Glossary
Activist investor An investor who owns 5% or more of a company and demands changes from management.
American Depositary Receipt (ADR) An instrument that trades on a U.S. exchange that represents shares (often one share) of a foreign stock.
Beta A measure of volatility or risk. It is the correlation of a stock or portfolio’s change in value in response to a move by the overall market.
Business Development Corporation (BDC) A publicly traded private equity firm.
Call option An option that gives the buyer the right but not the obligation to buy a security at a specific price by a certain date.
Cash flow The amount of cash generated by a company. Often compared with earnings.
Cash flow from operations The amount of cash generated by business activities. Does not include financing activities such as interest payments or sale of stock.
Closed-end fund A mutual fund that trades like a stock, based on supply and demand. Usually trades at a discount or premium to its net asset value.
Compound annual growth rate (CAGR) The average year-over-year growth rate over a period of years. It’s not the simple average growth rate, but it takes into account the effect of compounding.
Compounding The ability of an investment to earn additional money by adding previous distributions, earnings, and the like to the original amount, which generates a larger return than would be received from just the original amount.
Covered call Selling a call, when you own the underlying stock.
Depreciation
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