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ADRs or (American Depository Receipts) represent the right to receive securities of foreign issuers deposited in a bank or trust company. ADRs are an alternative to purchasing the underlying securities in their national markets and currencies.
A benchmark is the standard, usually in the form of a market index, used to compare the performance of a mutual fund.
Collars are the simultaneous purchase of an equity floor (an agreement in which one party agrees to pay the other if a specific market benchmark falls below a certain level) and the sale of an equity cap.
Compounding is when an investment's earnings are reinvested and begin to earn interest as well.
An equity cap is an agreement in which one party, for a premium paid up-front, agrees to pay the other party at a specific time period if a designated stock market benchmark moves above a certain level, agreed upon in advance.
Futures (or futures contracts) are contracts to pay a fixed price for an agreed-upon amount of commodities or securities, or the cash value of the commodities or securities, on an agreed-upon date.
Hedging is a strategy that attempts to reduce the risk of a portfolio by making investments that are expected to perform differently than - or even offset - each other.
Leverage is a means of turning small market movements up or down into large changes in an investment's value. Leverage techniques include equity caps, collars and floors, swaps, American Depository Receipts (ADRs), futures contracts, short sales, and options on securities indexes and futures.
A call option gives you the right to buy a stock at an agreed-upon price on or before a certain date. A put option gives you the right to sell a stock at an agreed-upon price on or before a certain date.
Price-to-book is used to compare a stock's market value to its book value. It is calculated by dividing the price of the stock by the book value (book value is simply assets minus liabilities).
Selling short is selling a stock, usually borrowed, in anticipation of buying it back at a lower price.
A swap is an agreement in which two parties lend to each other on different terms (for example, in different currencies and/or at different interest rates).
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