Category: Investments glossary

A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.

A global bond is a type of bond that can be traded in a domestic or European market. It is a bond issued and traded outside the country where the currency of the bond is denominated. This type of bond is issued by a non-European company but sells in a European country or any other foreign market. For example, a U.S. corporation can issue a bond in Europe. These bonds are sold in various maturities and credit qualities.

The health insurance marketplace is a platform which offers insurance plans to individuals, families or small businesses. The Affordable Care Act of 2010 established the marketplace as a means to achieve maximum compliance with the mandate that all Americans carry some form of health insurance. Many states offer their own marketplaces, while the federal government manages an exchange open to residents of other states.

The TED spread is the difference between the three-month Treasury bill and the three-month LIBOR based in US dollars. To put it another way, the TED spread is the difference between the interest rate on short-term US government debt and the interest rate on interbank loans.

A bear spread is an options strategy implemented by an investor who is mildly bearish and wants to maximize profit while minimizing losses. The goal is to net the investor a profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of either puts or calls for the same underlying contract with the same expiration date but at different strike prices.

An income stock is an equity security that pays regular, often steadily increasing dividends. Income stocks usually offer a high yield that may generate the majority of the security’s overall returns. While there is no specific breakpoint for classification, most income stocks have lower levels of volatility than the overall stock market, and offer higher-than-market dividend yields.

A histogram is a graphical representation that organizes a group of data points into user-specified ranges. It is similar in appearance to a bar graph. The histogram condenses a data series into an easily interpreted visual by taking many data points and grouping them into logical ranges or bins.

The cash conversion cycle (CCC) is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Also called the Net Operating Cycle or simply Cash Cycle, CCC attempts to measure how long each net input dollar is tied up in the production and sales process before it gets converted into cash received.

The Ulcer Index (UI) is a technical indicator that measures downside risk in terms of both the depth and duration of price declines. The index increases in value as the price moves farther away from a recent high and falls as the price rises to new highs. The indicator is usually calculated over a 14-day period, with the Ulcer Index showing the percentage drawdown a trader can expect from the high over that period.

A nonrenewable resource is a natural substance that is not replenished with the speed at which it is consumed. It is a finite resource.