Financial Terms Glossary



A takeover is an action by a corporation to assume control of a target firm. This is done by buying either all or most of the target's ownership stakes. Takeovers can either be friendly and favorable, or unwelcome and hostile in which case the owners of the target company tend to do anything they can to prevent the takeover.

Typically takeovers are undertaken in order to expand into a new sector or to grow within the sector (i.e. increase market share). For example, if a logging firm has one competitor in the surrounding area, they may simply buy the competitor and run a monopoly business.

Tangible Assets

Tangible assets is a broad accounting term which refers to any asset which can be owned and easily valued such as:

  • Buildings
  • Inventory
  • Securities and Investments
  • Cash

Tangible assets are not explicitly stated in any financial statement, but it is total assets less intangible assets. These tangible assets are part of Book Value.


A ticker is set of characters representing an asset listed on a stock exchange. All publicly traded companies have their own ticker symbol (i.e. AAPL = Apple, GS = Goldman Sachs, F = Ford). Stocks traded on the NYSE are made up of up to 3 characters, all stocks on the NASDAQ have 4 characters, stocks on the FTSE have up to 4.

Mutual funds and ETF's also have ticker symbols although these frequently contain numbers and an X to differentiate them from normal stocks.


Trading is one of the key features of the global financial economy. It creates liquidity across the financial markets, is one of the main sources of profit for investment banks and is done by many institutions (investment banks, hedge funds, commodity companies etc.). Traders tend to use technical and fundamental analysis to price assets and to attempt to predict the future movements. If a trader is trading in large enough quantities, their trades can actually move the market, thus giving them a comparative advantage over smaller traders.

As opposed to investment banking, trading tends to be extremely performance orientated and if you perform well, you will be promoted quickly whereas if you consistently lose money or are risky, you will not last long. The most common way to break into trading at an investment bank is out of undergraduate study with a quantative degree and having completed a trading internship.

Treasury Stock

Treasury Stock is the amount of company shares that the company itself owns. This comes about as a result of a buy-back from shareholders. These shares can be sold on the market if required (for extra capital), but do not pay any dividends.

Treasury Stock repurchases may be done to increase the value of current shares on the market, or simply in an attempt to improve EPS or other metrics.

Treasury Stock is found on the Balance Sheet under Shareholders Equity, and any share buy-backs come into the Cash Flow Statement under Financing Activities.


A trend is when the price of an asset moves in the same general direction for a period of time, be it short, medium or long term. Trading with the trend is one of the simplest yet most effective trading strategies.

Trends are formed by simple economics, when there is more demand than supply there will be an upward trend and the same applies in reverse.

U & V

Underlying Asset

An underlying asset is the term used to refer to an asset that a derivative is based upon. For example, the underlying asset for WTI Oil futures is WTI Oil itself. The movement in the price of the underlying asset relative to the price of the derivative is known as delta.


An upgrade is when an asset, company or government has its rating lowered. Typically this will represent either the lowering of the quality of the asset or the increased likelihood of default on a corporate or government bond.

Equity downgrades are usually done by equity researches, whilst bond ratings are done by the main ratings agencies.


Valuation is the process of placing a cash value on a company (or asset). Within investment banks, valuation is frequently done either by the Equity Research department or the IBD (for the purposes of selling / buying the company in question).

Analysts conducting the valuation will usually use a form of comparable analysis to evaluate the financial metrics of the firm and compare it to similar ones in the market to achieve a rough valuation.

Venture Capital (VC)

Venture Capital (or VC) firms are similar to private equity firms in that they invest large amounts of money in companies in order to provide them with funding to enhance the target company. The idea is that the VC firm buys into the target company, improves it (or simply waits for the company to grow) and then sells it's stake for a profit.

In contrast to private equity firms, venture capital firms usually invest in start-up companies (and invest smaller amounts) and have a much higher percentage of their investments which fail. However, because they invest in startup firms, if the firm succeeds the return is likely to be very high indeed, therefore offsetting any losses made previously.

Venture capital firms do not only provide funding, but may also bring new staff on board with prior experience in the industry to improve the target firm.


Volatility refers to the size of changes in the price of an asset. In a more technical sense it is a measure of the deviation of returns for a given asset. If an asset is very volatile then its price is likely to change a lot. The measure of volatility provides no indication as to the direction of change, merely the amount.


Volume refers to the quantity of assets traded over any given period. Volume is very important when looking at price movements or volatility. This is because if volume traded is very low, then the market is likely to be far more volatile as the few buyers / sellers have more of an individual impact on the price than if there were hundreds of thousands or even millions of trades going on.