Glossary of Financial Terms
Welcome to the Glossary at EarningPerShare.com! This is your source for learning key financial and investing terms. Whether you are starting off as an investor or just refreshing your finance knowledge, these definitions will help you walk confidently into the world of finance.
A
Asset
Any resource with economic value that is owned by an individual or company, with the expectation of generating future benefit. Common examples include stocks, bonds, and real estate.
B
Bear Market
A market condition where the prices of securities are in a downtrend, and widespread pessimism creates a self-reinforcing downward spiral.
Bull Market
The opposite of a bear market: a market in which the prices of securities are rising or expected to rise, usually due to investor confidence and strong economic indicators.
C
Capital Gains
The profit made from the sale of an asset, such as stocks, bonds, or real estate, where the selling price is greater than the purchase price.
Compound Interest
Interest calculated on the initial principal and also on the accumulated interest from previous periods. This allows investments to grow exponentially over time.
Read more about compound interest.
D
DEMAT Account
A Dematerialized (DEMAT) account allows investors to hold their shares in electronic form. It is necessary for trading in NEPSE.
Dividend
A portion of a company’s profit that is distributed to shareholders. Dividends can be issued in cash, stocks, or other forms.
E
Equity
Ownership interest in a company, represented by shares of stock. Equity holders have a claim to the company’s profits and assets.
Exchange-Traded Fund (ETF)
A type of investment fund traded on the stock exchange, just like shares. ETFs hold underlying assets like stocks, commodities, or bonds and typically track an index such as the S&P 500.
F
Financial Advisor
A professional who provides advice on financial planning, investment strategies, and wealth management.
Fundamental Analysis
A method of evaluating a stock by examining the company’s financial statements, management, and market position to estimate its intrinsic value.
Read more about fundamental analysis.
I
Index Fund
A mutual fund or ETF that tracks the performance of a specific market index, such as the S&P 500 or the NEPSE Index. Index funds offer low-cost diversification.
Initial Public Offering (IPO)
The process by which a private company offers shares to the public for the first time, usually to raise capital.
Learn how to invest in IPOs on Meroshare.
L
Liquidity
The ease with which an asset can be quickly converted into cash without affecting its market price. Stocks and bonds are typically more liquid than real estate.
M
Meroshare
An online platform used by investors in Nepal to manage DEMAT accounts, apply for IPOs, and buy/sell shares in NEPSE.
Visit Meroshare.
Mutual Fund
An investment vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities. Mutual funds are professionally managed.
Learn more about mutual funds.
P
Portfolio
A collection of financial investments, such as stocks, bonds, commodities, and cash equivalents, managed to achieve an investor’s financial goals.
Price-to-Earnings (P/E) Ratio
A valuation ratio that compares a company’s current share price to its earnings per share (EPS). The P/E ratio helps determine whether a stock is overvalued or undervalued.
R
Return on Investment (ROI)
A measure of the profitability of an investment, calculated as net profit divided by the initial investment cost. ROI is expressed as a percentage.
Risk Tolerance
The level of risk an investor is willing and able to endure. This depends on factors like age, financial situation, and investment goals.
S
Stock
A security that represents ownership in a corporation. Stocks entitle the stockholder to a proportionate share of the company’s profits and assets.
Learn more about how stocks work.
Stock Market
A marketplace where shares of publicly listed companies are bought and sold. The Nepal Stock Exchange (NEPSE) is Nepal’s primary stock market.
V
Volatility
The degree to which the price of a security fluctuates. Higher volatility means that the price can change dramatically in a short period.
Value Investing
An investment strategy that involves selecting stocks that are undervalued relative to their intrinsic value. Value investors look for companies that are trading below their true worth and hold them for long-term gains.
Have More Questions?
If you encounter any unfamiliar terms while exploring EarningPerShare.com, please refer back to this glossary or check out our FAQ section. You can also contact us directly with any questions you may have.
