A financial instrument is a monetary contract that can be traded and settled between two parties. The contract represents a financial liability to one party (the buyer) and an asset to the other (the seller).

CEFs and exchange-traded funds (ETFs) are both traded on exchanges, but there are significant differences between them. For starters, CEFs are actively managed, which results in higher trading costs. Most ETFs are designed to track index performance...

Capital gains are profits made from the purchase and sale of assets. They are created when traders sell assets, such as stocks or commodities, for more than they paid for them. A capital loss is the inverse of a capital gain.

The total market value of a company's shares on the market is referred to as market capitalization. It is frequently abbreviated to market capitalization. Market capitalization allows investors to quickly determine the size of a company, which can...

A rally occurs when the price of an asset sees sustained upward movement. After a period of flat prices, narrow trading bands, or declining prices, a rally usually occurs.

When trading, the term parity can be used in several ways, but it is always used to express equality.

When a company buys back its own shares from investors, this is known as a share buyback or share repurchase. It can be viewed as an alternative, tax-efficient method of returning funds to shareholders. When shares are repurchased, they are...

The price-to-earnings ratio, or P/E ratio for short, is a method of determining the worth of a company. Divide the company's market value per share by its earnings per share to get the P/E ratio (EPS).

Long-term investments represent non-current assets, whose full value won't be realized during the accounting year. Intangible assets, for example, or assets with no fixed expiration date, such as land or property, can also fall into this...

A call option is a contract that grants the buyer the right, but not the obligation, to purchase a specific asset at a specific price and on a specific date. If the asset's market price rises, the value of a call option rises as well.