Glossary

A

Acquisition

One company taking over controlling interest in another company.

Add-On Acquisition: a strategic acquisition fit for an existing platform/portfolio company.

Adjusted Book Value: The value that results after one or more asset(s) or liability amounts are added, deleted, or changed from their respective financial statement amounts.

Asset (Asset-Based) Approach: A general way of determining a value indication of a business, business ownership interest, or security by using one or more methods based on the value of the assets of that business net of liabilities.

Alpha

The amount of return expected from an investment from its inherent value.

Alternative Minimum Tax (AMT)

Federal tax, revamped by the Tax Reform Act of 1986, aimed at ensuring that wealthy individuals, trusts, estates and corporations pay at least some tax.

Annual report

The yearly audited record of a corporation or a mutual fund's condition and performance that is distributed to shareholders.

Annualized

A procedure where figures covering a period of less than one year are extended to cover a 12-month period.

Annualized rate of return

The average annual return over a period of years, taking into account the effect of compounding. Annualized rate of return also can be called compound growth rate.

Appreciation

The increase in value of a financial asset.

Asset allocation

The process of dividing investments among cash, income and growth buckets to optimize the balance between risk and reward based on investment needs.

Add-On Acquisition

A strategic acquisition fit for an existing platform/portfolio company.

Adjusted Book Value

The value that results after one or more asset(s) or liability amounts are added, deleted, or changed from their respective financial statement amounts.

Asset (Asset-Based) Approach

A general way of determining a value indication of a business, business ownership interest, or security by using one or more methods based on the value of the assets of that business net of liabilities.

Alternative Minimum Tax (AMT)

Federal tax, revamped by the Tax Reform Act of 1986, aimed at ensuring that wealthy individuals, trusts, estates and corporations pay at least some tax.

Appreciation

The increase in value of a financial asset.

Average maturity

For a bond fund, the average of the stated maturity dates of the debt securities in the portfolio. Also called average weighted maturity. In general, the longer the average maturity, the greater the fund's sensitivity to interest-rate changes, which means greater price fluctuation. A shorter average maturity usually means a less sensitive - and consequently, less volatile - portfolio.

Asset class

Securities with similar features. The most common asset classes are stocks, bonds and cash equivalents.

Amount to Raise

Often used as a reference to how much funding capitals companies intend to gather through IPOs, Venture Funds, Independent Investors and many more.

B

Benefit Stream

Any level of income, cash flow, or earnings generated by an asset, group of assets, or business enterprise. When the term is used, it should be supplemented by a definition of exactly what it means in the given valuation context.

Business Enterprise

A commercial, industrial, service, or investment entity, or a combination thereof, pursuing an economic activity.

Business Valuation

The act or process of determining the value of a business enterprise or ownership interest therein.

Balanced fund

Mutual funds that seek both growth and income in a portfolio with a mix of common stock, preferred stock or bonds. The companies selected typically are in different industries and different geographic regions

Bear market

A bear market is a prolonged period of falling stock prices, usually marked by a decline of 20% or more. A market in which prices decline sharply against a background of widespread pessimism, growing unemployment or business recession. The opposite of a bull market.

Benchmark

A standard, usually an unmanaged index, used for comparative purposes in assessing the performance of a portfolio or mutual fund.

Beta

A measurement of volatility where 1 is neutral; above 1 is more volatile; and less than 1 is less volatile.

Blue chip

A high-quality, relatively low-risk investment; the term usually refers to stocks of large, well-established companies that have performed well over a long period. The term Blue Chip is borrowed from poker, where the blue chips are the most valuable.

Board of Trustees

A governing board elected or appointed to direct the policies of an institution.

Bond

A bond acts like a loan or an IOU that is issued by a corporation, municipality or the U.S. government. The issuer promises to repay the full amount of the loan on a specific date and pay a specified rate of return for the use of the money to the investor at specific time intervals.

Bond fund

A mutual fund that invests exclusively in bonds.

Breakpoint

The level of dollar investment in a mutual fund at which an investor becomes eligible for a discounted sales fee. This level may be achieved through a single purchase or a series of smaller purchases.

Bull market

Any market in which prices are advancing in an upward trend. In general, someone is bullish if they believe the value of a security or market will rise. The opposite of a bear market.

Balanced fund - Mutual funds that seek both growth and income in a portfolio with a mix of common stock, preferred stock or bonds. The companies selected typically are in different industries and different geographic regions.

C

Capital

The funds invested in a company on a long-term basis and obtained by issuing preferred or common stock, by retaining a portion of the company's earnings from date of incorporation and by long-term borrowing.

Capital gain

The difference between a security's purchase price and its selling price, when the difference is positive.

