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That specifies how the profits from a private equity fund will be distributed to the limited partners (LPs) and general partners (GPs). The waterfall is typically structured in a cascading manner, with the LPs receiving their returns first, followed by the GPs.

Of the fund to an investor to contribute a portion of the money that they have committed to invest. Capital calls are common in private equity and typically made when the fund needs additional funds to make investments.

The return an asset achieves over a certain period of time.

An investment strategy that aims to produce a positive return over time regardless of whether markets rise or fall.

A fixed-term, cohort-based program that includes mentorship and educational components and culminates in a public pitch event or demo day.

A provision in a private equity or venture capital fund’s limited partnership agreement that allows the fund to accept additional capital from existing investors. It is an option that a company can buy that gives it the right to increase its line of credit with a lender; usually in the anticipation of the need for more working capital for possible expansion opportunities.

A person or business entity who is allowed to deal in securities not registered with financial authorities.

The gradual and incremental growth of assets and earnings over time due to business expansion, a company’s internal growth, or a merger or acquisition.

A corporate action in which one company buys most, if not all, of another company’s ownership stakes to assume control.

Refers to an investment strategy where a portfolio manager uses research and experience to buy/sell securities in the hopes of generating profits and outperforming a specific index or benchmark, such as the S&P 500 Index or Russell 2000 Index. In contrast, passive management is an approach designed to track (or mimic) the performance of an index or benchmark.

The process of distributing and allocating equity shares to investors who have applied for the initial public offering (IPO). An IPO is the process in which a privately-held company makes shares of the firm available to the general public for purchase.

Is a key performance measurement term that gauges the performance of a particular investment strategy relative to the return of a broader market index (e.g., the S&P 500 Index) or benchmark. Alpha can be negative or positive as it simply refers to the difference between the investment return and the benchmark return, adjusted for risk. An investment that has positive alpha is outperforming the benchmark.

An investment in asset classes other than stocks, bonds, and cash.

Is a method used by organizations to share or transfer risk (i.e., potential losses) with a third party that is willing to bear the risk in exchange for a financial gain. Through the use of derivative or securitization, ART provides a customized risk management solution to address an organization’s specific needs.

A trading platform or exchange that allows the trading of securities outside of traditional exchanges.

A statistical measurement used to predict the likelihood of a company’s bankruptcy, based on its financial statements.

An accounting method for spreading out the costs for the use of a long-term asset over the expected period the long-term asset will provide value. For example, a company spreads out the cost of a $10,000 patent over 5 years, recording an annual amortization expense of $2,000.

An individual who provides financial support to startup companies or entrepreneurs. Angel investors are usually High-Net-Worth individuals who invest their own money in exchange for ownership equity in the company.

A group of high-net-worth investors who come together to invest collectively in early-stage or start-up companies. These investors typically provide capital and expertise to support the growth of new businesses.

A tax on the funding received by start-ups from angel investors, often at a higher rate than the tax on funding from venture capital firms.

(ARR) is a metric of predictable and regular revenue generated by customers, normalized on an annual basis and generally used by businesses operating on a subscription-based model.

A detailed report that contains comprehensive financial information and shows a company’s operations and financial performance in the preceding 12 months. This information is of interest to shareholders and potential investors.

An increase in the value of an asset or investment over time, which can result in capital gains if the asset is sold. Appreciation occurs for many different reasons, including increased demand, weakened supply, or a change in inflation or interest rates.

A low-risk short-term investment tactic that attempts to generate small and quick profits when the same, or similar, asset displays different values in two separate marketplaces. Investors attempt to exploit this pricing mismatch by simultaneously buying and selling an investment where the difference is considered the “profit”.

An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon. The four main asset classes— equities, fixed-income, cash or equivalents, and private investments—have different levels of risk and return, so each will behave differently over time.

Occurs when the price of a financial asset or commodity rises to levels that are well above either historical norms, the asset’s intrinsic value, or both. A rapid and unsustainable increase in the prices of assets, often followed by a sharp decline.

A grouping of investments that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.

The practice of increasing total wealth over time by acquiring, maintaining, and trading investments that have the potential to grow in value. The goal of asset management is to maximize the value of an investment portfolio over time while maintaining an acceptable level of risk.

Is a type security that generates cash flows from debt and is collateralized by a specific pool of income-producing assets, such as auto loans, credit cards, and mortgage loans.

A situation where the potential gains and losses of an investment are uneven, meaning one side of the transaction is exposed to greater risk than its counterpart. Simply put, asymmetric risk occurs when the potential gains from an investment are far greater than the potential losses.

(AIP) an investment program that allows investors to contribute money to an investment account at regular intervals to be invested in a pre-set strategy or portfolio. Funds can be automatically deducted from an individual’s paycheck or paid out from a personal account.

A strategy where an investor purchases more shares of an investment at a lower price than their original purchase price, thereby reducing the average cost per share.

A fee paid by investors when selling mutual fund shares, and it is expressed as a percentage of the value of the fund’s shares. A back-end load can be a flat fee or gradually decrease over time, usually within five to ten years. In the latter case, the percentage is highest in the first year and falls until it drops to zero.

A performance-based method for evaluating the viability of a new investment strategy using historical data. Backtesting can serve as a valuable tool to understand how a particular investment could perform, and help boost confidence for the investor implementing the particular strategy.

It typically describes a condition in which securities prices fall 20% or more from recent highs. A market condition characterized by falling prices and widespread pessimism among investors.

A standard, or a baseline, that’s used for comparative purposes when assessing a portfolio or mutual fund. Investors use benchmarks to measure the performance of securities, mutual funds, exchange-traded funds, portfolios, or other investment instruments.

Measures sensitivity of a specific investment relative to a broader market index (e.g. S&P 500 Index). Private market investments typically display lower volatility in comparison to publicly-traded securiteis due to lagged and infrequent valuations that may artifically smooth overall volatility. A beta of 1.0 means a particlar investment will move in lockstep with the broader market, while a beta of 2.0 means that it is twice as volatile as the market.

The difference between the highest price a buyer is willing to pay for a security and the lowest price a seller is willing to accept for any transaction.

A type of financial derivative where the payoff is either a fixed amount or nothing at all.

