BUX Glossary part 2

Inflation: Inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising.

Quarterly company reports: Let investors know how a publicly-traded company performed in the last quarter.

Dividend: Dividends are a share of profits distributed from a company when you invest in them.

Compound Interest: Is a way to make your money work for you.

Dollar-cost averaging: Is a simple investment method. Where you invest the same amount of money in the same portfolio, at regular intervals (weekly, monthly or quarterly) regardless of fluctuations in price, over a long time span.

Diversification: Is a strategy whereby you invest in different assets from several different sectors. It helps spread your risk, so if one asset or industry falls, it’s balanced out with your other investments.


Price-to-earnings (P/E) ratio: Is a valuation metric that determines the value of a company relative to its earnings, often expressed on a per share basis. For example, if a company’s stock is trading at $100 per share, and is expected to earn $4 per share, its P/E ratio would be 25.

Hedge Fund: is an investment vehicle that uses pooled funds to generate returns. The difference between mutual funds and hedge funds is that hedge fund portfolio managers are part of a firm (limited partnership or LLC) and raise money from investors, which they then manage and invest across different assets. Unlike mutual funds, not everyone can invest in hedge funds; to be considered, you generally need to earn a minimum annual paycheck of $200,000+.

PEG Ratio: The price-to-earnings-to-growth (PEG) ratio is a modified form of the PE ratio that factors growth into the metric. For instance, the ratio shows that a company growing at 15% per annum and trading at 20x earnings can be cheaper than a company trading at 8x earnings and shrinking by 10% per annum.

Dividend Yield: The dividend yield is the current yield of a common stock at its present dividend rate. If a stock is trading at $100 per share and pays out $5 in annual dividends, the dividend yield would be 5%.

New York Stock Exchange: Is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.