Capital gains ex-date

The date that a shareholder is no longer eligible for a capital gain distribution that has been declared by a security or mutual fund.

Capital gains long term

The difference between an asset's purchase price and selling price (when the difference is positive) that was earned in more than one year.

Capital gains reinvest NAV

The difference between an asset's purchase price and selling price (when the difference is positive) that was automatically in vested in more shares of the security or mutual fund invested at the security's net asset value.

Capital gains short term

The difference between an asset's purchase price and selling price (when the difference is positive) that was earned in under one year.

Capital loss

The amount by which the proceeds from the sale of a security is less than its purchase price.

Capital Asset Pricing Model (CAPM)

A model in which the cost of capital for any security or portfolio of securities equals a risk free rate plus a risk premium that is proportionate to the systematic risk of the security or portfolio.

Capitalization

A conversion of a single period stream of benefits into value.

Capital Structure

The composition of the invested capital of a business enterprise; the mix of debt and equity financing.

Cash Flow

Cash that is generated over a period of time by an asset, group of assets, or business enterprise. It may be used in a general sense to encompass various levels of specifically defined cash flows. When the term is used, it should be supplemented by a qualifier (for example, "discretionary" or "operating") and a definition of exactly what it means in the given valuation context.

Committed Equity Capital

Equity investment funds readily available to an investor to make investments according to a predefined investment strategy. Related uses or terms – capital under management, capital available for investment

Control

The power to direct the management and policies of a business enterprise.

Cost Approach

A general way of estimating a value indication of an individual asset by quantifying the amount of money that would be required to replace the future service capability of that asset.

Cost of Capital

The expected rate of return (discount rate) that the market requires in order to attract funds to a particular investment.

Cash equivalent

A short-term money-market instrument, such as a Treasury bill or repurchase agreement, of such high liquidity and safety that it is easily converted into cash.

Common stock

Securities that represent ownership in a corporation; must be issued by a corporation.

Contingent deferred sales charge (CDSC)

A back-end sales charge imposed when shares are redeemed from a fund. This fee usually declines over time.

Corporate bond

A long-term bond issued by a corporation to raise outside capital.

Country breakdown

Breakdown of securities in a portfolio by country.

Custodian

A bank that holds a mutual fund's assets, settles all portfolio trades and collects most of the valuation data required to calculate a fund's net asset value (NAV).

Cut-off time

The time of day when a transaction can no longer be accepted for that trading day.

Client Quality Assurance

This refers to the evaluation and analysis of various systems with the purpose to ensure that multiple services offered by financial companies are in line with the required standard to ensure quality delivery and customer satisfaction.

Cross Border

Any form of financing that exists beyond national confines is known as cross border financing and could be in the form of loans, bankers acceptances (BA) or letters of credit.

D

Daily dividend factor (date)

Daily dividend distributed by a money market mutual fund.

Default

Failure of a debtor to make timely payments of interest and principal as they come due or to meet some other provision of a bond indenture.

Distribution schedule

A tentative distribution schedule of a mutual fund's dividends and capital gains.

Diversification

The process of owning different investments that tend to perform well at different times in order to reduce the effects of volatility in a portfolio, and also increase the potential for increasing returns.

Dividend

A dividend is a portion of a company's profit paid to common and preferred shareholders. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends.

Dividend paid

Amount paid to the shareholder of record a security or mutual fund.

Dividend reinvest NAV

Dividends paid to the shareholder of record that are automatically invested in more shares of the security or mutual fund that are purchased at the security's net asset value.

Dividend yield

Annual percentage of return earned by a mutual fund. The yield is determined by dividing the amount of the annual dividends per share by the current net asset value or public offering price.

Dollar cost averaging

Investing the same amount of money at regular intervals over an extended period of time, regardless of the share price. By investing a fixed amount, you purchase more shares when prices are low, and fewer shares when prices are high. This may reduce your overall average cost of investing.

Dow Jones Industrial Average (Dow)

The most commonly used indicator of stock market performance, based on prices of 30 actively traded blue chip stocks, primarily major industrial companies. The Average is the sum of the current market price of 30 major industrial companies' stocks divided by a number that has been adjusted to take into account stocks splits and changes in stock composition.

Discount For Lack of Control

A discount for lack of control is the reduction in a company's share value due to a shareholder's lack of ability to exercise their control over the company.

Discount Rate

In finance, the discount rate has two important definitions. First, a discount rate is a part of the calculation of present value when doing a discounted cash flow analysis, and second, the discount rate is the interest rate the Federal Reserve charges on loans given to banks through the Fed's discount window loan process.

Discount

A reduction in value or the act of reducing value.

Divestiture

Large public or private parent corporations selling off non-core business units.

Daily dividend factor (date)

Daily dividend distributed by a money market mutual fund.

