Summary of Key Terms

Alpha - how much an investment has returned in comparison to the market index or other broad benchmark.
Arbitrage - taking advantage of the difference of a stock's price between two or more markets.
Beta - the measure of a stock's risk of volatility compared to the overall market.
Intangible asset - the value of something that does not have a physical form.
Option - the right to buy or sell a share at a fixed price within a given period after paying a premium.
Gearing - a company's level of borrowing.
Depreciation - decrease in value of an asset due to cost of keeping and maintaining it over its working life
Debtor - money due to a business (usually from a customer).
Working capital - money available to meet current short-term requiments.
Cash flow - retained earnings (net profits after tax and dividends) plus depreciation.
Debenture - loan stock issued by a company as a fixed or floating charge on its assets.
Coupon - nominal rate of interest payable on a fixed asset security.
Script issue - bonus issue of shares to ordinary shareholders in proportion to their holdings.
Buyback - repurchase of outstanding shares by a company to reduce the number of shares on the market and increase the value of remaining shares.
Call option - the right to buy a stock bond commodity or other asset at a specified price within a specific time period.
Put option - gives the holder the right to sell an underlying asset at a specified price on or within a specified time.

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