Appendix:Glossary of finance

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This is a glossary of finance.

Table of Contents: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


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.
bear 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.
bull market 
A stock market where a majority of investors are selling ("bears"), causing overall stock prices to drop.
A documentary obligation to pay a sum or to perform a contract; a debenture.


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.
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.


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.
A bill of exchange.


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.
Able to be substituted for something of equal value.


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.


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.


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


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


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


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.


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.