Default

Failure of a debtor to make timely payments of interest and principal as they come due or to meet some other provision of a bond indenture.

Distribution schedule

A tentative distribution schedule of a mutual fund's dividends and capital gains.

Data Protection Compliance

This is a regulation that falls under GDPR (General Data Protection Regulation) to improve the security of personal data and give users more control over the data they share with various companies.

Direct Expenses

These refer to cost that directly changes with the volume of a cost object (services, customer, product, employees, product line and sales region). Examples of direct cost include; the price of materials used to make a product and price of labour.

E

EPS

The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.

Equities

Shares issued by a company which represent ownership in it. Ownership of property, usually in the form of common stocks, as distinguished from fixed-income securities such as bonds or mortgages. Stock funds may vary depending on the fund's investment objective.

Equity fund

A mutual fund/collective fund in which the money is invested primarily in common and/or preferred stock. Stock funds may vary, depending on the fund's investment objective.

Ex-Dividend

The interval between the announcement and the payment of the next dividend for a stock.

Equity fund

A mutual fund/collective fund in which the money is invested primarily in common and/or preferred stock. Stock funds may vary, depending on the fund's investment objective.

Ex-Dividend date

The date on which a stock goes ex-dividend. Typically about three weeks before the dividend is paid to shareholders of record.

Exchange privilege

The ability to transfer money from one mutual fund to another within the same fund family.

Expense ratio

The ratio between a mutual fund's operating expenses for the year and the average value of its net assets.

Expense ratio (date)

Amount, expressed as a percentage of total investment that shareholders pay annually for mutual fund operating expenses and management fees.

Earn-Out

A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals. An earn-out is a mutually beneficial tool to getting a deal done if it is structured appropriately. It maximizes the selling price for the Seller and it matches the Company's future earnings with the payments made to the Seller. An earn-out should not provide a financial "burden" on the Company, but should be structured as a sharing of the wealth. An earn-out becomes easier for a Seller to accept as he/she gets more comfortable with the Buyer. Trust must be established between the parties with face-to-face time.

EBITDA

A financial term that is a rough proxy for free cash flow. Formally defined as Earnings before Interest and Taxes plus Depreciation and Amortization.

Economic Life

The period of time over which property may generate economic benefits.

Enterprise Value

Enterprise value (EV) is a financial metric representing the entire value of a company after taking into account both holders of debt and equity. EV is calculated as the company's market capitalization plus debt, minus cash.

Equity Net Cash Flows

Those cash flows available to pay out to equity holders (in the form of dividends) after funding operations of the business enterprise, making necessary capital investments, and reflecting increases or decreases in debt financing.

Equity Risk Premium

A rate of return in addition to a risk free rate to compensate for investing in equity instruments because they have a higher degree of probable risk than risk free instruments (a component of the cost of equity capital or equity discount rate).

Excess Earnings

That amount of anticipated benefits that exceeds a fair rate of return on the value of a selected asset base (often net tangible assets) used to generate those anticipated benefits.

Excess Earnings Method

A specific way of determining a value indication of a business, business ownership interest, or security determined as the sum of the value of the assets obtained by capitalizing excess earnings and the value of the selected asset base. Also frequently used to value intangible assets. See Excess Earnings.

Exit Plan

A strategy, planned or unplanned, to depart an existing situation. The creation of an overall strategy that prepares a business owner and his/her company for the time when that business owner is no longer involved in the operations of the company. Examples of unplanned exits include death, divorce, incapacity, disability, management disputes, influx of competition, technological obsolescence, loss of a major customer, or other unforeseen economic events.

F

Fair Market Value

The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm's length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.

Family Succession

In family successions or retirement transitions, ownership transfers from passive owners to active family members or outside shareholders. Facilitators are particularly sensitive to estate planning issues, family business dynamics, and the need for discretion and trust to make these transactions seamless and successful.

Forced Liquidation Value

Liquidation value at which the asset or assets are sold as quickly as possible, such as at an auction.

Free Cash Flow

The cash generated by a business on a pre-tax, pre-interest basis after making positive adjustments for non-cash expenses such as depreciation and amortization as well as owner-related benefits and negative adjustments for capital expenditures. Formally defined as Operating cash flow (Net Income plus depreciation and amortization plus taxes plus interest) minus capital expenditures and dividends.

Federal Funds Rate (Fed Funds Rate)

The interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve requirements. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate, which are periodically changed by banks and by the Federal Reserve Board.

Federal Reserve Board (The Fed)

The governing board of the Federal Reserve System, it regulates the nation's money supply by setting the discount rate, tightening or easing the availability of credit in the economy.

Fixed income fund

A fund or portfolio where bonds are primarily purchased as investments. There is no fixed maturity date and no repayment guarantee.

