Plain-English definitions of financial terms — from Amortisation to Zero-Coupon Bonds.
Alpha Advanced
A measure of an investment's performance relative to a benchmark index, after adjusting for risk. Positive alpha means outperformance.
Asset Allocation Intermediate
How an investor divides their portfolio among different asset categories like stocks, bonds, and cash, based on goals, risk tolerance, and time horizon.
Bear Market Beginner
A period when stock prices fall 20% or more from recent highs, usually accompanied by widespread pessimism about the economy.
Beta Advanced
A measure of a stock's volatility relative to the overall market. A beta above 1 means the stock is more volatile than the market; below 1 means less.
Blue Chip Stock Beginner
Shares of large, well-established, financially sound companies with a history of reliable performance, such as market leaders in their sector.
Bond Yield Intermediate
The return an investor earns on a bond, expressed as a percentage of its price. Yields move inversely to bond prices — when prices fall, yields rise.
Book Value Intermediate
A company's total assets minus its total liabilities, representing the net worth attributable to shareholders if the company were liquidated.
Bull Market Beginner
A period of rising stock prices, typically 20% or more from recent lows, usually accompanied by investor optimism.
Capital Gains Tax Intermediate
Tax owed on the profit from selling an investment. In India, gains are classified as short-term or long-term depending on the holding period, with different tax rates.
Compound Interest Beginner
Interest calculated on both the initial principal and the accumulated interest from previous periods — 'interest on interest' — which accelerates growth over time.
Demat Account Dematerialized Account
Beginner
An account that holds your shares and securities in electronic form instead of physical certificates, required to trade on Indian stock exchanges.
Derivative Advanced
A financial contract whose value is derived from an underlying asset like a stock, index, or commodity. Futures and options are the most common types.
Diversification Beginner
Spreading investments across different assets, sectors, or geographies to reduce risk, so a decline in one holding doesn't sink the whole portfolio.
Dividend Yield Beginner
Annual dividend payments divided by the current share price, expressed as a percentage. Shows how much cash return a stock pays relative to its price.
EPS Earnings Per Share
Intermediate
A company's net profit divided by its number of outstanding shares. Used to gauge profitability on a per-share basis and to calculate the P/E ratio.
Expense Ratio Beginner
The annual fee a mutual fund charges to manage your money, shown as a percentage of your investment. Lower is generally better for long-term returns.
Fixed Deposit FD
Beginner
A bank product where you deposit a lump sum for a fixed tenure at a fixed interest rate, offering guaranteed but generally lower returns than equities.
Futures Contract Advanced
An agreement to buy or sell an asset at a predetermined price on a specific future date, commonly used for hedging or speculation.
IPO Initial Public Offering
Beginner
The first time a private company sells shares to the public on a stock exchange, raising capital and allowing public trading of its stock.
Liquidity Intermediate
How quickly and easily an asset can be converted to cash without significantly affecting its price. Stocks of large companies are generally highly liquid.
Market Capitalization Market Cap
Beginner
The total value of a company's outstanding shares, calculated as share price multiplied by number of shares. Used to classify companies as large-, mid-, or small-cap.
NAV Net Asset Value
Beginner
The per-unit price of a mutual fund, calculated by dividing the fund's total assets minus liabilities by the number of units outstanding.
Options Contract Advanced
A contract giving the buyer the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before a certain date.
P/E Ratio Price-to-Earnings Ratio
Beginner
A company's share price divided by its earnings per share. A high P/E can mean investors expect strong future growth, or that the stock is overpriced.
Portfolio Rebalancing Intermediate
Periodically buying or selling assets to bring your portfolio back to its target allocation, since some investments grow faster than others over time.
Rupee Cost Averaging Intermediate
The natural effect of investing a fixed amount regularly (as in a SIP) — you buy more units when prices are low and fewer when prices are high, lowering your average cost per unit over time.
Short Selling Advanced
Borrowing shares to sell them immediately, hoping to buy them back later at a lower price and profit from the difference. A bet that a stock will fall.
SIP Systematic Investment Plan
Beginner
A fixed amount invested into a mutual fund at regular intervals (usually monthly), regardless of market price. Smooths out the effect of market ups and downs over time.
Volatility Intermediate
A statistical measure of how much an asset's price fluctuates over time. Higher volatility means larger, more frequent price swings and generally higher risk.
Yield Curve Advanced
A line plotting interest rates of bonds with equal credit quality but different maturities. An inverted yield curve has historically preceded recessions.