Wealth Management Fundamentals
Expert-defined terms from the Professional Certificate in Wealth Management course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Aesthetic Appeal refers to the visual attractiveness of a product, servic… #
Related terms include branding and design.
Absolute Return is a measurement of an investment's return, regardless of… #
Related terms include relative return and benchmark.
Acceleration Clause is a provision in a loan agreement that requires the… #
Related terms include default and foreclosure.
Account Aggregation is the process of collecting and consolidating financ… #
Related terms include data integration and portfolio management.
Accredited Investor is an individual or organization that meets certain <… #
Related terms include accreditation and qualification.
Active Management is an investment approach that involves actively buying… #
Related terms include passive management and style drift.
Actuarial Science is the study of statistics and probability</b… #
Related terms include demography and stochastic processes.
Advisory Fee is a charge levied by a financial advisor or investment mana… #
Related terms include management fee and commissions.
Agency Theory is a concept in finance that examines the relationship</… #
Related terms include stewardship and fiduciary duty.
Alpha is a measure of an investment's excess return over a benc… #
Related terms include beta and Sharpe ratio.
Alternative Investment is a type of investment that does not fit into tra… #
Related terms include hedge funds and private equity.
American Depositary Receipt (ADR) is a certificate issued by a US bank th… #
Related terms include global depositary receipt and international investing.
Annual Percentage Rate (APR) is the rate of interest charged on a… #
Related terms include nominal interest rate and effective interest rate.
Annuity is a financial product that provides a guaranteed income s… #
Related terms include life insurance and pension plans.
Arbitrage is the practice of taking advantage of a price differenc… #
Related terms include risk arbitrage and statistical arbitrage.
Asset Allocation is the process of dividing an investment portfolio</i… #
Related terms include strategic asset allocation and tactical asset allocation.
Asset Class is a group of investments that behave similarly and ar… #
Related terms include sector and industry.
Asset Management is the process of managing and administering a po… #
Related terms include investment management and portfolio management.
Asset Protection is the practice of protecting one's assets from <… #
Related terms include estate planning and trusts.
Assignment is the transfer of a contract or right from one… #
Related terms include novation and substitution.
At #
the-Money is a term used to describe an option that has a strike price equal to the current market price of the underlying security. Related terms include in-the-money and out-of-the-money.
Auction Rate Security is a type of security that has a floating in… #
Related terms include variable rate security and floating rate note.
Audit is an examination and evaluation of a company's or organizat… #
Related terms include financial audit and internal audit.
Backtesting is the process of evaluating the performance of a trad… #
Related terms include simulation and model validation.
Balance Sheet is a financial statement that provides a snapshot of… #
Related terms include income statement and cash flow statement.
Bankruptcy is a legal process where an individual or organization is d… #
Related terms include insolvency and reorganization.
Barrier Option is a type of option that becomes active or <… #
Related terms include knock-in option and knock-out option.
Basis Point is a unit of measurement used to express the yield<… #
Related terms include yield curve and interest rate swap.
Basis Risk is the risk that the price of a security or commodity m… #
Related terms include hedging and arbitrage.
Bear Market is a period of time when the overall market is decl… #
Related terms include bull market and market trend.
Benchmark is a standard or reference point used to evaluate the <b… #
Related terms include performance measurement and evaluation.
Beneficial Owner is the individual or organization that ultimately own… #
Related terms include nominee and custodian.
Beta is a measure of an investment's systematic risk or volatil… #
Related terms include alpha and Sharpe ratio.
Bid #
Ask Spread is the difference between the price at which a security or commodity can be bought (the ask price) and the price at which it can be sold (the bid price). Related terms include liquidity and trading costs.
Block Trade is a large trade of a security or commodity, often executed i… #
Related terms include institutional trading and market impact.
Bond is a type of debt security issued by a borrower to raise c… #
Related terms include fixed income and credit risk.
Book Value is the value of a company's or organization's assets an… #
Related terms include market value and equity value.
Broker is an intermediary who facilitates the buying and selling o… #
Related terms include dealer and trader.
Brokerage Account is a type of account that allows an individual or organ… #
Related terms include trading account and investment account.
Budget is a financial plan that outlines an individual's or organization'… #
Related terms include financial planning and forecasting.
Bull Market is a period of time when the overall market is risi… #
Related terms include bear market and market trend.
Business Cycle is the pattern of expansion and contraction … #
Related terms include recession and boom.
Buy #
Side is the part of the financial industry that involves buying and managing securities or commodities on behalf of individuals or organizations, often through asset management firms or pension funds. Related terms include sell-side and trading.
Call Option is a type of option that gives the holder the right… #
Related terms include put option and strike price.
Capital Asset Pricing Model (CAPM) is a theory that describes the rela… #
Capital Asset Pricing Model (CAPM) is a theory that describes the relationship between the expected return of an investment and its systematic risk or beta.
Capital Expenditure is a type of expense that is capitalized</b… #
Related terms include operating expense and depreciation.
Capital Gain is a profit made from the sale of a security or commodity, o… #
Related terms include capital loss and tax liability.
Capital Market is a market where securities or commodities are bought<… #
Related terms include money market and foreign exchange market.
Capital Structure is the composition of a company's or organization's … #
Related terms include debt financing and equity financing.