A cryptocurrency, a virtual currency designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions. The first and most well-known cryptocurrency, based on decentralized blockchain technology.

A private equity or venture capital investment vehicle that does not disclose its investment strategy and goals when raising capital.

A decentralized, distributed ledger system used to record transactions across many computers.

Equal to the cost of carrying an asset on a company’s balance sheet, and firms calculate it by netting the asset against its accumulated depreciation. As a result, book value can also be thought of as the net asset value (NAV) of a company, calculated as its total assets minus intangible assets(patents, goodwill) and liabilities.

Building and growing a business without external funding, often by reinvesting profits back into the business.

The point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business. The amount of money, or change in value, for which an asset must be sold to cover the costs of acquiring and owning it.

An interim financing option used by companies and other entities to solidify their short-term position until a long-term financing option can be arranged. Bridge financing normally comes from an investment bank or venture capital firm in the form of a loan or equity investment. Short-term funding provided to a company until it secures long-term financing or reaches a milestone.

A short-term loan used until a person or company secures permanent financing or removes an existing obligation.

A financial entity that is engaged with trading securities on behalf of clients, but which may also trade for itself.

The condition of a financial market in which prices are rising or are expected to rise and widespread optimism among investors.

How quickly a company is spending its cash reserves to cover overhead costs usually expressed in monthly units. It is also a measure of negative cash flow also expressed as the amount of cash spent per month.

Is a recurring pattern of economic expansion and contraction. It is measured by the rise and fall of gross domestic product (GDP), which is the total value of goods and services produced in a country. The business cycle has four phases: Expansion, Peak, Contraction, and Trough.

A segment of financial markets made up of investing institutions that buy securities for money-management purposes.

The purchase of a controlling percentage of a company’s stock.

A financial derivative that gives its owner the right to buy a specified security at a set price within a certain time period.

A table providing an analysis of the founders’ and investors’ percentage of ownership, equity dilution, and value of equity in each round of investment.

A rise in an investment’s market price. Capital appreciation is the difference between the purchase price and the selling price of an investment.

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).

A legal right of an investment firm or an insurance company to demand a portion of the money promised to it by an investor.

The amount of money a limited partner promises to contribute to a venture capital fund.

An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.

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.

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.

The total capital invested in a project, including pure equity, hybrid equity, and debt.

The rate of return on an investment, expressed as a percentage of the investment’s initial cost.

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.

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.

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.

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

A provision in which money already paid must be returned under certain conditions.

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.

A complex structured finance product that is backed by a pool of loans and other assets.

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.

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.

Physical goods such as precious metals, agricultural products, and energy that are traded on markets like stocks and bonds.

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.

The additional value of purchasing a controlling stake in a company, rather than a minority stake.

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.

A form of short-term debt that converts into equity, typically in conjunction with a future financing round.

A type of preferred stock that holders can convert into a predetermined number of common stock shares.

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.

A financial derivative or contract that allows an investor to “swap” or offset his or her credit risk with that of another investor.

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.

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.

The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.

Involves obtaining work, information, or opinions from a large group of people who submit their data via the Internet, social media, and smartphone apps.

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.

An entity responsible for safeguarding and administering financial assets on behalf of investors or clients.

The rate at which business proposals and investment pitches are being received.

Help you reduce your debt load by reducing the total number of creditors an invetsor owes

When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to investors.

A financial ratio that compares a company’s total liabilities to its shareholder equity.

The risk a lender takes that a borrower will not make the required payments on a debt obligation; Lenders and investors are exposed to default risk in virtually all forms of credit offerings. A higher level of default risk typically requires the borrower to pay a higher interest rate. The risk that a borrower may be unable to repay their debt obligations.

A type of financial contract whose value is dependent on an underlying asset, group of assets, or benchmark. A derivative is set between two or more parties that can trade on an exchange or over-the-counter (OTC). Financial contracts whose value is derived from an underlying asset, such as options, futures, swaps, etc.

A form of business funding which helps established businesses to scale up, increase their revenues and build up their customer base. It is typically provided by an investor in exchange for an equity stake in the business.

The reduction in the ownership percentage of a share of stock caused by the issuance of new stock.

The act of buying a security directly from the issuer to hold for investment purposes.

To a valuation method that estimates the value of an investment using its expected future cash flows. DCF analysis attempts to determine the value of an investment today, based on projections of how much money that investment will generate in the future.

Financial assets that are in a state of financial distress, bankruptcy, or high debt. They are considered riskier and have lower value than similar assets.

The percentage of a company’s earnings that is paid out as dividends to shareholders.

Payments made to shareholders from a company’s profits.

A strategy that can make it easier to deal with uncertain markets by making purchases automatic. It also supports an investor’s effort to invest regularly. Investing a fixed amount of money at regular intervals, regardless of market conditions, to reduce the impact of market volatility.

A round of financing where investors purchase stock from a company at a lower valuation than earlier investors.

Various methods an investor uses to prevent a decrease in the value of the investment.

A clause in a shareholders’ agreement that allows majority shareholders to force minority shareholders to join in the sale of a company.

Cash or marketable securities that are low-risk and highly liquid and convertible to cash. Funds held as dry powder are kept in reserve to be deployed in case of emergency. The term is often used in terms of venture capitalists, where dry powder allows them to invest in opportunities as they arise.

The process of thoroughly investigating and verifying the details of a business/investment opportunity; by reviewing financial statements, market analysis, and other relevant information. It is typically conducted by a potential investor or acquirer in order to assess the risks and potential rewards of the opportunity.

A measure of a company’s operating performance.

A contractual provision stating that the seller of a business is to obtain additional compensation in the future if the business achieves certain financial goals, which are usually stated as a percentage of gross sales or earnings.

A measure of the decrease in the market value of an asset over time from influential economic factors. This form of depreciation usually pertains to real estate, which can lose value for several reasons The decrease in value of an asset over time due to wear and tear, obsolescence, or other factors.

A piece of economic data, usually of macroeconomic scale, that is used by analysts to interpret current or future investment possibilities. These indicators also help to judge the overall health of an economy. Statistics or data that provide insights into the overall health and performance of an economy

A financial asset donation made to non-profit group or institution in the form of investment funds or other property that has a stated purpose at the bequest of the donor.

The hypothesis that people value a good or service more once their property right to it has been established.

