Investment glossary

Glossary of financial terms relating to the investment sector and SME financing.


Security that represents a part of a company’s share capital. Whoever buys a share becomes a member of the company.


share Share whose owners enjoy a privilege in the distribution of the company’s profits and on the capital in the event of the company’s liquidation. These shares have no voting rights. They can only be issued by companies with ordinary shares listed on the stock exchange.


share Share that enjoys the privilege of receiving a higher dividend than that distributed to holders of ordinary shares. It has no right to vote in ordinary shareholders’ meetings.

BOT or Ordinary Treasury Bills

These are debt securities issued by the state to finance its public debt.

Capital gain

Gain of an equity investment, or capital gain; positive difference between the purchase price and the sale price of a security.


capital Capital of an enterprise consisting of all the credits granted to it by third parties. These credits can be of two types. Loan credits, (mortgages, bank loans, bond loans) and extensions of payment times granted by suppliers.


capital Part of the capital of an enterprise invested by the entrepreneur. It consists of the share capital paid in cash or with contributions in movable and immovable property, at the time of the establishment of the company or in subsequent times. Those who participate in a company’s venture capital are not sure of the remuneration that will be paid later as dividends and as a revaluation of the assets transferred.

Coupon Coupon

attached to the bond, which allows accrued interest or dividends to be collected at maturity. Coupons can also be negotiated separately from the security. Represents the interest paid to subscribers during the life of a bond. It can have quarterly, half-yearly or annual frequency. Interest can be fixed or variable (indexed).


Costs charged by the intermediary for the purchase, sale or management of a financial instrument.


Fees Costs paid by the subscriber when investing in a Fund or Sicav.


fees They represent the manager’s remuneration and are expressed as a percentage.


fees They are paid by the subscriber if and when the Fund or the Sicav achieves a higher return, in a given period, than a predetermined parameter.


fees Amount paid to the investor when he redeems the units of a fund or SICAV. It decreases over time. It aims to “discourage” divestment, especially in the short term. It is a remuneration for those who place the fund.

Cum warrant

Some bonds have a warrant associated with them: a security that allows the holder to purchase a certain amount of other securities (usually shares) within a specified period and conditions. Once the deadline has passed, it becomes a de facto normal obligation.


This is a financial product whose price depends on the market value of other securities or assets, called the underlying. There are both listed derivatives traded on specific regulated markets and unlisted derivatives traded on unregulated markets.


It is the share of profits achieved by a company that can be distributed to shareholders based on the shares held. The distribution of dividends is one of the parameters that are used to evaluate the health of a security.


For a bond, it is the operation that consists in launching a loan on the market at predetermined conditions: interest rate, duration, repayment method, etc. For one share, it indicates the launch of new shares on the market in the event of a capital increase. For mutual funds and SICAVs, indicates the creation of new units.


is the part of the capital of a company not held by the majority shareholders, and therefore available for trading on the Stock Exchange. The higher the liquidity of a security (measured by the volume of transactions and the free float), the more investors can buy and sell securities without causing large variations in prices.

Cash flow

Measures the revenue of a given period net of expenses. It expresses the liquidity that the company is able to produce during the year. In its simplest formulation it is calculated as the sum of net profit, amortization and provisions.

Speculative funds or hedge funds

They use different management strategies in order to obtain a return, independent of the evolution of the markets.


It is the abbreviated form for Foreign Exchange. It is the market of buying and selling currencies that makes international transactions between banks and multinationals possible. In recent years, it is also a market open to traders to increase trading liquidity and therefore it is now possible to use this market to trade and profit from currency price movements.


Financial derivative instrument; that is, its return depends on the performance of another underlying financial instrument (shares, stock market indices, assets). With this contract, two parties agree to buy or sell, at a future date, a specific asset (the underlying) at a predetermined price. It is a speculative and risky tool. Unlike the options, the contract is binding on both parties.

Financial Leverage

The ability to control a large amount with little. The main levers are five: money, time, ideas, work, experiences. By using the levers you can exceed your limited resources by going to use money, time, ideas, work and experiences of others.

Long term

Referring to an obligation, it indicates a maturity of more than seven years, while referring to normal banking transactions, it indicates maturities of more than three years.


funds Capital supplied by shareholders (directly or through accrued and uncollected profits), and not lent by lenders. At the accounting level are the company’s activities (properties, plants, receivables …) from which the debts and provisions set aside to cover risks must be subtracted.


Debt security that can be issued by supranational entities, public institutions (eg government bonds) or companies (corporate bonds) to cover their financial needs. The obligation makes the creditor of the issuing company or entity. As a creditor, coupons are collected (usually once a year or every six months).


bond A bond that pays a variable coupon, the amount of which is linked to the performance of a basket, made up of indices (index linked) or equity securities (equity linked).


These are financial instruments governed by a contract which confers the right, but not the obligation, to buy a financial asset (underlying) at a certain price by a certain date. There is also the possibility of selling options and this offers a unique possibility of generating cash flow from the financial markets.


Anything (good or service) which, after the purchase, does not entail any financial return but on the contrary only entails further capital outlays.

Quick ratio

Ratio between short-term assets (short-term receivables from customers, collectable within 12 months, cash on hand, etc.) and short-term payables (trade payables to be honored within 12 months). Values ​​above 1 indicate a good solvency in order to cope with the payment of short-term debts with only short-term resources, without affecting the fixed economic resources. Values ​​above 1 indicate the existence of a risk in meeting short-term debt. It is also called an acid test.

ROE Return on Equity

Ratio between a company’s return and equity. It measures the profitability of the money made available to the company by its shareholders. A Roe of 15% means that the company produces 15 euros of profits for every 100 euros of assets contributed by its shareholders (share capital, plus reserves). However, it does not take into account financing: if a company makes massive use of debt, it can also greatly increase its ROE, without improving its overall profitability.


Date on which the investment comes to an end and on which the investor receives the invested capital (intact or not, according to the investment conditions and circumstances) and, possibly, the return on this investment.


Variable capital investment company. The SICAVs function as a mutual fund: they raise capital among savers and invest them in markets. In the case of the fund, these are shareholdings, in the case of the Sicav shares of the Sicav itself.

Financial Instruments

Class that groups all the investments that can be made in the financial markets: stocks, bonds, forex, options, etc.


The loss of the purchasing power of money. The more time passes, the more with the same amount of money you buy less goods. Beware that it is similar but not identical to inflation.


Derivative instrument, consisting of a contract entered into between two subscribers for the exchange of financial flows, according to specific methods. The contract is signed through a financial intermediary who manages the transaction and controls the smooth running of the transaction, guaranteeing the counterparties from mutual insolvency risk. Can be subscribed on bonds; in the foreign exchange market (currency swap); in the capital market (interest rate swaps); on the commodity swap market.

Zero coupons

These are bonds that do not distribute periodic interest through the coupon detachment: their yield is given by the difference between the amount collected on repayment and the amount paid out on issue. BoT and CTz are typical zero coupons.