Fixed income security

A security that pays a set rate of interest on a regular basis.

Fund

A pool of money from a group of investors in order to buy securities. The two major ways funds may be offered are (1) by companies in the securities business (these funds are called mutual funds); and (2) by bank trust departments (these are called collective funds).

G

Going Concern

An ongoing operating business enterprise.

Going Concern Value

The value of a business enterprise that is expected to continue to operate into the future. The intangible elements of Going Concern Value result from factors such as having a trained work force, an operational plant, and the necessary licenses, systems, and procedures in place.

Goodwill

That intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.

Goodwill Value

The value attributable to goodwill.

Growth Capital

An investment made in an operating company by an outside investor to support existing or anticipated expansion of the business. May or may not include a change of equity control but frequently involves the exchange of equity ownership.

Growth investing

Investment strategy that focuses on stocks of companies and stock funds where earnings are growing rapidly and are expected to continue growing.

Growth stock

Typically a well-known, successful company that is experiencing rapid growth in earnings and revenue, and usually pays little or no dividend.

Growth-style funds

Growth funds focus on future gains. A growth fund manager will typically invest in stocks with earnings that outperform the current market. The manager attempts to achieve success by focusing on rapidly growing sectors of the economy and investing in leading companies with consistent earnings growth. The fund grows primarily as individual share prices climb.

I

Index

An investment index tracks the performance of many investments as a way of measuring the overall performance of a particular investment type or category. The S&P 500 is widely considered the benchmark for large-stock investors. It tracks the performance of 500 large U.S. company stocks.

Individual Retirement Account (IRA)

A tax-deferred account to which an eligible individual can make annual contributions up to $3,000 ($6,000 for a single-income married couple filing a joint income tax return).

Inflation

A rise in the prices of goods and services, often equated with loss of purchasing power.

Interest rate

The fixed amount of money that an issuer agrees to pay the bondholders. It is most often a percentage of the face value of the bond. Interest rates constitute one of the self-regulating mechanisms of the market, falling in response to economic weakness and rising on strength.

Interest-rate risk

The possibility of a reduction in the value of a security, especially a bond, resulting from a rise in interest rates.

Investment advisor

An organization employed by a mutual fund to give professional advice on the fund's investments and asset management practices.

Investment company

A corporation, trust or partnership that invests pooled shareholder dollars in securities appropriate to the organization's objective. Mutual funds, closed-end funds and unit investment trusts are the three types of investment companies.

Investment grade bonds

A bond generally considered suitable for purchase by prudent investors.

Investment objective

The goal of a mutual fund and its shareholders, e.g. growth, growth and income, income and tax-free income.

Income (Income-Based) Approach

A general way of determining a value indication of a business, business ownership interest, security, or intangible asset using one or more methods that convert anticipated benefits into a present single amount.

Intangible Assets

Nonphysical assets (such as franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights, securities and contracts as distinguished from physical assets) that grant rights, privileges, and have economic benefits for the owner.

Intermediary

a merger & acquisition advisor who assists buyers and sellers of privately held small businesses throughout the business transfer transaction process. An agency relationship typically exists between the intermediary and either the buyer or the seller. The intermediary offers transaction advisory services such as estimating the value of the business; advertising it for sale with or without disclosing its identity; managing the initial buyer/seller interviews, discussions, and negotiations; facilitating the progress of the due diligence investigation and generally assisting with the business sale. Intermediaries require specific skills - number-crunching ability, excellent verbal and written communication skills, and the capacity to work very long and grueling hours.

Invested Capital

The sum of equity and debt in a business enterprise. Debt is typically long term liabilities or the sum of short term interest bearing debt and long term liabilities. When the term is used, it should be supplemented by a definition of exactly what it means in the given valuation context.

Investment Banker

An individual who works in a financial institution that is in the business primarily of raising capital for companies, governments and other entities. Investment bankers may also provide other services to their clients such as mergers and acquisition advice, or advice on specific transactions, such as a spin-off or reorganization. Investment bankers require specific skills - number-crunching ability, excellent verbal and written communication skills, and the capacity to work very long and grueling hours.

Investment Risk

The degree of uncertainty as to the realization of expected returns.

Investment Value

The value to a particular investor based on individual investment requirements and expectations. {NOTE: In Canada, the term used is "Value to the Owner."}

J

Junk bond

A lower-rated, usually higher-yielding bond, with a credit rating of BB or lower.

L

Letter of Intent (LOI)

A formal, written document indicating the terms a buyer is offering a seller in a proposed acquisition or investment. Although not a contract, it is a document stating a serious intent, by both parties, to carry out the proposed acquisition.

