Glossary

1. A
2. B
3. C
4. D
5. E
6. F
7. G
8. H
9. I
10. J
11. K
12. L
13. M
14. N
15. O
16. P
17. Q
18. R
19. S
20. T
21. U
22. V
23. W
24. X
25. Y
26. Z

Absolute Return Vehicles -  

An absolute return vehicle has no direct benchmark portfolios. It seeks to earn returns independent of any existing index or benchmark.

Active Investment Approach -  

This is an approach utilized by portfolio managers where the composition (holdings) of the portfolio are adjusted based on the future return expectations of the portfolio manager.

Active Return -  

The portfolio’s return in excess of the portfolio’s benchmark

Alternative-A (alt-A) -  

A sector of the mortgage market; the term refers to loans made to borrowers
who generally have high credit scores but who:
(1) have variable incomes,
(2) are unable or unwilling to document a stable income history, or
(3) are buying second homes or
investment properties.

Annual percentage rate (APR) -  

A yearly rate of interest that includes fees and costs paid to acquire a loan

Annuity -  

A financial product that is designed to accept and grow funds from an individual and then pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.

Arbitrage -  

– A trading strategy that takes advantage of price differentials between two or more financial markets.

Ask price -  

The price that the seller of a financial instrument is willing to accept in the market.

Asset-Liability Management (ALM) -  

The practice of managing risks that arise due to mismatches between the assets and liabilities. Financial institutions commonly employ an ALM strategy of matching interest-sensitive assets with interest sensitive liabilities in order to eliminate exposure to interest rate fluctuations.

At-the-money -  

A term used to denote an option contract with a value of zero.