Ownership interest in a company, typically represented by the stock.

A method of raising capital by soliciting small investments from a large number of people, often through online platforms, in exchange for equity in the company.

The process of raising capital by selling ownership stakes in a company or investment.

An equity incentive where the lender provides credit at a lower interest rate and, in exchange, gets an equity position in the borrower’s company. An additional return on an investment in the form of equity, typically used to sweeten a debt financing deal.

An exchange of future cash flows between two parties that allows each party to diversify its income for a specified period of time while still holding its original assets. A financial contract where two parties agree to exchange future cash flows based on the performance of an underlying equity instrument.

A legal concept describing a financial instrument whereby an asset or escrow money is held by a third party on behalf of two other parties.

A set of standards for a company’s behavior used by socially conscious investors to screen potential investments. Investing in companies that demonstrate positive environmental, social, and governance practices.

The possibility that an unforeseen event will negatively affect a company, industry, or security causing a loss to investors or other stakeholders. The risk associated with unexpected events, such as natural disasters, political changes, or regulatory decisions, that can impact investments.

A type of venture fund with an unspecified life span that continuously reinvests profits in new investments.

Investment returns that exceed a benchmark or index with similar risk. Excess returns will depend on a designated investment return comparison for analysis. The riskless rate and benchmarks with similar levels of risk to the investment being analyzed are commonly used in calculating excess return.

A plan for how and when an investor will sell their stake in a company or investment. An exit strategy can involve selling the investment or business to another party, liquidating assets, or distributing ownership to shareholders.

A rapid increase in value or magnitude over time, following an exponential function.

The estimated price at which an asset is bought or sold when both the buyer and seller freely agree on a price. The estimated value of an asset or liability based on current market conditions.

Private wealth management firms that cater to the financial needs of high net worth individuals, typically individuals or families with assets over $50 million.

The state of having sufficient wealth and assets to cover living expenses without relying on employment income.

A regulatory body that governs business between brokers, dealers and the investing public.

Using borrowed capital as a funding source when investing to expand the firm’s asset base and generate returns on risk capital. Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.

A financial portfolio is an aggregation of various types of investments, such as stocks, bonds, commodities, cash, and other financial instruments. It can also encompass a broader range of assets, including real estate, art, and private investments. The composition of a portfolio is tailored to the investor’s goals, risk tolerance, and investment horizon, offering a diversified approach to wealth management and growth.

Industry composed of companies that use technology to offer financial services.

The advantage that a company has by being the first to enter a market or introduce a new product.

A one-year period that companies and governments use for financial reporting and budgeting. A fiscal year is most commonly used for accounting purposes to prepare financial statements. A 12-month period used for financial reporting and budgeting purposes, not necessarily coinciding with the calendar year.

An unchanging rate charged on a liability, such as a loan or a mortgage. It might apply during the entire term of the loan or for just part of the term, but it remains the same throughout a set period.

Purchasing an asset with a short holding period with the intent of selling it for a quick profit rather than holding on for long-term appreciation. Flipping is most often used to describe short-term real estate transactions as well as the activities of some investors in initial public offerings (IPO).

Additional investment in a company that had been previously invested in.

An additional investment made by an investor in a company that they have previously invested in.

The process of attempting to predict the future condition of the economy, based on historical data and other factors. Can also apply to predicting future revenues of individual companies or properties.

The individual or entity responsible for managing and making investment decisions for a mutual fund or investment fund, by implementing a fund’s investing strategy and managing its portfolio trading activities.

Also known as a multi-manager investment—is a pooled investment fund that invests in other types of funds. In other words, its portfolio contains different underlying portfolios of other funds. These holdings replace any investing directly in other types of securities.

A person or entity, such as an investment advisor or fund manager, who controls access to investment opportunities or manages investment portfolios on behalf of others

A measure of the total value of goods and services produced within a country over a specific period of time.

A partner who is involved in the day-to-day operations of the partnership and has unlimited liability.

Spreading investments across different countries or regions to reduce risk and take advantage of global opportunities.

The total value of goods sold on a platform, often used as a metric for e-commerce businesses.

An intangible asset that is associated with the purchase of one company by another. It represents the value that can give the acquiring company a competitive advantage; such as, company’s reputation, customer relationships, brand recognition, and other non-physical assets.

The period of time during which a borrower is not required to make loan payments, typically provided after the due date.

A clause in an IPO underwriting agreement that grants the underwriter the right to sell more shares than originally planned.

Investing in new or undeveloped projects or ventures, often in emerging markets or industries.

The percentage of revenue remaining after deducting the cost of goods sold, representing a company’s profitability.

The total revenue generated by a business without deducting any expenses and losses.

A type of private equity investment, usually minority investment, in relatively mature companies that are looking for capital to expand or restructure operations.

An investment strategy that aims to achieve long-term capital appreciation by investing in assets expected to grow at a higher rate than the market.

The percentage change of a specific variable within a specific time period. For investors, it typically represents the compounded annualized rate of growth of an investment, or a company’s revenues, earnings, or dividends.

The percentage difference between what an asset is worth relative to how much a lender will recognize of that value as collateral. The percentage reduction in the value of collateral accepted by lenders to account for potential declines in value

A tangible or physical item or resource that an individual or company owns: such as real estate, commodities, or natural resources.

The maximum amount of capital that a company is seeking to raise in a crowdfunding campaign.

Refers to money that is issued by a nation that is seen as politically and economically stable. Hard currencies are widely accepted around the world as a form of payment for goods and services and may be preferred over the domestic currency. A globally recognized and stable currency that is readily accepted in international trade.

An investment fund that uses a variety of strategies to generate returns, including buying and selling stocks, bonds, and other securities, as well as using derivatives and other financial instruments.

An advanced risk management strategy that involves buying or selling an investment to potentially help reduce the risk of loss of an existing position.

A financial industry classification denoting an individual with liquid assets above a certain figure. People who fall into this category generally have at least $1 million in liquid financial assets – an individual with a high level of personal wealth.

The highest peak in the value of an investment fund or portfolio, used to calculate performance fees for fund managers. If the fund is losing money, then the manager has to get it above its high-water mark before receiving a performance bonus.

A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds, and municipal bonds.

