TERMS & DEFINITIONS

  1. Basis Points: A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.
  2. Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
  3. Book Value: The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
  4. Free Cash Flow: Measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.
  5. Lehman Brothers Intermediate Government/Credit 1-10 Year Index: A market value weighted performance benchmark that includes virtually every major U.S. Government and investment-grade rated corporate bond with 1-10 years remaining until maturity.
  6. The Lehman Brothers Government/Credit 1-5 Year Index: A market value weighted performance benchmark that includes virtually every major U.S. Government and investment-grade rated corporate bond with 1-5 years remaining until maturity. You cannot directly invest in an index.
  7. NASDAQ: A computerized system that facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks. Created in 1971, the Nasdaq was the world's first electronic stock market.
  8. Par Value: The face value of a bond.
  9. P/E Ratio: A valuation ratio of a company's current share price compared to its per-share earnings. Divide market value of a share by the earnings per share.
  10. Price/Networking Ratio: A measure of both a company's efficiency and its short-term financial health. The working capital ratio is calculated as:
  11. Price/Sales Ratio: A ratio for valuing a stock relative to its own past performance, other companies or the market itself. Price to sales is calculated by dividing a stock's current price by its revenue per share for the trailing 12 months.
  12. ROC: In economics, return on capital, also known as return on invested capital, is a financial measure that quantifies how well a company generates cash flow relative to the capital it has invested in its business.
  13. ROE: A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.
  14. Russell 1K: An index measuring the performance of the 1,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small cap stocks in the United States.
  15. Russell 2K: An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small cap stocks in the United States.
  16. Russell Midcap Index: The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index based on total market capitalization. You cannot invest directly in an index.
  17. S&P 500: The S&P 500 Index is an unmanaged index commonly used to measure the performance of U.S.stocks. You cannot directly invest in an index.

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