MKT CAP- Market capitalization refers the total dollar

market value of a company's outstanding shares. It is

calculated by multiplying a company's shares outstanding
by the current market price of one share. Large-cap
companies typically have a market capitalization of $10
billion or more. Mid-cap companies generally have a
market capitalization of between $2 billion and $10 billion.
Companies that have a market capitalization of between
$300 million to $2 billion are generally classified as smallcap companies.
P/E- P/E is short for the ratio of a company's share price to
its per-share earnings. Theoretically, a stock's P/E tells us
how much investors are willing to pay per dollar of
earnings. It also takes into account market expectations for
a companys growth. For this reason its also called the
multiple of a stock. Most of the time, the P/E is
calculated using EPS from the last four quarters. This is
also known as the trailing P/E. Companies that aren't
profitable, and consequently have a negative EPS, pose a
challenge when it comes to calculating their P/E. Opinions
vary on how to deal with this. Some say there is a negative
P/E, others give a P/E of 0, while most just say the P/E
doesn't exist. Historically, the average P/E ratio in the
market has been around 15-25. This fluctuates significantly
depending on economic conditions. The P/E can also vary
widely between different companies and industries.
Trailing price-to-earnings (P/E) is calculated by taking the
current stock price and dividing it by the trailing earnings
per share (EPS) for the past 12 months.
Forward price to earnings (forward P/E) is a measure of the
price-to-earnings (P/E) ratio using forecasted earnings for
the P/E calculation.

Outstanding shares- Any authorized shares that are held by

or sold to a corporations shareholders, exclusive
of treasury stock which is held by the company itself, are
known as the outstanding shares. In other words, the
number of shares outstanding represents the amount of
stock on the open market, including shares held by
institutional investors and restricted shares held by insiders
and company officers.
EPS- Earnings per share (EPS) is the portion of a
company's profit allocated to each outstanding share
of common stock. Earnings per share serves as an indicator
of a company's profitability.
Dividend/yield- A financial ratio that indicates how much a
company pays out in dividends each year relative to
its share price.
Ann.Div.Per Share/ Price per Share
Dividend-A dividend is a distribution of a portion of a
company's earnings, decided by the board of directors, to a
class of its shareholders. Dividends can be issued as cash
payments, as shares of stock, or other property.Types- cash
and stock dividend.
Beta- is a measure of the volatility, or systematic risk, of a
security or a portfolio in comparison to the market as a
whole.
Unlevered beta compares the risk of an unlevered company
to the risk of the market. The unlevered beta is the beta of a
company without any debt.
Volatility- In other words, volatility refers to the amount of
uncertainty or risk about the size of changes in a security's
value.

A higher volatility means that the price of the security can

change dramatically over a short time period in either
direction. A lower volatility means that a security's value
does not fluctuate dramatically, but changes in value at a
steady pace over a period of time.
Alpha- A measure of performance on a risk-adjusted basis.
Alpha, often considered the active return on an investment,
gauges the performance of an investment against a market
index used as a benchmark, since they are often considered
to represent the markets movement as a whole. The excess
returns of a fund relative to the return of a
benchmark index is the fund's alpha.
Excess returns- are investment returns from a security or
portfolio that exceed the riskless rate on a security
generally perceived to be risk free, such as a certificate of
deposit or a government-issued bond.
Risk free asset- Treasuries (especially T-bills) are
considered to be risk-free because they are backed by the
U.S. government. Because they are so safe, the return on
risk-free assets is very close to the current interest rate.
Risk-free return is the theoretical rate of return attributed to
an investment with zero risk.
The Market Risk Premium, also known as the equity risk
premium, is the difference between the expected return on
a market portfolio and the risk-free rate.
A risk premium is the return in excess of the risk-free rate
of return an investment is expected to yield; an asset's risk
premium is a form of compensation for investors who
tolerate the extra risk, compared to that of a risk-free asset,

in a given investment.
Treasury yield-The return on investment, expressed as a
percentage, on the U.S. government's debt obligations
(bonds, notes and bills). Looked at another way, the
Treasury yield is the interest rate the U.S. government pays
to borrow money for different lengths of time.
The U.S. Treasury, created in 1789, is the government
department responsible for issuing all Treasury bonds,
notes and bills.
A yield curve is a line that plots the interest rates, at a set
point in time, of bonds having equal credit quality but
differing maturity dates.
Price to book ratio- The price-to-book ratio (P/B Ratio) is a
ratio used to compare a stock's market value to its book
value.
Market value is determined in the stock market through
its market capitalization.
Book value is also the net asset value of a company,
calculated as total assets minus intangible assets (patents,
goodwill) and liabilities.
There are two main ways to value a stock: with earnings or
with cash flow. Cash flows are generally discounted back
to a present value, while earnings are measured in terms of
relative price.
Treasury stock (treasury shares) are the portion
of shares that a company keeps in its own treasury.
Treasury stock may have come from a repurchase
or buyback from shareholders, or it may have never been

issued to the public in the first place. These shares don't

pay dividends, have no voting rights and should not be
included in shares outstanding calculations.
Fully diluted shares are the total number of shares that
would be outstanding if all possible sources of
conversion, such as convertible bonds and stock options,
are exercised.
A mutual fund is an investment vehicle made up of a pool
of funds collected from many investors for the purpose
of investing in securities such as stocks, bonds, money
market instruments and similar assets. Mutual funds are
operated by money managers, who invest the fund's capital
and attempt to produce capital gains and income for the
fund's investors.
An ETF, or exchange traded fund, is a marketable
security that tracks an index, a commodity, bonds, or a
basket of assets like an index fund. Unlike mutual funds, an
ETF trades like a common stock on a stock exchange. ETFs
experience price changes throughout the day as they are
bought and sold. ETFs typically have higher
daily liquidity and lower fees than mutual fund shares,
making them an attractive alternative for individual
investors.
Index ETF- Exchange-traded funds that follow a specific
benchmark index as closely as possible.
A benchmark is a standard against which the performance of a
security, mutual fund or investment manager can be measured.
The Standard & Poor's 500 Index (S&P 500) is an index of
500 stocks seen as a leading indicator of U.S. equities and a
reflection of the performance of the large cap universe, made up

of companies selected by economists.

The Dow Jones Industrial Average (DJIA) is a price-weighted
average of 30 significant stocks traded on the New York Stock
Exchange (NYSE) and the NASDAQ.