A bank account that offers a higher interest rate than traditional savings accounts, providing a higher return on savings.

A company that owns the shares of other companies and controls their operations.

The amount of time the investment is held by an investor, or the period between the purchase and sale of a security.

Takeover offers taken directly to shareholders because management has rejected the offer.

Also called a “Preferred Return”, is the predetermined minimum return a fund must generate for investors before the GP (or fund manager) receives distributions of its carried interest. A typical hurdle rate is around 8% but may be higher or lower depending on the strategy and manager reputation.

A single financial security that combines two or more different financial instruments. Hybrid securities, often referred to as “hybrids,” generally combine both debt and equity characteristics.

The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value.

An asset that cannot be easily sold or converted into cash without significant loss of value, such as real estate or private equity.

Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.

The date on which the fund began its operations. The commencement date indicates when a fund began investing in the market. Many investors prefer funds with longer operating histories. Funds with longer histories have longer track records and can thereby provide investors with a more long-standing picture of their performance.

A company that helps new and startup companies to develop by providing services such as management training or office space.

A type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific index.

Refers to the use of some benchmark indicator or measure as a reference or yardstick. Indexing is used as a statistical measure for tracking economic data such as inflation, unemployment, gross domestic product (GDP) growth, productivity, and market returns.

The rate at which the general level of prices for goods and services is rising, eroding the purchasing power of money. It represents the rate at which the real value of an investment is eroded and the loss in spending or purchasing power over time.

The risk that the future real value (after inflation) of an investment, asset, or income stream will be reduced by unanticipated inflation.

The allocation of capital to projects such as roads, bridges, water supply, sewers, electrical grids, etc.

A tax imposed on the transfer of assets or wealth from a deceased person to their heirs or beneficiaries.

A method of raising capital by issuing a new digital currency, often used by blockchain-based companies.

The initial amount of money or collateral required to be deposited when trading on margin or entering into a futures or options contract. Simply put, it is a tax imposed by some states on the recipients of inherited assets.

(IPO) the process by which a private company sells shares of its stock to the public for the first time, in order to raise capital. This process can be complex and expensive.

A nonbank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions.

A financial solution that allows qualified loan customers to swap a variable interest rate for a fixed rate over a defined period of time, increasing the predictability of cash flow.

An agreement between two counterparties in which one stream of future interest payments is exchanged for another based on a specified principal amount.

A financial metric used to evaluate the profitability of an investment over a specific period of time, expressed as a percentage.

The true or inherent value of an investment, often determined by fundamental analysis of the underlying company’s financial and operational performance.

A situation in which short-term interest rates are higher than long-term interest rates, often seen as a potential indicator of an upcoming economic downturn.

Describe the total length of time that an investor expects to hold a security or a portfolio before needing to access the funds.

Used by asset managers to determine the optimal portfolio mix for a client. Investments are chosen using the guidelines of the investment objective.

Real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both.

A set of principles, behaviors and/or procedures designed to guide an individual investor’s selection of an investment portfolio in order to achieve that investor’s financial and investment goals. An investment strategy is what guides an investor’s decisions based on goals, risk tolerance, and future needs for capital.

The method and philosophy followed by an investor or money manager in selecting investments for a portfolio. Investment style is based on several factors and typically tends to be based on parameters such as risk preference, growth vs. value orientation, and/or market cap.

A written document that recommends a new investment, based on research and analysis of its potential for profit. Individual investors can use this technique to investigate and select investments that meet their goals. Financial professionals use the investment thesis to pitch their ideas.

Describes the return stages of a private equity fund, where negative returns are generated in the early years due to acquisition costs and initial losses, followed by returns exceeding costs in later years through the disposition of individual investments. The returns over time resemble the letter “J” as returns are negative at the start and then gradually increase over time as the investments start generating positive incremental returns.

In private equity, the pattern of returns where initial investments in a fund may lead to negative or low returns in the early years, followed by a period of positive returns as portfolio companies mature and are exited.

An investment account held by two or more individuals who share equal ownership and have the authority to transact on the account. Joint accounts are most likely to be used by relatives, couples, or business partners who have a level of familiarity and trust with each other.

The co-ownership of an asset or property by two or more individuals or entities, sharing the rights, responsibilities, and benefits associated with the ownership.

(JV) a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. Each of the participants in a JV is responsible for profits, losses, and costs associated with it.

Debt securities or loans that have a lower priority or claim on a company’s assets in the event of bankruptcy or liquidation, ranking below senior debt and other obligations.

The measurement of an option contract’s price sensitivity to changes in the volatility of the underlying asset. Volatility accounts for recent changes in price, historical changes in price, and future price moves.

(KPI) a set of quantifiable measurements used to gauge a company’s overall long-term performance. KPIs help determine a company’s strategic, financial, and operational achievements, especially compared to those of competitors.

Measures how the value of a debt security or a debt instrument portfolio changes at a specific maturity point along the entirety of the yield curve. When keeping other maturities constant, the key rate duration is used to measure the sensitivity in a debt security’s price to a 1% change in yield for a specific maturity.

An illegal payment intended as compensation for preferential treatment or any other type of improper services received. The kickback may be money, a gift, credit, or anything of value. Paying or receiving kickbacks is a corrupt practice that interferes with an employee’s or a public official’s ability to make unbiased decisions. Kickbacks are often referred to as a type of bribery.

A right, exercisable warrant, or other feature that is added to a debt instrument to make it more desirable to potential investors by giving the debt holder the potential option to purchase shares of the issuer.

The fraudulent use of a financial instrument to obtain additional credit that is not authorized.

An option with a built-in mechanism to expire worthless if a specified price level in the underlying asset is reached. A knock-out option sets a cap on the level an option can reach in the holder’s favor.

The due diligence process undertaken by financial institutions and investment firms to verify the identity and assess the risk profile of their clients or customers, as required by anti-money laundering (AML) regulations. KYC are standards used in the investment and financial services industry to verify customers and know their risk and financial profiles.

Refers to the intangible value of an organization made up of its knowledge, relationships, learned techniques, procedures, and innovations. In other words, knowledge capital is the full body of knowledge an organization possesses. A company’s knowledge capital depends on the skills and talents of its workers, which is what makes it an intangible asset.

