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A Glossary Of Important Investment Terms & Terminologies


If you’re new to investing, knowing what these terms mean can help you be a smart investor. Read this blog to find a comprehensive glossary of investment terms and terminologies.

Investment glossary

Source: Freepik

The world of investment is ever blooming with several opportunities. However, we need to be familiar with all relevant investment terms and terminologies to make the most out of our investment endeavors.  

Listed below are a few investment-related terms which would give you a fair idea about some investment jargon.  



Arbitrage is a process where a particular asset is brought from a different market and sold to another market. This practice helps yield some profit from the differences in the market values for the same asset.  

Asset Allocation

An asset allocation is a necessary step for any investor to categorize all the assets owned by an investor, making it easy to determine potential risks and gains from each asset class.  


Appreciation is when the monetary value of a particular asset rises.  


Alpha is a calculating unit that measures the amount of money gained from a specific investment.  

Adjusted Cost Base (ACB)  

The Adjusted Cost Base or ACB is a situation where the actual cost of an asset varies because of many factors affecting it, such as recent sales and purchases.  

Ask Price

The asking price or the offer price is the pre-decided price against which we sell a particular stock.  


An annuity is a source of regular flowing income. The invested plans help you unlock a steady income flow after investing a fixed amount of money.  

Asset Class

When we group all assets with identical features, we term it as an asset class.  


Bid Price

A bid price or a bid is the topmost price a buyer is ready to pay to buy a particular stock, asset, or commodity.  

Bull Market  

We use the term bull market when we refer to the stock market. It is a marketplace where the prices of a commodity rise and fall according to the marketing trends and factors affecting the value of a particular commodity.  

Buy And Hold  

Buy and hold is a strategy in the share market. The traders buy stocks, bonds, and other asset classes and keep them on hold irrespective of the prevailing market trends, their value, and how they will further depreciate or appreciate.    


Beta represents variability in the investment market where Beta above 1 symbolizes more volatility and vice versa.  


A benchmark is a limiting point at which we make the different comparisons amongst the various assets in terms of their performance level.  

Balanced Fund  

A balanced fund falls under the category of Mutual Fund, where it includes both stocks and bonds. A balanced fund carries all the information of an investor about his stocks and bonds.  

Blue Chip Stocks  

Blue-chip stocks represent stocks of the big companies that have goodwill. These companies pay dividends consistently with good market capitalization.  


In a share market, a bear market is the exact opposite of a bull market. Here, the prices and valuations follow a downward graph where they keep falling. A bull market sees an upraise in valuations.  


Canadian Investor Protection Fund (CIPF)   

The Canadian Investor Protection Fund or CPIF operates totally for a nonprofit purpose under the Canadian Government. It aims to stand with an investor if worse situations of bankruptcy arise. However, it does not look after the security, or any losses incurred by the investor.  


A commodity is a product a trader exchanges in the share market during buying and selling at a price for monetary gain.  


Capital is the total amount of money available for an investor to invest in financial operations or buy any stock or asset.  

Capital Asset Pricing Model (CAPM)   

The Capital Asset Pricing Model or CAPM is a systematic model between the potential returns from an investment and the potential risks that may arise from the investment. The CAPM model gives proper insights to an investor before investing his capital.  


Dividend Yield

The dividend yield is a percentage of dividends a company pays to its stockholders.  

Dollar-Cost Averaging (DCA)  

Dollar-Cost Averaging or DCA is an integrated process of investing a fixed amount at regular intervals instead of a lump-sum amount together. The DCA practice is critical to safeguard from poor investment choices.  

Dividend Tax Credit

The dividend tax credit is a feature that reduces the amount of tax to be paid from the dividends earned.  

Dividend Reinvestment Plan (DRIP)  

The Dividend Reinvestment Plan or DRIP is a system where the total amount of dividend earned is paid out in shares rather than in cash. The DRIP system helps investments to flow at a steady pace.  


Equity Funds

An equity fund or stock fund is the principal asset of investment in the stock market.  

Earning Per Share (EPS)  

The Earning Per Share or EPS is the company’s net income and is valued by the number of outstanding shares. It calculates the exact amount earned per share.  

Emerging Markets 

Emerging markets refer to those countries where the market situations are still underdeveloped but emerging much better. Countries like India, China, Brazil, and Russia are classified as emerging markets.  


Fixed Income  

Fixed-income assets are all such assets or stocks which pay a fixed amount. Regardless of the market situation, the income from these fixed income sources is constant.  

Fair Market Value (FMV)  

The Fair Market Value or FMV is the exact market value of a particular asset in the market.  


Growth Stock 

A Growth Stock is any company’s share expected to grow above the average growth rate of the market.  

Green Bond

Green bonds are special bonds aiming to raise money specifically for any environmental or climatic project. Its earnings are invested in only green policies.  

Growth Investing

Growth investing is a strategized program that helps in increasing the capital money of an investor with other plans and policies.  



An index is the benchmark of performance to see how the assets have been performing and to measure its performance.  

Income Statement  

An income statement is a complete document that shows the entire profit-and-loss account of a company stating its income and expenses.  



Liquidity is the level of easiness to buy a particular asset or stock. It ensures an easy flow of income because its liquidity (value) can be retained any business day whenever it is sold.  

Large-Cap Stock 

A company with a massive market capitalization stock falls under the category of a Large Cap stock.  


Mutual Fund

Mutual funds are a source of income channelized and managed by investment companies to invest in stocks, shares, bonds, etc.  

Marginal Tax Rate (MTR)  

The Marginal Tax Rate, or MTR, is the tax rate a consumer pays on every extra income earned.  


Net Asset Value Per Share (NAV)  

The NAV is the current market price of a particular share of a mutual fund.  

Number Of Holdings

The number of holdings is the individual number of securities that an investor possesses.  


Power Purchase Agreement (PPA)  

A Power Purchase Agreement or PPA is a legal agreement between two parties where one is the producer of electricity and the other buys it. It is a pre-defined document of all terms related to such a contract.  


Premium is the added amount with which a bond sells at its market value.  


Risk-Free Rate

A risk-free rate is when a particular rate of return is risk-free when invested in certain assets, such as treasury bills.  

Registered Retired Income Fund (RRIF)  

The RRIF is a specialized fund that helps save its owner from a rising tax burden when a certain number of fixed amounts of annual withdrawals are executed.  



Security is a stock, bond, or any asset which is tradable in the share market.  

Strike Price

The strike price is the ultimate price at which an investor purchases or sells a particular stock.  


Tax-Free Savings Accounts

A tax-free savings account allows the holder to perform all actions that are tax-free. All the incomes, expenses, growth are tax-free.  



The volatility is the rate of fluctuations recorded in any investment.  



A yield is the income coming from any assets such as stocks, bonds.  

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