FINANCIAL GLOSSARY








Below is a glossary of financial terms written by us.
Simply click on a term to access its definition.
[For a correct use of this glossary, please consult these "notes"]

puce Majority Holder

A shareholder who is part of a group that controls more than half the outstanding shares of a corporation.

puce Management cost

puce Management Fee

The compensation for the management of investment funds, including in venture capital funds, paid from the fund to the general partner or investment advisor.

puce Managing Underwriters

The members of a syndicate of underwriters who assist the company in preparing the prospectus and the road show.
See also Lead Underwriter, Syndicate and Road Show.

puce Market

A public place where buyers and sellers make transactions, directly or via intermediaries. Also sometimes means the stock market.

puce Market Authority

Governing entity of a stock exchange or trading system responsible for granting authorisations, market regulation, approval of members, admission to and cancellation of listing and operation of the trading system.

puce Market Capitalization or Market Cap

The number of shares outstanding multiplied by the market price of the stock.

puce Market Maker

Brokerage and securities firms that are required by the rules of a stock market or exchange to both buy and sell securities of a quoted company at bid and offer prices which they quote.
All NASDAQ - traded companies are required to have at least two market makers.

puce Market Maker Spread

The difference between the price at which a market maker is willing to buy a securitiy and the price at which he is willing to sell.

puce Market Niche

A focused, targetable part of a market.

puce Market Overhang

The depressive effect on the market price of a quoted security when it is known that there is a substantial number of shares which are freely tradable and there is reason to believe the holders may sell in the near future.

puce Market Portfolio

In concept, a value-weighted index of all securities.
In practice, it is an index, such as the S&P500, that describes the return of the entire value of the stock market, or at least the stocks that make up the index.
A market portfolio represents the average investor's return.

puce Market Portfolio Rreturn Rate (Rm)

The rate of return of the market portfolio.
A good approximation for this is a 10 year average of the achieved return on the local market index.
When valuing a French company for example, one would use a 10 year average of the returns of the CAC40 index.

puce Market Price

The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.

puce Market Research

The collection and analysis of information about consumers, market niches, and the effectiveness of marketing programs.

puce Market Segment

Group of customers with specific characteristics.

puce Market Segmentation

A marketing technique that targets a group of customers with specific characteristics.

puce Market Study

The collection and analysis of information about consumers, market niches, and the effectiveness of marketing programs.

puce Market Vvalue

The theoretically established highest price a willing buyer would pay and the lowest price a willing seller would be willing to accept.

puce Marketable Securities

Securities that are easily convertible to cash because there is high demand allowing them to be sold quickly.

puce Marketplace

A public place where buyers and sellers make transactions, directly or via intermediaries. Also sometimes means the stock market.

puce Market-share Weighted Index

A stock index in which the weight of each stock is set in proportion to the number of shares outstanding.

puce Material Information (USA)

Information that a reasonable investor would consider an important part of the total mix of information required when deciding whether to buy or sell a security, to vote for or against a director or a merger, or when making some other investment decision.

puce Mature Funds

Funds which have been investing for at least five years.

puce Maturity date

puce MBI

[Management Buy-In]
An operation where external managers take over a company.
Financing is provided to enable a manager or group of managers from outside the target company to buy into the company with the support of Private equity investors.

puce MBO

[Management Buy-Out]
An operation where the operating managers of a company and investors purchase that company, or a business activity or a range of products of that company.

puce MBS

Mortgage-Backed Securities

puce MD&A (USA)

[Management Discussion and Analysis]
A required part of the disclosure in a registration statement under the Securities Act of 1933 or Form 10-K or 10-Q under the Securities Exchange Act of 1934, where management of the issuer explains at length the financial results of operations and financial liquidity of a company.

puce Member of the board

puce Memorandum

See Investment Memorandum.

puce Mentor

A trusted and experienced advisor who has direct interest in the development and support of an entrepreneur.

puce Merchant Bank

An institution investing its own funds for its own account, often acquiring a controlling interest in a company.

puce Merger

Combination of two or more corporations in which greater efficiency is supposed to be achieved by the elimination of duplicate plant, equipment, and staff, and the reallocation of capital assets to increase sales and profits in the enlarged company.

puce Mezzanine

A layer of financing that has intermediate priority (seniority) in the capital structure of a company.
For example, mezzanine debt has lower priority than senior debt but usually has a higher interest rate and often includes warrants.
In venture capital, a mezzanine round is generally the round of financing that is designed to help a company have enough resources to reach an IPO.

puce Mezzanine Capital/Fund

Venture capital financing in connection with a company's execution phase, as it begins production and marketing following the start-up phase.
A Mezzanine Fund is focusing on mezzanine financing.
See also evelopment Stage Capital/Fund and Pre-IPO Capital/Fund.

puce Mezzanine Financing or Round

A financing round in venture capital-backed companies occuring after the company has completed its product development, but before the company is ready for a public offering (IPO) or to be acquired.

puce Milestone

A significant accomplishment for a company; an intermediate goal.
Often additional funds availability is made conditional on the company achieving certain milestones.
Such deals are referred to as milestone deals.

puce Minority Holding

Less than 50% ownership of a corporation's voting stock, or not enough ownership to control company operations.

puce Mortgage

A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.

puce Moving average

puce Mutual Fund

A mutual fund, or an open-end fund, sells as many shares as investor demand requires.
As money flows in, the fund grows.
If money flows out of the fund the number of the fund's outstanding shares drops.
Open-end funds are sometimes closed to new investors, but existing investors can still continue to invest money in the fund. In order to sell shares an investor usually sells the shares back to the fund.
If an investor wishes to buy additional shares in a mutual fund, the investor must buy newly issued shares directly from the fund.
See also Closed-end Funds.





 

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