(KPO) is the outsourcing of core, information-related business activities. KPO involves contracting out work to individuals that typically have advanced degrees and expertise in a specialized area.

A metric used to measure the performance of a company or investment against specific goals or benchmarks.

The use of borrowed money to increase the potential return on investment.

A corporate finance transaction that enables a company to repurchase some of its shares using debt—reducing the number of shares outstanding increases the remaining owners’ respective shares.

The acquisition of another company using a significant amount of borrowed money.

Involves using borrowed money or financial instruments to increase the potential return on investment, potentially amplifying the returns but also increasing risk. This can be done through debt or financial derivatives.

A mutual fund in the hybrid category that automatically resets the asset mix of stocks, bonds, and cash equivalents in its portfolio according to a selected time frame.

A business that is designed to provide its owners with a comfortable lifestyle, rather than maximizing profits.

A take-profit order placed with a bank or brokerage to buy or sell a set amount of a financial instrument at a specified price or better.

A type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company (LLC). In other words, investors’ and owners’ private assets are not at risk if the company fails

A corporate structure in the United States whereby the owners are not personally liable for the company’s debts or liabilities.

An investor in a limited partnership who can lose no more than the amount of their investment.

A type of business structure in which one or more partners act as general partners and are personally liable for the partnership’s debts, while other partners act as limited partners and have limited liability.

The amount of capital that an investor is entitled to receive before any remaining assets are distributed to other shareholders in the event of a company’s liquidation.

Describes how easy it is to convert a financial asset into cash without causing a big loss in value. If you don’t have cash on hand to cover expenses, liquidity can help you convert assets into usable income. Cash is the most liquid asset followed by cash equivalents, which are things like money markets, CDs, or time deposits.

A liquidity premium is an incremental return that compensates an investor for owning an asset that is not highly liquid.

A specified period of time after an IPO during which insiders, such as company executives and early investors, are restricted from selling their shares.

Describes what an investor has purchased when they buy a security or derivative with the expectation that it will rise in value.

In behavioral economics refers to a phenomenon where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain. For instance, the pain of losing $100 is often far greater than the joy gained in finding the same amount. It leads investors to be more risk-averse and unwilling to take on potentially profitable but risky investments.

An investment technique used to mitigate or eliminate downside systemic risk from a portfolio of assets. Macro-hedging strategies typically involve using derivatives to take short positions on broad market catalysts that can negatively affect the performance of a portfolio or a specific underlying asset.

A transaction where a company’s management team purchases the assets and operations of the business.

A fee paid by a limited partnership to the general partner for managing the assets of the partnership; and it is used to pay for the fund’s operating expenses such as salaries, rent, etc.

The degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to “beat” the market because there are no undervalued or overvalued securities available.

An investment strategy that seeks to hedge out all or a significant majority of market risk by taking offsetting long and short positions, resulting in extremely low or zero market exposure.

A request by an investor to buy or sell a security at the best available price in the current market.

The possibility that an individual or other entity will experience losses due to factors that affect the overall performance of investments in the financial markets.

The difference between the expected return on a market portfolio and the risk-free rate.

The voluntary fusion of two companies on broadly equal terms into one new legal entity.

A hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.

A minority ownership interest in a company, typically less than 50%.

The trade in short-term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a year.

The risk that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.

MOIC is a performance metric for private market investments, which indicates the multiple of capital returned at investment maturity. In essence, it shows how many times an investor’s initial capital is regained.

An investment vehicle that pools money from many investors to purchase a diversified portfolio, primarily investing in public stocks and bonds. They’re run by professional money managers who decide which securities to buy and when to sell them.

The value of an entity’s assets minus the value of its liabilities, often in relation to open-end, mutual funds, hedge funds, and venture capital funds. This instrument is used to estimate whether a fund is under or overvalued.

The profit that remains after all expenses and costs have been subtracted from revenue. Net income—also called net profit—helps investors determine a company’s overall profitability, which reflects how effectively a company has been managed.

An indication of the sensitivity of a long/short fund to direction and volatility of markets. Lower net exposure typically means less direct impact from overall market movements.

(NPV) the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.

A specialized and narrow segment of a larger market, typically characterized by specific customer needs or preferences, providing opportunities for targeted investment and market penetration.

A preliminary proposal or indication of interest to acquire a company or investment, which is not legally enforceable and does not create a contractual obligation to complete the transaction.

A legal contract that outlines the confidential information that parties agree not to disclose to third parties, commonly used in investment discussions to protect sensitive information

A type of commercial lending that entitles the lender to repayment only from the profits of the project the loan is funding and not from any other assets of the borrower. Such loans are generally secured by collateral.

A real estate investment trust (REIT) that is registered as a public company with the SEC but not listed and traded on a public exchange. Non-traded REITs allow investors to access diversified real estate investments with little capital requirements and added taxation benefits.

A term often used to value the underlying asset in a derivatives trade. Put simply, it is the face value that is used to determine payments on a financial asset.

(OBS) assets or liabilities that do not appear on a company’s balance sheet. Although not recorded on the balance sheet, they are still assets and liabilities of the company

Real estate that is purchased before it is constructed or completed, often based on architectural plans or artist renderings, with the expectation of future appreciation.

The practice of investing in assets or financial instruments located in jurisdictions outside of one’s home country, often for tax advantages or diversification purposes.Offshore investing is beyond the means of many but the wealthiest of investors.

A diversified portfolio of pooled investor money that can issue an unlimited number of shares. The fund sponsor sells shares directly to investors and redeems them as well. These shares are priced daily based on their current net asset value (NAV).

Individuals who are employees of private equity firms but are not part of the investment team.

The cost of forgoing one investment opportunity in favor of another, usually expressed as the difference between the expected returns of each option.

A financial derivative that gives the holder the right, but not the obligation, to buy (call option) or sell (put option) a specific asset at a predetermined price within a specified time period.

A pool of equity that is set aside for the purpose of granting options to employees and other stakeholders.

The performance of an investment or portfolio that exceeds the performance of a benchmark or other comparable investments, indicating above-average returns.

An acquisition or purchase of an asset or security in full with one payment, without using borrowed funds or other forms of leverage.

A situation in which the price or value of an asset or investment is considered higher than its intrinsic or fundamental value, potentially indicating a potential price correction or bubble.

