📚 Financial Glossary
Master investment terminology with our comprehensive dictionary of financial terms
📈 Basic Investment Terms
Asset
Basic Investment
Anything of value that can be owned or controlled to produce positive economic value. Assets include stocks, bonds, real estate, commodities, and cash.
Example: Your investment portfolio containing stocks worth ₹5 lakhs is an asset.
Bull Market
Market Conditions
A market condition where prices are rising or are expected to rise. Bull markets are characterized by optimism, investor confidence, and expectations of strong results.
Example: The Indian stock market experienced a bull run from 2020-2021, with NIFTY gaining over 70%.
Bear Market
Market Conditions
A market condition where prices are falling or are expected to fall. A bear market is typically defined as a decline of 20% or more from recent highs.
Example: During the 2008 financial crisis, global markets entered a severe bear market.
Dividend
Stock Returns
A payment made by a corporation to its shareholders, usually in the form of cash or additional shares. Dividends represent a share of company profits.
Example: If you own 100 shares of a company that pays ₹5 per share dividend, you receive ₹500.
Market Capitalization
Company Valuation
The total value of a company's shares in the stock market. Calculated by multiplying the stock price by the number of outstanding shares.
Example: If a company has 1 crore shares trading at ₹100 each, its market cap is ₹100 crores.
Portfolio
Investment Management
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.
Example: Your portfolio might include 60% stocks, 30% bonds, and 10% cash for diversification.
📊 Technical Analysis
Moving Average
Technical Indicator
A trend-following indicator that smooths out price action by creating a constantly updated average price over a specific time period.
Example: A 50-day moving average takes the average closing price of the last 50 trading days.
RSI (Relative Strength Index)
Technical Indicator
A momentum oscillator that measures the speed and change of price movements. RSI ranges from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold.
Example: If a stock's RSI is 75, it might be overbought and due for a price correction.
Support and Resistance
Price Levels
Support is a price level where a stock tends to find buying interest. Resistance is a price level where selling pressure emerges.
Example: If RELIANCE consistently bounces at ₹2,500, that's a support level. If it struggles to break ₹2,800, that's resistance.
MACD
Technical Indicator
Moving Average Convergence Divergence - a trend-following momentum indicator that shows the relationship between two moving averages of a security's price.
Example: When MACD line crosses above the signal line, it's often considered a bullish signal.
🔍 Fundamental Analysis
P/E Ratio
Valuation Metric
Price-to-Earnings ratio measures a company's current share price relative to its per-share earnings. A key valuation metric used to determine if a stock is over or undervalued.
Example: If a stock trades at ₹100 and has earnings of ₹10 per share, its P/E ratio is 10.
EPS (Earnings Per Share)
Financial Metric
A company's net profit divided by the number of outstanding shares. EPS indicates how much money a company makes for each share of its stock.
Example: If a company earns ₹100 crores profit with 10 crore shares outstanding, EPS is ₹10.
ROE (Return on Equity)
Profitability Ratio
A measure of financial performance calculated by dividing net income by shareholders' equity. ROE shows how efficiently a company uses shareholders' money.
Example: A company with ₹20 crore net income and ₹100 crore equity has an ROE of 20%.
Debt-to-Equity Ratio
Leverage Metric
A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Lower ratios generally indicate less risk.
Example: A company with ₹50 crore debt and ₹100 crore equity has a D/E ratio of 0.5.
🏛️ Market Types & Instruments
IPO (Initial Public Offering)
Market Event
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand.
Example: When Zomato went public in 2021, it was an IPO that allowed public investors to buy shares for the first time.
Mutual Fund
Investment Vehicle
An investment vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets.
Example: A large-cap equity mutual fund pools money from thousands of investors to buy shares of established companies.
ETF (Exchange Traded Fund)
Investment Vehicle
A type of investment fund that tracks an index, commodity, bonds, or basket of assets like an index fund but trades like a stock on an exchange.
Example: NIFTY BeES is an ETF that tracks the NIFTY 50 index and can be bought/sold during market hours.
Bond
Fixed Income
A fixed income instrument that represents a loan made by an investor to a borrower (corporate or governmental). Bonds pay regular interest and return principal at maturity.
Example: A 10-year government bond paying 6% annual interest provides steady income and returns principal after 10 years.
⚠️ Risk & Strategy
Volatility
Risk Measure
The degree of variation of a trading price series over time. Higher volatility means larger price swings and greater risk.
Example: A stock that moves 5% daily has higher volatility than one that moves 1% daily.
Diversification
Risk Management
The practice of spreading investments across various financial instruments, industries, and other categories to reduce exposure to any one particular asset or risk.
Example: Instead of buying only tech stocks, you spread investments across banking, pharma, and FMCG sectors.
Beta
Risk Measure
A measure of a stock's volatility in relation to the overall market. Beta of 1 means the stock moves with the market, above 1 means more volatile, below 1 means less volatile.
Example: A stock with beta 1.5 typically moves 50% more than the market in either direction.
SIP (Systematic Investment Plan)
Investment Strategy
An investment strategy where an investor invests a fixed amount regularly in a mutual fund scheme, regardless of market conditions. Helps in rupee cost averaging.
Example: Investing ₹5,000 every month in an equity mutual fund for 10 years through SIP.
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