As a business person, you should have adequate knowledge about the trends and changes in the financial space. Such information will help you plan ahead of time so that your business can be in a stable position. However, for you to understand the latest stock market and financial news, you should know some of the terminology used so that you familiarize yourself with the market. The financial terms may be complicated. Nonetheless, you should know them! Here is a comprehensive list of the financial terms you should learn more about.
The first financial term you should know is the 12b-1 fees. This is generally the service fee that is charged by a mutual fund. Although share prices may change, this fee is always constant, at 1% of the fund’s assets. As a shareholder, this charge can only affect your portfolio downwards. The other financial term you should know is the after-hours trading. Just as the name suggests, it refers to the selling and buying of stocks at odd hours. Most of these transactions take place after normal trading hours. It is advantageous though because unlike trading during normal hours, investors have limited orders.
Arbitrage is another significant factor you should know. This is a concept that relies on the difference between the prices of assets on different exchanges. It happens when an arbitrageur trades in the market with lower price and sells in the market at a higher price, making a significant difference. Many people prefer pure arbitrage because is considered to be safer. Remember that a trader must confirm that there is a price difference. The other type of arbitrage is known as risk arbitrage. It is important to note that this concept is unpredictable. It works on taking risks hoping that an event may take place. You can learn more at MarketBeat.
This list cannot be complete without mentioning the balance sheet. Also known as the statement of the financial position, the balance sheet helps investors to know some of the essential things such as the company’s net worth. It is calculated based on the equity of the shareholders and the liabilities. Last but not least, let’s look at the bond. This is a type of security that can be issued by governments or corporations especially if they intend to raise money to fund their operations. From the above points, you are now familiar with some of the key financial terms you need to know before you invest. Find out more here: https://www.britannica.com/topic/business-finance/Short-term-financing.