The percentage or proportion of ownership that an investor or shareholder holds in a company, representing their equity interest.

On equal footing. Used in finance to describe situations where two or more assets, securities, creditors, or obligations are equally managed without any display of preference.

A type of protection given to preferred shareholders, entitling them to receive dividends or liquidation proceeds.

The frequency represents how often investors should receive forms of principal or interest repayments on their investments.

A fund established by an employer to facilitate and organize the investment of employees’ retirement funds.

A company that a specific venture capital firm, buyout firm, or private equity firm has invested in.

Selecting and overseeing a group of investments that meet the long-term financial objectives and risk tolerance of a client, a company, or an institution.

The value of a company after outside financing and/or capital injections are added to its balance sheet.

A right granted to existing shareholders to maintain their percentage ownership stake in a company by purchasing new shares in proportion to their existing holdings.

The valuation of a company prior to the closing of an investment round. It is the value of a company before new capital is added.

The claim on profits given to preferred investors in a project.

A type of equity that typically has a fixed dividend and takes priority over common stock in the event of a company’s liquidation.

The overall process, whether explicit or inferred, of setting the proper price of an asset, security, commodity, or currency.

The original sum of money borrowed in a loan or put into an investment. In the context of investing, principal is the original sum committed to the purchase of assets (independent of any earnings or interest).

A fixed-income security that guarantees a minimum return equal to the investor’s initial investment (the principal amount), regardless of the performance of the underlying asset.

A form of financing in which companies or real estate projects borrow money from private investors, rather than from traditional sources such as banks or public markets.

A type of investment where investors purchase stake in a company that is not publicly traded on a stock exchange; usually with the goal of improving the company’s financial performance, and ultimately increasing the value of their stake.

A financial asset that is not traded on public markets and is therefore not directly affected by market volatility. these assets, which are also known as alternative investments, include commercial real estate, fine art, private credit, venture capital, private equity, consumer packaged goods, spirits and more.

An arrangement between a public company and private investors to purchase a large number of shares at a discount.

The sale of securities to pre-selected investors and institutions rather than publicly on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion.

The right of an investor to participate in subsequent funding rounds to maintain their ownership percentage in a company.

The share of profits received by the general partner of a private equity or venture capital fund, in addition to the management fee.

When a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm’s own money, as opposed to depositors’ money, so as to make a profit for itself.

A market for the buying and selling of publicly traded securities, such as stocks and bonds.

An ordinary dividend that can be reported to the IRS as a capital gain rather than income.

(QIB) is a class of investor that can safely be assumed to be a sophisticated investor and hence does not require the regulatory protection that the Securities Act’s registration provisions give to investors. In broad terms, QIBs are institutional investors that own or manage on a discretionary basis at least $100 million worth of securities.

While additional criteria also apply, in general, “Qualified Purchasers” are individuals with at least $5 million in investable assets or entities with at least $25 million in investable assets.

An assessment of the sustainability and reliability of a company’s reported earnings, examining the sources, consistency, and transparency of the earnings generated. A company’s quality of earnings is revealed by dismissing any anomalies, accounting tricks, or one-time events that may skew the real bottom-line numbers on performance.

A hedge fund or investment fund that uses quantitative analysis and computer-based models to make investment decisions, often relying on statistical and mathematical techniques to identify trading opportunities.

(QA) an approach that emphasizes mathematical and statistical analysis to help determine the value of a financial asset. It is used to evaluate and predict financial performance, often used in investment management and risk analysis.

Is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a form of monetary policy that came into wide application after the financial crisis of 2007–2008.

The process of designing and developing trading strategies based on mathematical and statistical analyses.

A relatively obscure provision under generally accepted accounting principles (GAAP), which states that under certain circumstances, a firm may eliminate a deficit in its retained earnings account by restating assets, liabilities, and equity in a manner similar to a bankruptcy.

A set amount of time, before a company’s initial public offering (IPO),when a company’s management and marketing teams cannot share opinions or additional information about the firm. The quiet period prohibits management teams or their marketing agents from making forecasts or expressing any opinions about the value of their company.

The minimum number of shareholders or board members required to be present at a meeting in order for the meeting to be valid and decisions to be made.

The difference between the bid price and the ask price of a security or financial instrument, representing the cost of trading and the potential profit for market makers.

A company that owns, operates or finances income-generating real estate.

A publicly-traded company that actively invests in properties—generally commercial real estate. Unlike real estate investment trusts (REITs), REOCs reinvest the money they earn back into their business and are subject to higher corporate taxes than REITs.

The value of the assets in a fund that have been sold for a gain or loss or issued dividends.

The process of restructuring a company’s debt and equity mixture, often to stabilize a company’s capital structure.

The repayment of any non-traded investment on or before its maturity date. Mutual fund investors can request redemptions for all or part of their shares from their fund manager.

A Securities and Exchange Commission (SEC) regulation governing private placement exemptions.

A significant modification made to the debt, operations, or structure of a company in order to eliminate financial harm and improve the business.

A measure of an investment’s total interest, dividends and capital gains, expressed as a financial gain or loss over a specific timeframe. In its simplest terms, is the money made or lost on an investment over some period of time.

The ratio of an investment’s return to its cost, often used as a metric for evaluating the performance of private equity and venture capital investments.

(ROA) a financial ratio that indicates how profitable a company is in relation to its total assets. Corporate management, analysts, and investors can use ROA to determine how efficiently a company uses its assets to generate a profit.

(ROE) the measure of a company’s net income divided by its shareholders’ equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those profits.

(ROI) a financial metric that is used to measure the efficiency of an investment: profit or loss. The result is expressed as a percentage of the origiinal investment.

A process where a private company becomes publicly traded without going through an initial public offering (IPO).

The chance that an outcome or investment’s actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment.

Determines the likelihood of loss on an asset, loan, or an investment. Assessing risk is the most important aspect to determine if it is a personal fit for an investor.

An approach to portfolio construction focusing on analysis of its main sources of risk. This approach forecasts expected volatility and correlation between underlying assets and securities to project total portfolio volatility.

The funds earmarked by an investor for high-risk, high-reward investments.

A portfolio allocation strategy using risk to determine allocations across various components of an investment portfolio.

