Alpha is an annualized return measure of how much better or worse a fund’s performance is relative to an index of funds in the same category, after allowing for differences in risk.
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face.
A
basis point is a value equaling one one-hundredth
of a percent (1/100 of 1%).
- Beta measures the sensitivity of rates of return on a fund to general market movements.
- Beta measures the volatility of the fund, as compared to that of the overall market. The Market's beta is set at 1.00; a beta higher than 1.00 is considered to be more volatile than the market, while a beta lower than 1.00 is considered to be less volatile.
Book
value is the net asset value of a company,
calculated by subtracting total liabilities from
total assets.
Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g., depreciation) and interest expense to pretax income.
Cash-on-Cash
Return is a method
of yield computation used for investments lacking
an active secondary market, such as limited partnerships.
Contango is a condition in which distant delivery prices for futures exceed spot (for immediate delivery) prices, often due to the costs of storing and insuring the underlying commodity.
Debt to Capital Ratio (D/C ratio) shows the proportion of a company’s debt to its total capital, which consists of the sum of its debt and equity combined.
Discounted Cash Flow is calculated by multiplying future cash flows by discount factors to obtain present values.
Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.
Earnings Before Interest, Taxes, Depreciation and Amortization is an approximate measure of a company's operating cash flow based on data from the company's income statement. Calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.
Earnings per share (EPS) is calculated by taking the total earnings divided by the number of shares outstanding.
Enterprise value/sales multiple is measure of a company's value, often used as an alternative to straightforward market capitalization. EV is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Free
Cash Flow is the amount of
cash a company has after expenses, debt service,
capital expenditures and dividends.
Free cash flow yield is an overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price.
Margin of safety is a principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the margin of safety. This difference allows an investment to be made with minimal downside risk.
Market Cap is the market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share.
- The Price to Book (P/B) Ratio compares a stock’s market value to the value of total assets less total liabilities.
- The Price to Book (P/B) Ratio is calculated by dividing the current price of the stock by the company's book value per share.
- The Price to Earnings (P/E) Ratio reflects the multiple of earnings at which a stock sells.
- The Price to Earnings (P/E) Ratio is calculated by dividing current price of the stock by the company's trailing 12 months' earnings per share.
- Price to earnings ratio is a common tool for comparing the prices of different common stocks and is calculated by dividing the current market price of a stock by the earnings per share.
- The Price-Earnings Ratio ("P/E") is the most common measure of how expensive a stock is.
- Synonymous with the term Absolute Price to Earnings (P/E) Ratio.
Price to Sales (P/S) Ratio is a tool for calculating a stock's valuation relative to other companies, calculated by dividing a stock's current price by its revenue per share.
Return on Equity measures the rate of return on the ownership interest of the common stock owners equal to a fiscal year's net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage.
Return on Invested Capital measures how effectively a company uses the money (borrowed or owned) invested in its operations. It is calculated by dividing net income after taxes by total assets less excess cash minus non-interest-bearing liabilities.
Standard Deviation is a statistical measure of the historical volatility of a mutual fund or portfolio, usually computed using 36 monthly returns.
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