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An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
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The rate of return on an investment, expressed as a percentage of the investment's initial cost.
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A financial document that outlines the ownership structure of a company. It lists all of the company's shares, the percentage of ownership held by each shareholder and the value of each security.
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A table providing an analysis of the founders’ and investors’ percentage of ownership, equity dilution, and value of equity in each round of investment.
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The profit or loss on an investment, often used in private equity and venture capital to refer to the share of profits received by the investment firm after the investment has been exited.
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The additional value of purchasing a controlling stake in a company, rather than a minority stake.
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A type of loan or bond that can be converted into equity shares at a later date. This means that the borrower has the option to pay back the debt in the form of equity rather than cash.
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A type of debt financing that can be converted into equity at a later date, often at a discounted price.
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A type of preferred stock that holders can convert into a predetermined number of common stock shares.
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The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.
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A statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
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A rise in an investment's market price. Capital appreciation is the difference between the purchase price and the selling price of an investment.
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The loss incurred when a capital asset, such as an investment or real estate, decreases in value. This loss is not realized until the asset is sold for a price that is lower than the original purchase price.
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A financial derivative that gives its owner the right to buy a specified security at a set price within a certain time period.
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Is a simple and widely used financial model to calculate the expected return of an asset or investment by using the expexted return of the broader market, the risk-free rate, and the asset's sensitivity to the overall market (measured as beta).
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An investment strategy that aims to protect capital and prevent loss of a portfolio. When using this investment strategy, investors opt for safe, short-term assets.
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Refers to the net amount of cash and cash equivalents being transferred in and out of a company. Cash received represents inflows, while money spent represents outflows. The movement of money into or out of a business, investment, or individual's finances
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A valuable asset that a borrower pledges as security for a loan. Its objective is to reduce the risk for lenders. For example, when a homebuyer obtains a mortgage, the home serves as the collateral for the loan.
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Refers to properties that are used for commercial purposes; such as office buildings, retail spaces, warehouses, etc. As an investment, commercial real estate can generate income through rent or lease payments, and may also appreciate in value over time.
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A portfolio consisting of assets from several accounts that are blended together. Commingled funds exist to reduce the costs of managing the constituent accounts separately.
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Physical goods such as precious metals, agricultural products, and energy that are traded on markets like stocks and bonds.
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A private investment structure that combines investor contributions to trade the futures and commodities markets. The commodity pool, or fund, is used as a single entity to gain leverage in trading, in the hopes of maximizing profit potential.
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An independent assessment of a company's or government entity's creditworthiness in general terms or with respect to a particular debt or financial obligatio, indicating the likelihood of defaulting on debt obligations. They differ from credit scores, which are assigned to individuals.
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An individual or institution that extends credit to another party to borrow money usually by a loan agreement or contract. Creditors are commonly classified as personal or real.
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Involves obtaining work, information, or opinions from a large group of people who submit their data via the Internet, social media, and smartphone apps.
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A digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend, and is generally not issued by any central government authority. Many cryptocurrencies are decentralized networks based on blockchain technology - a distributed ledger enforced by a disparate network of computers.
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An entity responsible for safeguarding and administering financial assets on behalf of investors or clients.
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Is most common in private equity funds, but it can also be used in venture capital and hedge funds. The general partner (GP) typically receives a management fee as well as carried interest. The management fee is a fixed percentage of the fund's assets under management, and it is paid out on an annual basis. Carried interest, on the other hand, is only paid out when the fund achieves a certain level of performance.
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A legal right of an investment firm or an insurance company to demand a portion of the money promised to it by an investor.
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A form of short-term debt that converts into equity, typically in conjunction with a future financing round.
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The total capital invested in a project, including pure equity, hybrid equity, and debt.
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A provision in which money already paid must be returned under certain conditions.
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The amount of money a limited partner promises to contribute to a venture capital fund.
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A complex structured finance product that is backed by a pool of loans and other assets.
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A financial derivative or contract that allows an investor to “swap” or offset his or her credit risk with that of another investor.
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