Financial glossary
- Stock
- An ownership share in a company. Its value can fall, including to zero.
- Bond
- A loan to an issuer; repayment depends on its terms and the issuer’s ability to pay.
- ETF
- An exchange-traded fund. Its risk depends on its holdings and structure.
- Volatility
- How much prices fluctuate. It is not the same as every form of investment risk.
- Liquidity
- The ability to trade without a large price impact. It can disappear during stress.
- Drawdown
- A decline from a prior portfolio or asset peak.
- Diversification
- Spreading exposures to reduce concentration; it does not eliminate market losses.
- Slippage
- The difference between an expected trade price and the actual execution price.
- Market capitalization
- Share price multiplied by shares outstanding; it is not the same as enterprise value.
- Yield
- Income relative to price, calculated under a stated convention; quoted yields are not guaranteed total returns.