Define 'internal rate of return' (IRR).

IRR is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Define 'arbitrage pricing theory' (APT).

APT is a multi-factor asset pricing model based on the idea that an asset's returns can be predicted using the linear relationship between the asset's expected return and a number of macroeconomic variables that are presumed to influence the asset's overall risk.

Define 'liquidity risk'.

Liquidity risk is the risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash or obtain new financing.

Define 'market capitalization'.

Market capitalization is the total market value of a company's outstanding shares, calculated as share price times the number of outstanding shares.

Define 'hedge funds'.

Hedge funds are alternative investments using pooled funds that employ different strategies to earn active return, or alpha, for their investors.

Define 'currency risk'.

Currency risk, or exchange rate risk, is the risk that the value of a financial transaction will be affected by fluctuations in exchange rates.

Define 'current ratio'.

Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Define 'earnings before interest and taxes' (EBIT).

EBIT is an indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest.

Define 'operating margin'.

Operating margin is a margin ratio used to measure a company's pricing strategy and operating efficiency.

Define 'maturity date' in bonds.

Maturity date is the date on which the principal amount of a bond is to be paid in full, ending the bond issue agreement between the borrower and lender.

Define 'futures contract'.

A futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future.

Define 'capital gains'.

Capital gains are the increase in value of an asset or investment over its purchase price.

Define 'interest rate risk'.

Interest rate risk is the potential for investment losses due to fluctuating interest rates affecting the overall investment's value.

Define 'cost of capital'.

Cost of capital refers to the return a company needs to achieve to maintain its capital structure and satisfy its shareholders or creditors.

Define 'beta coefficient'.

Beta coefficient measures the volatility of an investment compared to the market as a whole.

Define 'free cash flow' (FCF).

Free cash flow is the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It's an important measure of profitability.

Define 'equity financing'.

Equity financing is the process of raising capital through the sale of shares in an enterprise.

Define 'market risk premium'.

Market risk premium is the difference between the expected return on a market portfolio and the risk-free rate, representing the extra return investors demand for taking on the risk of investing in the stock market.

Define 'book value per share'.

Book value per share is a measure used to gauge a company's financial health, calculated as total equity minus preferred equity divided by shares outstanding.

Define 'exchange traded fund' (ETF).

ETF is a type of investment fund and exchange-traded product, i.e., they are traded on stock exchanges. ETFs hold assets such as stocks, commodities, or bonds.

Define 'balance sheet'.

A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Define 'convexity' in bond markets.

Convexity is a measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes.

Define 'bull market'.

A bull market is a financial market of a group of securities in which prices are rising or are expected to rise.

Define 'amortization'.

Amortization is the process of spreading out a loan into a series of fixed payments over time, or it can refer to the gradual write-off of the initial cost of an intangible asset over a period.

Define 'portfolio rebalancing'.

Portfolio rebalancing is the process of realigning the weightings of a portfolio of assets by periodically buying or selling assets to maintain an original or desired level of asset allocation or risk.