Leveraged Buyout (LBO)

The acquisition of a business utilizing equity or investment capital and third-party debt financing. Typically includes a change of control or change of ownership.

Liquidity

The ability to quickly convert property to cash or pay a liability.

Liquidation Value

The net amount that can be realized if the business is terminated and the assets are sold piecemeal. Liquidation can be either "orderly" or "forced".

Large-Cap

The market capitalization of the stocks of companies with market values greater than $10 billion.

Lipper ratings

The Lipper Mutual Fund Industry Average is the performance level of all mutual funds, as reported by Lipper Analytical Services of New York. The performance of all mutual funds is ranked quarterly and annually, by type of fund such as aggressive growth fund or income fund. Mutual fund managers try to beat the industry average as well as the other funds in their category.

Loads (back-end, front-end and no-load)

Sales charges on mutual funds. A back-end load is assessed at redemption (see contingent deferred sales charge), while a front-end load is paid at the time of purchase. No-load funds are free of sales charges.

Long-term investment strategy

A strategy that looks past the day-to-day fluctuations of the stock and bond markets and responds to fundamental changes in the financial markets or the economy.

Legal Fiat Gateway

Refers to acceptable fiat currency that is accepted and can be used to make purchases and trades on cryptocurrency platform or exchange. Examples of fiat currency include; Dollars, Pounds, Chinese Yuan and many more.

Legal Responsibility

The obligations, duties, roles and rights of every party involved in trading or performing trade on a cryptocurrency platform as back by existing law. It is essential that everyone be aware of what they are legally responsible for, in the event of a breach of terms.

M

Management fee

The amount paid by a mutual fund to the investment advisor for its services

Market price

The current price of an asset.

Market risk

The possibility that an investment will not achieve its target.

Market timing

A risky investment strategy that calls for buying and selling securities in anticipation of market conditions.

Maturity

The date specified in a note or bond on which the debt is due and payable.

Maturity distribution

The breakdown of a portfolio's assets based on the time frame when the investments will mature

Median Market Cap

The midpoint of market capitalization (market price multiplied by the number of shares outstanding) of the stocks in a portfolio, where half the stocks have higher market capitalization and half have lower.

Mid-cap

The market capitalization of the stocks of companies with market values between $3 to $10 billion.

Money market mutual fund

A short-term investment that seeks to protect principal and generate income by investing in Treasury bills, CDs with maturities less than one year and other conservative investments.

Morningstar ratings

System for rating open- and closed-end mutual funds and annuities by Morningstar Inc. of Chicago. The system rates funds from one to five stars, using a risk-adjusted performance rating in which performance equals total return of the fund.

Mutual fund

Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities or money market securities.

Majority Control

The degree of control provided by a majority position.

Majority Interest

An ownership interest greater than fifty percent (50%) of the voting interest in a business enterprise.

Management Buy-in

Financing an outside manager or management team to acquire a target company. In a management buy-in (MBI), an external management team partners with a company with a management void. This could be a private company, a stand-alone company, or an orphaned division of a larger company. Again, managers retain operational control while holding significant equity.

Management Buy-out

A process whereby management of a company acquires all or some of the ownership of the company they manage either independently or in partnership with a private equity fund/group (PEG). Management buy-outs (MBOs) are generally pursued by management teams that have little or no ownership in a business and want to obtain more ownership, but lack the financial resources to buy the company from the current owners. In these circumstances, a PEG can provide the financing necessary to facilitate the purchase of the business. The PEG also gives the management team a large equity stake to cement their commitment to continue running the business and pursue growth opportunities. Related uses or terms – MBO (Management Buy Out).

Market (Market-Based) Approach

A general way of determining a value indication of a business, business ownership interest, security, or intangible asset by using one or more methods that compare the subject to similar businesses, business ownership interests, securities, or intangible assets that have been sold.

Merger

The combination of two or more companies, either through (1) a pooling of interests in which the accounts are combined, (2) a purchase where the amount paid over and above the acquired company's book value is carried on the books of the purchaser as goodwill, or (3) a consolidation in which a new company is formed to acquire the net assets of the combining companies.

Minority Discount

A discount for lack of control applicable to a minority interest.

Minority Interest

An ownership interest less than fifty percent (50%) of the voting interest in a business enterprise.

Market risk

Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved. Market risk, also called "systematic risk," cannot be eliminated through diversification, though it can be hedged against

N

NASDAQ

National Association of Securities Dealers Automated Quotations system, which is owned and operated by the National Association of Securities Dealers. NASDAQ is a computerized system that provides brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities.

Net Asset Value per share (NAV)

The current dollar value of a single mutual fund share; also known as share price. The fund's NAV is calculated daily by taking the fund's total assets, subtracting the fund's liabilities, and dividing by the number of shares outstanding. The NAV does not include the sales charge. The process of calculating the NAV is called pricing.

