Financial dictionary

CAGR (Compound Annual Growth Rate) shows the average annual return on an investment over a specific period, assuming this return was evenly distributed across each year. It is a useful tool for comparing the performance of different investments or projects, as it takes into account the effect of compound interest. It helps both investment professionals and individuals understand how their investments have developed over time.

Cash flow is an indicator that tracks the movement of cash into and out of a company over a specific period. It reflects the company's ability to generate cash to cover expenses, repay debts, or make investments. It is divided into operating, investing, and financing cash flow, with each reflecting cash flows from specific areas of the company's activities.

Click & mortar refers to businesses that combine physical brick-and-mortar stores with online sales. This model allows customers to shop for products or services online, while also providing them the option to visit physical locations in person. Click & mortar businesses often use both channels to expand their reach, enhance customer experiences, and increase purchasing flexibility.

A closed-end investment fund is a fund that is created for a fixed period of time. The shareholder of such a fund does not have the right to request the redemption of their shares. Throughout its existence, the fund operates with a fixed number of shares. The purpose of the fund is to distribute dividends or pay out the appreciated invested amount after the fund's lifespan has ended.

Collateral refers to assets or property provided as a guarantee to secure a loan, credit, or other forms of financing. If the borrower fails to meet their obligations, the lender can use the collateral to cover any losses. Collateral can take various forms, including real estate, stocks, bonds, or other securities. The use of collateral helps mitigate the risk for the lender and can also influence loan conditions, such as interest rates.

Commercial real estate refers to properties intended for business purposes. These include office buildings, retail spaces, warehouses, and industrial buildings. Such properties generate income through rent or business operations and can be a key element of business strategies and investment portfolios. Commercial real estate differs from residential properties, which are intended for living purposes.

Common stock refers to a type of equity that represents ownership in a company and grants shareholders the right to participate in the company's profits (often through dividends) and to vote at shareholder meetings. Holders of common stock have the right to be involved in decisions about important matters concerning the company, such as electing board members or approving mergers and acquisitions. Common stock also has the potential to appreciate in value, which can lead to capital gains. However, in the event of liquidation, common stockholders have lower priority compared to preferred stockholders and creditors when it comes to the distribution of remaining assets.

Company valuation is the process of determining the economic value of a company or its assets. This process involves analyzing various factors such as financial statements, market conditions, future earnings, competition, and economic trends. The goal of valuation is to provide an accurate estimate of a company's value, which can be used in transactions such as mergers and acquisitions, company sales, obtaining financing, or internal planning. Valuation methods may include comparisons with similar companies, discounting future cash flows (DCF), or evaluating based on the company’s assets and liabilities.

A corporate bond is a security issued by a company to raise capital from investors. When purchasing a corporate bond, the investor is lending money to the company, which must be repaid within a specified period, with the company committing to regularly pay interest (coupons) throughout the duration of the bond. Corporate bonds can have various interest rates and maturities, and can be secured or unsecured, which affects their risk and return. Investors earn regular income from interest and may profit from a potential increase in the bond's value if its market price rises.

Credit risk is the risk that a borrower will not be able to meet their obligations to the lender on time or at all, which may lead to financial losses. This risk can arise from various types of loans and credit, such as corporate bonds, personal loans, or mortgages. Credit risk can be influenced by factors including the financial stability of the borrower, their ability to generate income, and external economic conditions. To mitigate credit risk, lenders often carefully assess the borrower's creditworthiness. As compensation for the increased risk, they may require collateral or higher interest rates.