A metric used to evaluate the performance of an investment by considering both its return and the level of risk involved. It is often presented as a ratio, where higher values typically indicate a more desirable and healthy investment. This allows investors to compare the potential returns of various investments while accounting for the risks associated with each.

Digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision.

A financial strategy that entrepreneurs use when the business owners want to sell the business.

Funding that a startup receives from private equity investors or venture capitalists. It is normally the second stage of financing after seed capital and the first major funding round in the venture capital stage. A stage in a company’s financing lifecycle, often referred to by letters, such as Series A, B, or C, indicating the order and size of the financing round.

A provision in a law or regulation that affords protection from liability or penalty under specific situations or if certain conditions are met.

The process of evaluating potential investments against a set of predefined criteria.

A market where investors buy and sell securities they already own.

The U.S. governmental agency responsible for enforcing federal securities laws, proposing securities rules, and regulating the securities industry.

The act of loaning a stock, derivative or other security to an investor or firm.

A fungible, negotiable financial instrument that holds some type of monetary value. A security can represent ownership in a corporation in the form of stock, a creditor relationship with a governmental body or a corporation represented by owning that entity’s bond; or rights to ownership as represented by an option.

Also known as seed capital or seed money, is the early-stage funding provided to a startup to help it get off the ground before the company has developed a product or service.

A type of equity financing that is used to help early-stage startups get off the ground. It is typically the first round of funding that a startup receives, and it is used to cover the costs of things like product development, marketing, and hiring.

Those who are making investment decisions on their own behalf, i.e. selecting investment types and making trades themselves without the help of a financial adviser.

The part of the financial industry that is involved with the creation, promotion, and sale of financial instruments to the public market.

Debt that takes priority over other unsecured or otherwise more “junior” debt owed by the issuer.

The first round after the seed stage, typically used to fund the expansion of a company. In this round, it’s important to have a plan for developing a business model that will generate long-term profit; usually raising between $2 million and $15 million.

The naming convention for rounds of funding in the startup ecosystem.

A unique form of limited liability company (“LLC”) in which the articles of formation specifically allow for unlimited segregation of membership interests, assets, and operations into independent series.

A measure of fund’s risk-adjusted performance. It is calculated by taking a fund’s annualized return, removing the risk-free rate (typically the 3-month Treasury rate), and dividing this excess return by the fund’s standard deviation.

A strategy in which one investor allows a second investor to control how to invest their capital. A sidecar investment usually occurs when one of the parties lacks the ability or confidence to invest for themselves.

The minimum amount of capital that a company is seeking to raise in a crowdfunding campaign.

The process of identifying potential investments for a fund.

State-owned investment fund investing in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments.

A distinct legal entity generally established to isolate financial risk and protect the parent company’s assets by housing specific assets, liabilities, or activities, while providing operational and financial independence.

A public financial market in which financial instruments or commodities are traded for immediate delivery.

A condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation.

A measure of volatility that is often used as a proxy for risk. A volatile fund or security has a higher standard deviation, while the deviation of a more stable investment is lower. Standard deviation calculates all upside and downside volatility equally, including returns above the average, or mean.

A company that builds startups using its own ideas and resources.

A type of investor, usually a corporation, who invests in a startup with the goal of forming a partnership for mutual business advantages.

A loan or security that ranks below other loans or securities with regard to claims on assets or earnings.

A contract outlining the terms and conditions of an investment, including the amount of capital being invested and the ownership stake being acquired.

The amount, including interest, owed by investors who do not participate in the first closing of a fund to compensate initial investors for their pro rata share of previously funded capital to a fund.

Equity that is received in exchange for the labor or the commitment made by the equity recipient.

The process of adjusting a mutual fund’s net asset value to effectively pass on trading costs to the investors in the fund who are buying or selling shares.

A group of investors or financial institutions that jointly underwrite, fund or participate in a single investment or financing transaction. A temporary alliance of businesses that joins together to manage a large transaction, which would be difficult, or impossible, to effect individually.

The risk that is inherent in the entire market or economy, affecting all investments to some degree, as opposed to specific risks associated with a particular investment.

A legal concept in corporate law that allows minority shareholders to sell their shares under the same conditions as majority shareholders.

The amount of capital that a fund manager wishes to raise for a specific fund during the fundraising period.

Any type of investment, financial account, or savings plan that is either exempt from taxation, tax-deferred, or that offers other types of tax benefits.

A loan that is repaid over a fixed period of time, typically with periodic interest payments.

A document outlining the terms and conditions of a proposed investment, including the type and amount of funding, the valuation of the company, and any other relevant details.

The process of digitally representing real, physical assets on distributed ledgers, or issuing traditional asset classes in tokenised form.

A measure of financial performance that takes into account capital appreciation, representing the change in the market price of an asset, as well as investment income generated from dividends, interest payments and other distributions, over a specific period of time. Total return is often expressed as a percentage of the initial investment, and it is an important metric for evaluating the overall performance of an investment over time.

Pieces of a pooled collection of securities, usually debt instruments, that are split up by risk or other characteristics in order to be marketable to different investors. Tranches carry different maturities, yields, and degrees of risk—and privileges in repayment in case of default.

A date upon which a trade takes place for a security or other financial instrument. The transaction date represents the time at which ownership officially transfers.

The extent to which investors have ready access to required financial information about a company, such as: prior track record, investor suitability, investment methods, market depth, and audited financial reports. Investors also require transparency with investment firms and funds surrounding the various fees that’ll be charged to them.

The portion of shares that a company keeps in its own treasury.

The financial recovery of a company that has been performing poorly for an extended time.

When a company that has experienced a period of poor performance moves into a period of a financial recovery

When a company does not have sufficient capital to conduct normal business operations and pay creditors. This can occur when the company is not generating enough cash flow or is unable to access forms of financing such as debt or equity.

The financial assets upon which a derivative’s price is based. Options are an example of a derivative.

The process through which an individual or institution takes on financial risk for a fee. This risk most typically involves loans, insurance, or investments. The term underwriter originated from the practice of having each risk-taker write their name under the total amount of risk they were willing to accept for a specified premium.

A private startup company valued at over $1 billion. It is described to be a rare and highly valued status of such companies.

An investment strategy that involves regularly investing a fixed amount of money into an investment, buying more shares or units when prices are low and fewer shares or units when prices are high.

