Professional Documents
Culture Documents
Private Placement: A sale of stocks, bonds, or securities directly to a private investor, rather
than as a part of public offering.
Private placement is a funding round of securities which are sold not through a public offering,
but rather than through a private offering, mostly to a small number of chosen investors.
Money Market: The trade in short-term loans between banks and other financial institutions.
The money market refers to trading in very short-term debt investment.
Capital Market: A capital market is a financial market in which long-term debt or equity-
backed securities are bought and sold.
Mutual Fund: A mutual fund is an open-end professionally managed investment fund that
pools money from many investors to purchase securities. These investors may be retail or
institutional in nature.
Open-end Mutual Fund: Open-end fund is a collective investment scheme that can issue
and redeem shares at any time. An investor will generally purchase shares in the fund directly
from the fund itself, rather than from the existing shareholder.
Financial Assets: A financial assets is a non-physical asset whose value is derived from a
contractual claim, such as bank deposits, bonds, and stocks. Financial assets are usually more
liquid than other tangible assets, such as commodities or real estate, and may be traded financial
markets.
Broker: A broker is a person or firm who arranges transactions between a buyer and seller for
a commission when the deal is executed. A broker who also acts as a seller or as a buyer
becomes a principal party to the deal.
Dealer: A dealer is an individual or firm that buys goods from a producer or distributor for
wholesale and/or retail reselling.
Factoring: Factoring is a financial transaction and a type of debtor finance in which a business
sells its accounts receivable to a third pay at a discount.
Bank Capital: Bank capital is the difference between a bank’s assets and liabilities, and it
represents the net worth of the bank or its equity value to investors. The asset portion of a bank’s
capital includes cash, govt. securities, and interest earnings loans.
Interest Rate Risk: It is the risk that arises for bond owners from fluctuating interest rates.
How much interest rate risk a bond has depends on how sensitive its price is to interest rate
changes in the market. The sensitivity is depends on two things, the bond’s time to maturity, and
the coupon rate of the bond.
Asymmetric Information: It is also known as “information failure” occurs when one party
to an economic transaction possesses greater material knowledge than the other party.
Credit Risk: A credit risk is a risk of default on a debt that may arise from a borrower failing
to make required payments. In the first resort, the risk of the lender and includes lost principal
and interest, disruption to cash flows, and increased collection costs. The loss may be complete
or partial.
Country Risk: It refers to the uncertainty associated with investing in a particular country,
and more specifically the degree to which that uncertainty could lead to losses for investors. This
uncertainty can come from any number of factors including political, economic, exchange rate or
technological influences.
Refinancing Risk: It refers to the possibility that an individual or company would not be able
to replace a debt at a critical time for the borrower. Your level of refinancing risk is strongly tied
to your credit rating.
Reinvestment Risk: Reinvestment risk is one of the main genres of financial risk. The term
describe the risk that a particular investment might be canceled or stopped somehow, that one
may have to find a new place to invest that money with the risk being that there might not to be a
similarly attractive investment available.
Liquidity Risk: Liquidity risk is a financial risk that for a certain period of time a given
financial asset, security or commodity cannot be traded quickly enough in the market without
impacting in the market price.
Operational Risk: Operational risk is” the risk of change in value caused by the fact actually
losses, incurred for inadequate or failed internal processes, people and system, or from external
events, differ from the expected losses”.
Best Effort Underwriter: Best effort is a term for a commitment from an underwriter to
make their best effort to sell as much as possible of a securities offering.
The term best efforts refers to an agreement made by a service provider to do whatever it takes to
fulfill the requirements of a contract. An underwriter makes a best effort or good faith promise to
their issuer to sell as much of their securities offering as possible.
Equity Multiplier: The equity multiplier is a financial leverage ratio measures the amount of
a firm’s assets that are financed by its shareholders by comparing total assets with total
shareholder’s equity. In the other words, the equity multiplier shows the percentages of assets
that are financed or owed by the shareholders.