Appendix:Glossary of finance

This is a glossary of finance.

B

 * banker's acceptance : A negotiable instrument or time draft drawn on and accepted by a bank, that upon acceptance becomes an obligation of the bank and is a marketable money-market instrument.


 * bull market : A stock market where a majority of investors are buying ("bulls"), causing overall stock prices to rise.


 * bill of exchange : A document demanding payment from another party, especially used in international trade; draft.


 * bear market : A stock market where a majority of investors are selling ("bears"), causing overall stock prices to drop.


 * bond : A documentary obligation to pay a sum or to perform a contract; a debenture.

C

 * cash instrument : Any financial instrument whose value is determined directly by the market.


 * capital market : The market for long-term securities, including the stock market and the bond market.
 * certificate of deposit : A type of time deposit, which is insured, with a specific, fixed term, and, usually, a fixed interest rate.
 * commercial paper : A negotiable instrument with short maturity.
 * coupon : Any interest payment made or due on a bond, debenture or similar (no longer by a physical coupon).
 * credit default swap : A credit derivative contract between two counterparties, whereby the buyer (seller of risk) makes periodic payments to the seller (buyer of risk) in exchange for the right to a payoff if there is a default or other credit event in respect of a third party called reference entity.
 * credit event : A significant default on a financial instrument or some other financial occurrence, such as bankruptcy, restructuring, repudiation, or moratorium, or failure to pay some other obligation, such as taxes.
 * credit risk : The risk of loss due to a debtor's non-payment of a loan or other line of credit.

D

 * debt instrument : A document evidencing a debt; the debt so evidenced.


 * derivative instrument : A security whose value is derived from one or more other, more fundamental, assets.


 * draft : A bill of exchange.

E

 * exchange rate : The rate at which one currency can be exchanged for another.

F

 * face value : The amount or value listed on a bill, note, stamp, etc.; the stated value or amount.


 * financial instrument : Any form of funding medium, mostly those used for borrowing in money markets, including cash instruments and derivative instruments.


 * fungible : Able to be substituted for something of equal value.

I

 * interest : The price paid for obtaining, or price received for providing, money or goods in a credit transaction, calculated as a fraction of the amount or value of what was borrowed.

M

 * market risk : The risk that the value of an investment will decrease due to moves in market factors.
 * money market : A market for trading short-term debt instruments, such as treasury bills, commercial paper, bankers' acceptances, and certificates of deposit.

N

 * negotiable instrument : A right to receive payment of money which is unconditional (sometimes excepting loss or theft) and capable of transfer by negotiation.

P

 * promissory note : A document saying that someone owes a specific amount of money to someone else, often with the deadline and interest fees.

S

 * security : A fungible, negotiable instrument representing financial value.
 * share : A financial instrument that shows that you own a part of a company that provides the benefit of limited liability.
 * stock : The capital raised by a company through the issue of shares. The total of shares held by an individual shareholder.

T

 * time deposit : A deposit in a bank that cannot be withdrawn before a specified date.


 * treasury bill : A government obligation, sold at a discount, maturing in one year or less, and pays no interest prior to maturity.

Z

 * zero coupon bond : A bond (e.g., corporate debenture or government debt) that has no coupon (i.e., pays no interest), during the life of the issue. Such a bond is initially sold at a deep discount to its face value.