Number of Holdings

Total number of individual securities in a fund or portfolio.

Net Book Value

With respect to a business enterprise, the difference between total assets (net of accumulated depreciation, depletion, and amortization) and total liabilities of a business enterprise as they appear on the balance sheet (synonymous with Shareholder's Equity); with respect to an intangible asset, the capitalized cost of an intangible asset less accumulated amortization as it appears on the accounting books of the business enterprise.

Net Cash Flow

A form of cash flow. When the term is used, it should be supplemented by a qualifier (for example, "Equity" or "Invested Capital") and a definition of exactly what it means in the given valuation context.

Net Tangible Asset Value

The value of the business enterprise's tangible assets (excluding excess assets and non-operating assets) minus the value of its liabilities. {NOTE: In Canada, tangible assets also include identifiable intangible assets.}

Non-operating Assets

Assets not necessary to ongoing operations of the business enterprise. {NOTE: In Canada, the term used is "Redundant Assets."}

No of Intermediaries

The total number of individuals or institution that facilitate a financial transaction between several parties.

O

Orderly Liquidation Value

Liquidation value at which the asset or assets are sold over a reasonable period of time to maximize proceeds received.

Onboarding time

This refers to the total amount of time it takes a client to search for information on a financial organization to the time it takes for them to have their request (i.e. account opening and activation) answered.

P

Premise of Value

An assumption regarding the most likely set of transactional circumstances that may be applicable to the subject valuation; e.g. going concern, liquidation.

Private Equity

An investment in non-public securities of, typically, private companies. Also an investment asset class typically reserved for large institutional investors such as pension funds and endowments as well as high net worth individuals. Includes investments in privately-held companies ranging from start-up companies to well-established and profitable companies to bankrupt or near bankrupt companies. Examples of private equity include venture capital, leveraged buyout, growth capital and distressed investments.

Private Equity Fund

An investment vehicle, typically a Limited Partnership, formed to make investments in private companies via a pool of available equity capital.

Portfolio Discount

An amount or percentage that may be deducted from the value of a business enterprise to reflect the fact that it owns dissimilar operations or assets that may not fit well together.

Portfolio Company

A company acquired and owned by a private equity fund.

P/B Ratio

The price per share of a stock divided by its book value (net worth) per share. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds.

Par value

Par value is the amount originally paid for a bond and the amount that will be repaid at maturity. Bonds are typically sold in multiples of $1,000.

Portfolio

A collection of investments owned by one organization or individual, and managed as a collective whole with specific investment goals in mind.

Portfolio allocation

Amount of assets in a portfolio specifically designated for a certain type of investment.

Portfolio holdings

Investments included in a portfolio.

Portfolio manager

The person or entity responsible for making investment decisions of the portfolio to meet the specific investment objective or goal of the portfolio.

Preferred stock

A class of stock with a fixed dividend that has preference over a company's common stock in the payment of dividends and the liquidation of assets. There are several kinds of preferred stock, among them adjustable-rate and convertible.

Premium

The amount by which a bond or stock sells above its par value.

Price-to-book

The price per share of a stock divided by its book value (net worth) per share. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds.

Price-to-earnings (P/E) Ratio

A stock's price divided by its earnings per share, which indicates how much investors are paying for a company's earning power.

P/E Ratio (1 yr trailing) (long position)

Price of a stock divided by its earnings from the latest year.

P/E Ratio (1 yr forecast)

Price of a stock divided by its projected earnings for the coming year.

Prospectus

Formal written offer to sell securities that sets forth the plan for proposed business enterprise or the facts concerning an existing one that an investor needs to make an informed decision. Prospectuses are also issued by mutual funds, containing information required by the SEC, such as history, background of managers, fund objectives and policies, financial statement, risks, services and fees.

Proxy

A shareholder vote on matters that require shareholders' approval.

Public offering price (POP)

A mutual fund share's purchase price, including sales charges.

Programmable Compliance

This compliance that is tailor-made for programmable financial assets such as cryptocurrencies.

Q

Quality distribution

The breakdown of a portfolio's assets based on quality rating of the investments.

Quality of Listed Assets

The phrase is used to judge the worth of assets utilized by a cryptocurrency platform and listed assets may include the following; tokens, utilities and currencies. Their quality will be determined based on factors such as regulations, long and short term value, and overall valuation of the exchange.

R

R2

The percentage of a fund's movements that result from movements in the index ranging from 0 to 100. A fund with an R2 of 100 means that 100 percent of the fund's movement can completely be explained by movements in the fund's external index benchmark.

