Investments glossary terminology
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.
An international depository receipt (IDR) is a negotiable certificate that banks issue. It represents ownership in the stock of a foreign company that the bank holds in trust. International depository receipts are also known as American Depository Receipt (ADR) in the U.S. ADRs represent stocks of quality issuers in a number of developed and emerging markets. In Europe, IDRs are known as Global Depository Receipts, and trade on the London, Luxembourg, and Frankfurt exchanges. IDR can also specifically refer to Indian Depository Receipts (IDRs).
A private equity firm buys all the stock in a troubled public company, thus taking the company private with the intention of revamping its operations and re-selling it at a profit. This process is called repackaging.
Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).
Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).
Illiquid refers to the state of a stock, bond, or other assets that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset. Additionally, a company may be illiquid if it is unable to obtain the cash necessary to meet debt obligations. Illiquidity is the opposite of liquidity.
Open source refers to a program with source code that can be modified or enhanced by anyone. Open source grants users of an application permission to fix broken links, enhance the design, or improve the original code. Open source software (OSS) is an example of a kind of open collaboration that can broaden design perspectives far more than a single company or design work group. Open source practices can also lead to considerable savings.
Fundamental analysis (FA) is a method of measuring a security’s intrinsic value by examining related economic and financial factors. Fundamental analysts study anything that can affect the security’s value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company’s management.
A chi-square (χ2) statistic is a test that measures how expectations compare to actual observed data (or model results). The data used in calculating a chi-square statistic must be random, raw, mutually exclusive, drawn from independent variables, and drawn from a large enough sample. For example, the results of tossing a coin 100 times meet these criteria.