, dispersion)
Risk-free asset       (risk-free return, risk-free investment, risk-free rate)
Risk model     (Arbitrage Pricing Theory model, APT model)

Risk-return plot     (investment scatterplot, risk and return chart, risk return graph)
Rolling regression       (moving-period regression, rolling window regression)
R-squared       (coefficient of determination, R2)

- S -

Sample    
Sample statistic     (statistic)
Sharpe ratio       (Sharpe Index, Sharpe Measure)
Specific risk     (idiosyncratic risk, idiosyncratic volatility, stock specific risk)
Spin-off     (stock spin-off, corporate spin-off)

Standard deviation       (volatility)
Stock return     (total return)
Stock risk     (stock variability)
Stock split     (split)
Systematic risk     (non-diversifiable risk, market risk, common factor risk, common source risk)

- T -

T-Bills     (Treasury Bills, risk-free asset)
Technical analysis     (chart reading)
Total return     (absolute return)
Treynor ratio    

- U -

 

- V -

Variable investment    
Variance       (second central moment)
Volatility     (dispersion, variability, standard deviation)

- W -

 

- X -

 

- Y -

 

- Z -

z-score     (standard score, standardize, z-value, normal score, standardized variable)


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finance glossary
investment terms
financial reference
investment dictionary
stock market history
risk measurement
market benchmarks
financial theories
common financial words
financial modeling
investment words
accounting terms
investment vehicles
behavioral finance
quant
financial education
fintech education