Ratings

Evaluations of the credit quality of bonds usually made by independent rating services. Ratings generally measure the probability of timely repayment of principal and interest on debt securities.

Recession

A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's gross domestic product.

Redemption

Sale of mutual fund shares by a shareholder.

Reinvestment option

Refers to an arrangement under which a mutual fund will apply dividends or capital gains distributions for its shareholders toward the purchase of additional shares.

Relative risk and potential return

The amount of potential return from an investment as related to the amount of risk you are willing to accept.

Rights of accumulation

The right to buy over a period of time. For example, this might be done by an institutional investor to avoid making a single substantial purchase that might drive up the market price, or by a retail investor who wants to reduce risk by dollar cost averaging.

Risk tolerance

The degree to which you can tolerate volatility in your investment values.

Rate of Return

An amount of income (loss) and/or change in value realized or anticipated on an investment, expressed as a percentage of that investment.

Recapitalization

A financing transaction that allow owners to harvest some of the value they have created in their companies while retaining a large ownership stake in the business going forward.

Residual Value

The prospective value as of the end of the discrete projection period in a discounted benefit streams model.

Risk Free Rate

The rate of return available in the market on an investment free of default risk.

Risk Premium

A rate of return in addition to a risk free rate to compensate the investor for accepting risk.

Rule of Thumb

A mathematical relationship between or among variables based on experience, observation, hearsay, or a combination of these, usually applicable to a specific industry.

S

Sales charge

An amount charged for the sale of some fund shares, usually those sold by brokers or other sales professionals. By regulation, a mutual fund sales charge may not exceed 8.5 percent of an investment purchase. The charge may vary depending on the amount invested and the fund chosen. A sales charge or load is reflected in the asked or offering price. See loads.

Sector

A group of similar securities, such as equities in a specific industry.

Sector breakdown

Breakdown of securities in a portfolio by industry categories.

Securities

Another name for investments such as stocks or bonds. The name 'securities' comes from the documents that certify an investor's ownership of particular stocks or bonds.

Securities and Exchange Commission (SEC)

The federal agency created by the Securities and Exchange Act of 1934 that administers the laws governing the securities industry, including the registration and distribution of mutual fund shares.

Share

A unit of ownership in an investment, such as a share of a stock or a mutual fund.

Share class net assets (date)

Fund assets included in a specific share class.

Share classes

Classes represent ownership in the same fund but charge different fees. This can enable shareholders to choose the type of fee structure that best suits their particular needs.

Sharpe Ratio

A risk-adjusted measure that measures reward per unit of risk. The higher the sharpe ratio, the better. The numerator is the difference between the Fund's annualized return and the annualized return of the risk-free instrument (T-Bills).

Short-term investment

The market capitalization of the stocks of companies with market values less than $3 billion.

Standard & Poor's Index

Broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks commonly known as the Standard & Poor's 500 or S&P 500.

Standard Deviation

A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution.

Statement of additional information (SAI)

The supplementary document to a prospectus that contains more detailed information about a mutual fund; also known as 'Part B' of the prospectus.

Stock

A long-term, growth-oriented investment representing ownership in a company; also known as 'equity.'

Stockholder

The owner of common or preferred stock of a corporation. Also called 'shareholder.'

Systematic investment plan

A service option that allows investors to buy mutual fund shares on a regular schedule, usually through bank account deductions.

Search Fund

An individual or group of individuals seeking to identify an acquisition candidate that the individual or group can acquire and subsequently manage. Typically, search funds do not have dedicated capital to acquire a business but, rather, have informal pledges from potential investors. Related uses or terms – fund-less sponsor.

Special Interest Purchasers

Acquirers who believe they can enjoy post-acquisition economies of scale, synergy, or strategic advantages by combining the acquired business interest with their own.

Sustaining Capital Reinvestment

The periodic capital outlay required to maintain operations at existing levels, net of the tax shield available from such outlays.

Systematic Risk

The risk that is common to all risky securities and cannot be eliminated through diversification. When using the capital asset pricing model, systematic risk is measured by beta.

Secondary Market

This is commonly referred to as the aftermarket, and it follows after an initial public offering and stocks, bonds, futures, and options are traded.

T

Terminal Value

See Residual Value.

Tax-exempt income

Tax-exempt income is income that is exempt from income taxes. A purchaser of state municipal bonds is exempt from federal taxation on the income earned from the bonds.

Time horizon

The amount of time that you expect to stay invested in an asset or security.

Top 10 holdings

Ten largest holdings in a portfolio based on asset value.

Top 10 long and short positions

The top 10 holdings ranked by market value in each position category (long and short). A long position is one in which an investor buys shares of stock and as an equity holder will profit if the price of the stock rises. With a short position an investor will sell shares of stock that they do not own but have borrowed. The investor in a short position will profit if the price of the stock falls.