Cash Flow is the movement of money into or out of a company or org… #
Related terms include income statement and balance sheet.
Cash Flow Statement is a financial statement that provides a summary</… #
Cash Flow Statement is a financial statement that provides a summary of a company's or organization's cash inflows and outflows over a specific period of time, often used to assess its liquidity and solvency.
Certificate of Deposit (CD) is a type of time deposit offered by a… #
Related terms include fixed deposit and time deposit.
Charitable Trust is a type of trust that is established for charitable… #
Related terms include donor advised fund and foundation.
Clearing House is an intermediary that facilitates the settlement… #
Related terms include exchange and settlement.
Closed #
End Fund is a type of investment fund that has a fixed number of shares outstanding and is listed on a stock exchange, often providing a range of investment options and diversification benefits. Related terms include open-end fund and mutual fund.
Collateral is an asset or security that is pledged as se… #
Related terms include margin and leverage.
Commercial Bank is a type of bank that provides a range of financial</… #
Related terms include retail bank and investment bank.
Commission is a fee paid to a broker or other intermediary … #
Related terms include fee and compensation.
Commodity is a type of good or service that is traded</b… #
Related terms include raw material and resource.
Commodity Futures Trading Commission (CFTC) is a regulatory agency that o… #
Related terms include Securities and Exchange Commission (SEC) and regulation.
Compound Interest is interest that is earned on both the princi… #
Related terms include simple interest and amortization.
Confidentiality is the practice of keeping information or data<… #
Related terms include privacy and security.
Consumer Price Index (CPI) is a measure of inflation that tracks t… #
Related terms include inflation rate and deflation.
Contingent Claim is a type of security that has a payoff th… #
Related terms include option and future.
Contract is a legally binding agreement between two or more partie… #
Related terms include agreement and obligation.
Contribution Margin is the difference between the revenue generate… #
Related terms include gross margin and operating margin.
Convertible Bond is a type of bond that can be converted into a <b… #
Related terms include convertible note and equity conversion.
Corporate Action is a decision or event that affects the owners… #
Related terms include reorganization and restructuring.
Corporate Bond is a type of bond issued by a corporation to raise… #
Related terms include high-yield bond and investment-grade bond.
Corporate Finance is the management of a company's or organization's f… #
Related terms include financial management and strategic planning.
Correlation Coefficient is a statistical measure that describes th… #
Related terms include covariance and regression analysis.
Cost Benefit Analysis is a method used to evaluate the potential <… #
Related terms include return on investment (ROI) and cost effectiveness.
Cost of Capital is the rate of return that a company or organizati… #
Related terms include weighted average cost of capital (WACC) and hurdle rate.
Counterparty Risk is the risk that a counterparty will default<… #
Related terms include credit risk and default risk.
Covenant is a condition or restriction that is imposed on a… #
Related terms include indent!Ure and agreement.
Credit Default Swap (CDS) is a type of derivative that provides <b… #
Related terms include credit derivative and default swap.
Credit Rating is an evaluation of a borrower's or issuer's creditworth… #
Related terms include credit score and rating agency.
Credit Risk is the risk that a borrower or issuer will default on… #
Related terms include default risk and counterparty risk.
Credit Spread is the difference between the yield on a credit</… #
Related terms include yield spread and credit premium.
Currency Forward is a type of derivative that allows a company or… #
Related terms include foreign exchange forward and currency hedge.
Currency Option is a type of option that gives the holder the r… #
Related terms include foreign exchange option and currency trading.
Currency Swap is a type of derivative that involves the exchang… #
Related terms include foreign exchange swap and currency hedging.
Current Account is a type of account that shows a company's or org… #
Current Account is a type of account that shows a company's or organization's income and expenses over a specific period of time, often used to evaluate liquidity and solvency.
Current Ratio is a measure of a company's or organization's liquidity<… #
Related terms include quick ratio and cash ratio.
Custodian is a company or organization that holds and safekeeps… #
Related terms include trustee and fiduciary.
Daily Settlement is the process of settling trades and transact… #
Related terms include mark-to-market and variation margin.
Day Trader is an individual who buys and sells securities o… #
Related terms include swing trader and position trader.
Debt is a type of obligation that requires a borrower to repay<… #
Related terms include credit and liability.
Debt Financing is the process of raising capital by borrowing mone… #
Related terms include equity financing and capital structure.
Debt Service is the payment of interest and principal on a… #
Related terms include debt repayment and interest payment.
Default is the failure of a borrower or issuer to meet their ob… #
Related terms include credit risk and counterparty risk.
Defeasance is the process of discharging or settling a debt… #
Related terms include debt forgiveness and debt cancellation.
Deferred Tax is a type of tax that is deferred or delaye… #
Related terms include tax deferral and tax accounting.
Deleveraging is the process of reducing a company's or organizatio… #
Related terms include debt reduction and balance sheet repair.
Deposit is a type of payment or investment that is made by… #
Related terms include deposit account and time deposit.
Depository Receipt is a certificate issued by a bank that represents a <i… #
Related terms include global depositary receipt and American depositary receipt.
Derivative is a type of security that derives its value fro… #
Derivative is a type of security that derives its value from an underlying asset or index, often used to manage risk or speculate on price movements.
Dividend Yield is the ratio of the annual dividend payment to the… #
Related terms include dividend payout ratio and yield.