Caproasia

Investment Terms

Shares / Stocks
Ownership of a company that can be determined by quantity. You can own 1,000 shares of HSBC Bank

Preferred or Preference Stocks / Shares
Second in rank to the ownership of the company, behind common stockholders or shareholders. Owners typically receive a fixed or high dividend payout

Equities
Same as shares. It originates from an accounting term (equities, liabilities, assets). Can be considered an asset class

Bonds
A loan with terms such as interest rate (%) and period (years)

Debts
Same as bonds. Corporate / accounting term

Debentures
A legal document to describe bonds & debts

Fixed Income
Investments that gives regular payout such as bonds and preferred shares

Money Market
Short-term investment in deposits, bonds or loans that can be easily converted to cash and is typically less than 1 year

Example: Fixed Deposits, Demand Deposits, Term Deposits, Certificate of Deposits, Government Bonds, High Quality Corporate Bonds

Real Estate
Land and properties. Common zoning includes residential, commercial, office, agricultural, industrial

Commodities
Goods or resources that can be traded

Example: Gold, Silver, Iron Ore, Soybean, Palm Oil, Coffee, Oil, Gas

Hedge Funds
Investments that are unregulated where the funds to be invested anywhere, anyhow

Example: Leveraged, long / short, arbitrage on equities, bonds, commodities, interest rates, futures, FX. Usually offered only to accredited investors

Asset Class
Investment grouping

Example: Equities, Fixed Income, Money Market, Real Estate, Commodities, Hedge Funds

Unit Trust
A portfolio of investments divided into units. The portfolio is placed under a trust* (a legal term). Hence the term Unit Trust. Investors invest into the units

Mutual Funds
A portfolio of investments managed by a company. Investors invest into the company

Currencies
Money in respective countries
CNY is China currency, SGD is Singapore currency, HKD is Hong Kong currency

Forex
Where you change a currency into another currency. Stands for Foreign Exchange

Foreign Exchange Rate
Exchange rate between two currencies
Eg. USD/SGD 1.30

Bitcoin
A virtual currency or cryptocurrency. Created online in 2008

REIT (Real Estate Investment Trusts)
A trust that allows investors to gain a stake in the rental profits of commercialised buildings.

WTI (West Texas Intermediate)
A grade of crude oil. It is one of the major oil price benchmark around the world, along with Brent Crude and Dubai Crude.

ETF (Exchange Traded Funds)
As its name suggests, it is a fund that is traded on an exchange. This is in contrast to certain funds that directly buy/sell its shares with its clients.

EBIT (Earnings before Interest and Taxes)
The earnings of a company before reducing any interest and taxes it has incurred.

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
The same as EBIT, only that it does not include any depreciation and amortization the company incurred.

Option
Giving an option to buy or sell at an agreed price ($) and date, only if the buyer of the option exercise his rights. You can be either buyer or seller of an option

Example: 1000 chickens at $2 each in 6 months time. Buyer of the option decides if he wants to exercise his rights. In 6 months time, if the buyer wants to buy at $2, the seller of the option has to complete the order

Call Option
An option to buy at an agreed price ($) and date, only if the option buyer wants to buy

Example: Buy 1000 chickens at $2 each in 6 months time

Put Option
An option to sell at an agreed price ($) and date, only if the option buyer wants to sell

Example: Sell 1000 chickens at $2 each in 6 months time

Stocks or Company Warrants
Same as option. Issued by company itself

Structured Warrants
Same as option. Structured and issued by banks or investment banks

Structured Notes
An investment structure with a derivative

Derivatives
Investment instrument that derives result from another
Example: Options, Futures, Swaps derive results from equities, bonds, interest rates, gold, oil, credit-worthiness

Hedge
An action taken to reduce or protect price movement of the investment

Forward
A private contract to exchange goods at an agreed price ($) and date

Example: 1000 chicken at $2 each in 6 months time

Swaps
A private contract to exchange future cashflow

Example: 100 hens lay 20 eggs weekly that sells for $2 now. A buyer agrees to use his cash of $2 weekly to swap for 20 eggs weekly for 4 weeks. If the price goes up to $3 after 1 week, the buyer has to continue swapping his cash of $2 for 20 eggs for the remaining weeks

Credit Default Swaps
An exchange of cash against credit or loan default

CDOs
Stands for Collateral Debt Obligations. Popularly known as sub-prime or credit-linked notes. CDOs is a package of loans

Exchange
A public platform where people trade. It is centralised and is regulated

Example: New York Stock Exchange, Tokyo Stock Exchange, Hong Kong Stock Exchange, Chicago Board of Trade

OTC
Stands for Over-the-counter. Any trades that is private between two parties by a dealer, without going through a regulated exchange

Example of OTC Transactions: FX trades, non-listed bond & stocks & options, forwards and swaps

FY (Fiscal Year)
The period used by companies to calculate their profits and prepare their financial statements.

NAV (Net Asset Value)
The value of a company in terms of its assets, minus its liabilities.

P/E (Price to Earnings Ratio)
The price of a stock divided by its earnings. Used to measure if a company is under/overpriced.

ROE (Return on Equity)
The net income of a company divided by shareholders equity. Used to measure if a company is profitable.

FCF (Free Cash flow)
The amount of liquid cash a company has to pay off short term liabilities.

YTD (Year to Date)
The period from the start of the (fiscal or calendar) year to the current day.

ROI (Return on Investment)
A measure used to calculate how the percentage return a particular investment has yielded.

Private Equity
Private investments into established businesses, companies, concepts or plans via equities or debts
Common Strategies: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital

Private Equity – Early Stage 
Investments that can be exited / sold within 5 to 7 Years.
Example: Infrastructure funds investing into railway, trains, airports, seaports before construction begins

Private Equity – Mid Stage
3 – 5 Years
Investments that can be exited / sold within 3 – 5 Years
Example: Growing or maturing businesses that requires funds for expansion

Private Equity – Late Stage
Investments that can be exited / sold within 1 to 3 Years
Example: Pre-IPO or debts or structured equities that will be expiring

Venture Capital
Investments into early-stage, high potential or startups where ideas or concepts may be new or risky

Seed Funding
Earliest or first money invested into a new business. A common expression for startups

Angel Investor
A person who provides capital for a new business or startup as a loan or ownership

Silicon Valley
Nickname for the southern area of San Francisco Bay, Northern California in US. A base for many of the world’s largest tech companies and startups