Top five contributors

Five assets in a portfolio that generated largest negative returns (losses).

Top five detractors

Top five industries in a portfolio based on amount of invested assets.

Top five holdings

Top five securities in a portfolio based on amount of invested assets.

Top five industries

Top five industries in a portfolio based on amount of invested assets.

Total return

Accounts for all of the dividends and interest earned before deductions for fees and expenses, in addition to any changes in the value of the principal, including share price, assuming the funds' dividends and capital gains are reinvested. Often, this percentage is presented in a specified period of time (one, five, ten years and/or life of fund). Also, a method of calculating an investment's return that takes share price changes and dividends into account.

Tracking Error

The active risk of the portfolio. It determines the annualized standard deviation of the excess returns between the portfolio and the benchmark.

Transfer agent

An agent, usually a commercial bank, appointed to monitor records of stocks, bonds and shareholders. A transfer agent keeps a record of the name of each registered shareholder, his or her address, the number of shares owned, and sees that certificates presented for the transfer are properly canceled and new certificates are issued in the name of the new owner.

Treasury bill

Negotiable short-term (one year or less) debt obligations issued by the U.S. government and backed by its full faith and credit.

Treasury bond

Negotiable long-term (10 years or longer) debt obligations issued by the U.S. government and backed by its full faith and credit.

Treasury note

Negotiable medium-term (one year to 10 years) debt obligations issued by the U.S. government and backed by its full faith and credit.

Treasury security

Securities issued by the U.S. Treasury Department and backed by the U.S. government.

Trustee
  1. An organization or individual who has responsibility for one or more accounts.
  2. An individual who, as part of a fund's board of trustees, has ultimate responsibility for a fund's activities.
Turnover Ratio

Percentage of holdings in a mutual fund that are sold in a specified period.

Trading 24/7

This means that trading can be done throughout the 24hours of a day at any given time.

U

Unsystematic Risk

The portion of total risk specific to an individual security that can be avoided through diversification.

V

Valuation

The act or process of determining the value of a business, business ownership interest, security, or intangible asset.

Valuation Date

The specific point in time as of which the valuator's opinion of value applies (also referred to as "Effective Date" or "Appraisal Date").

Valuation Method

Within approaches, a specific way to determine value.

Valuation Procedure

The act, manner, and technique of performing the steps of an appraisal method.

Valuation Ratio

A fraction in which a value or price serves as the numerator and financial, operating, or physical data serve as the denominator.

Value investing

A strategy whereby investors purchase equity securities that they believe are selling below estimated true value. The investor can profit by buying these securities then selling them once they appreciate to their real value.

Value stock

Typically an overlooked or underpriced company that is growing at slower rates.

Value-style funds

Value-style funds typically hold company stocks that are undervalued in the market. Fundamentally strong companies whose stocks are inexpensive but trending upward may also be selected for value funds.

Volatility

The amount and frequency with which an investment fluctuates in value.

W

Weighted Average Cost of Capital (WACC)

The cost of capital (discount rate) determined by the weighted average at market value of the cost of all financing sources in the business enterprise's capital structure.

Wtd. Avg. Market Cap

Most indexes are constructed by weighting the market capitalization of each stock on the index. In such an index, larger companies account for a greater portion of the index. An example is the S&P 500 Index.

Weighted average maturity

A Fund's WAM calculates an average time to maturity of all the securities held in the portfolio, weighted by each security's percentage of net assets. The calculation takes into account the final maturity for a fixed income security and the interest rate reset date for floating rate securities held in the portfolio. This is a way to measure a fund's sensitivity to potential interest rate changes.

Y

YTD total return

Year-to-date return on an investment including appreciation and dividends or interest.

YTD

Year-to-date return on an investment including appreciation and dividends or interest.

YTD Return (w load)

Year-to-date return on an investment including appreciation and dividends or interest, minus any applicable expenses or charges.

Yield

Annual percentage rate of return on capital. The dividend or interest paid by a company expressed as a percentage of the current price.

Yield to maturity

Concept used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond, is held to its maturity date.

Yield to maturity distribution

The average rate of return that will be earned on a bond if held to maturity.

1-9

12b-1 fee

A mutual fund fee, named for the SEC rule that permits it, used to pay for broker-dealer compensation and other distribution costs. If a fund has a 12b-1 fee, it will be disclosed in the fee table of the fund's prospectus.

30-day SEC yield (date)

Represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the fund's share price at the end of the 30-day period. The 30-day yield should be regarded as an estimate of investment income and may not equal the fund's actual income distribution rate.

52 Week High

A security's trading high point over the last 52-week period.

52 Week Low

A security's trading low point over the last 52-week period.