A security that is not traded on a public exchange because it does not meet listing requirements, often used in the context of private equity or debt investments.

An increase in the value of an investment that has not been sold or realized. It represents a paper gain that has not yet been converted into cash. An unrealized gain becomes realized once the position is sold for a profit.

An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because it will have nothing to fall back on should the borrower default on the loan.

Refers to loans that are not backed by collateral. If the borrower defaults on the loan, the lender may not be able to recover their investment because the borrower is not required to pledge any specific assets as security for the loan.

The potential increase in value, measured in monetary or percentage terms, of an investment. Often used to describe the positive potential of a high-risk investment. Analysts commonly use either technical analysis or fundamental analysis techniques to predict the future price of an investment.

The analytical process of determining the current worth of an asset or company.

(VaR) a risk management technique used to measure and manage the potential losses of an investment or portfolio over a given period of time, often used by hedge funds and other alternative asset managers.

A type of private equity that focuses on investing in early-stage or start-up companies with high growth potential yet, simultaneously, high risk. Venture capital firms provide funding and strategic guidance to help these companies grow and succeed.

Pooled investment funds that manage the money of investors who seek private equity stakes in startups and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as very high-risk/high-return opportunities.

A type of private equity strategy that provides capital to emerging companies that often do not have revenues and/or positive cash flow. This is generally a high-risk strategy but typically has the highest return potential.

A type of loan offered by banks and nonbank lenders that is designed specifically for early-stage, high-growth companies with venture capital backing. Often used as a complement to equity investments.

The application or redirection of principles of traditional venture capital (VC) financing to achieve philanthropic endeavors. Often, it is exercised in the context of charitable startups, green companies, or B corporations, as the venture capitalists offering funding to these types of firms will have the greatest breadth of experience in these areas.

Also called a startup studio business model, is a company that works to build several different companies in rapid succession. Venture studios develop the idea behind a company while simultaneously investing capital.

The process of acquiring the right to receive equity or other benefits over time, often as part of an employee compensation package.

The calendar year in which a private equity or venture capital fund makes its first investment, often used to analyze the performance of funds launched in different years.

A reserve of capital that a company holds in reserve for future opportunities or challenges.

A derivative that give the right, but not the obligation, to buy or sell a security—most commonly an equity—at a certain price before expiration. The price at which the underlying security can be bought or sold is referred to as the exercise price or strike price.

A prohibited practice in which an investor sells a security at a loss and repurchases it within a short period, typically within 30 days, in order to realize a tax benefit while maintaining their position in the security.

A method of allocating profits or losses among investors in a private investment, often used in private equity and venture capital.

Is a method of intergenerational welath transfer; it refers to a popular estate planning strategy in which a whole-life insurance policy is transfered一or “rolled over”一from the policyholder to their child or grandchild.

A payment structure that requires that higher-tiered creditors receive interest and principal payments, while the lower-tiered creditors receive principal payments after the higer-tiered creditors are paid back in full.

An investment advisory service that combines other financial services to address the needs of affluent clients. Using a consultative process, the advisor gleans information about the client’s wants and specific situation, then tailors a personalized strategy that uses a range of financial products and services.

The average cost of financing a company’s operations, calculated by weighting the costs of different sources of capital (such as debt and equity) based on their proportions in the company’s capital structure.

Anyone who has and reports insider knowledge of illegal, illicit, and fraudulent activities occurring in an organization. Whistleblowers can be employees, suppliers, contractors, clients, or any individual who becomes aware of dubious business activities.

A hostile takeover defense whereby a ‘friendly’ individual or company acquires a corporation at fair consideration when it is on the verge of being taken over by an ‘unfriendly’ bidder or acquirer. The unfriendly bidder is generally known as the “black knight.”

The process of liquidating a company that has ceased operations.

A business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to their most effective use.

(YTD) refers to the period of time beginning the first day of the current calendar year or fiscal year up to the current date. YTD information is useful for analyzing business trends over time or comparing performance data to competitors or peers in the same industry.

Commonly referred to as the annual percentage rate, is the amount earned on a fund throughout an entire year. The yearly rate of return is calculated by taking the amount of money gained or lost at the end of the year and dividing it by the initial investment at the beginning of the year.

A company that was orchestrating a hostile takeover attempt, but then backs out of it and proposes a merger of equals with the target company instead.

The income returned on an investment. The yield is usually expressed as an annual percentage rate based on the investment’s cost, current market value, or face value.

A method of quoting the price of a fixed-income security as a yield percentage, rather than as a dollar value.

The risk of experiencing an adverse shift in market interest rates associated with investing in a fixed income instrument.

The difference between yields on differing debt instruments of varying maturities, credit ratings, issuers, or risk levels. A yield spread is calculated by deducting the yield of one instrument from the other.

Allows investors to buy or sell calls and puts on the yield of a security rather than its price.

A slang term for a very volatile market. The name comes from the movements of a yo-yo toy; in a yo-yo market, security prices continually go up and down.

A financial metric used to predict the likelihood of a company’s bankruptcy, based on its financial statements.

(ZBB) is a method of budgeting in which all expenses must be justified for each new period.The budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.

Is a portfolio constructed to have zero systematic risk, or in other words, a beta of zero. Such a portfolio would have zero correlation with market movements, given that its expected return equals the risk-free rate or a relatively low rate of return compared to higher-beta portfolios.

A hedging strategy that combines the purchase of a put option with the sale of a call option to protect against downside risk while capping potential upside gains.

A situation in which the gains or losses of one participant in an economic transaction or investment are exactly balanced by the losses or gains of the other participants, resulting in a net-zero outcome.

A company that is unable to cover its debt obligations with its operating cash flow but continues to operate with the help of additional financing or restructuring..Companies that earn just enough money to continue operating and service debt but are unable to pay off their debt.

A venture capital or private equity fund that has reached the end of its initial investment period but continues to hold illiquid or underperforming investments, often requiring additional time and effort for its management or exit.

The range or overlap between the buyer’s and seller’s acceptable terms or price in a negotiation, where a mutually satisfactory agreement can be reached. It is this area where parties will often compromise and strike a deal.

A company that has achieved rapid growth, often used to refer to technology start-ups.