What is a Contract for Difference (CFD)? A Contract for Difference (CFD) refers to a contract that enables two parties to enter into an agreement to trade on financial instruments based on the price difference between the entry prices and closing prices. If the closing trade price is higher than the opening price, then the…
What is Macrofinance? Macrofinance targets widespread benefits to a section of the economy or the whole economy. It is tailored to fulfill all the financial obligations of the economy and find solutions to meet the obligations. To achieve said obligations, governments must draft policies, develop plans for subsidies, and engage in multi-year expansion strategies. In…
What is the Market Value of Debt? The Market Value of Debt refers to the market price investors would be willing to buy a company’s debt for, which differs from the book value on the balance sheet. A company’s debt doesn’t always come in the form of publicly traded bonds, which have a specified market…
Financial Analysis Ratios Glossary Below is a glossary of terms and definitions for the most common financial analysis ratios terms. When calculating financial ratios using vertical and horizontal analysis, and ultimately the pyramid of ratios, it’s important to have a solid understanding of basic terms. The below information is taken from CFI’s Financial Analysis Fundamentals…
What is a Rights Issue? A rights issue is an offering of rights to the existing shareholders of a company that gives them an opportunity to buy additional shares directly from the company at a discounted price rather than buying them in the secondary market. The number of additional shares that can be bought depends…
Financial Math Glossary This financial math glossary covers the most important terms and definitions required for a career as a financial analyst. This list is taken from CFI’s Financial Mathematics Course. Annuity An annuity is a series of payments in equal time periods, guaranteed for a fixed number of years. Annuity factor The present value…
What is Dry Powder? Dry powder refers to cash reserves that corporations and private equity funds have available to deploy when an attractive investment opportunity arises, or to weather a downturn. The cash reserves give their holders an advantage over other firms that do not keep reserves since they can be used to capitalize on…
What is Unitranche Debt? A Unitranche Debt is a hybrid loan structure that combines senior and subordinated debt into one debt instrument. The borrower of this type of loan pays a blended interest rate that falls between the rate of the senior debt and subordinated debt. Unitranche debts started in the United States in 2005…
Behavioral Finance Glossary This behavioral finance glossary is a helpful preparation guide to CFI’s behavioral finance course. Anchoring bias Relying on the first piece of information that’s encountered as a reference point (or anchor). Confirmation bias Our natural tendency is to listen to people who agree with us. It feels good to hear our own opinions…
