52 Week High/Low - is the highest, and the lowest price at which the security traded over the past 52 weeks (12 months). Some value investors like to invest in stocks that are far from their 52 week high, and close to 52 week low. However, a more detailed analysis is required to make sure that this is indeed a good starting point, and that stock is really undervalued.

Asset Turnover - calculates total sales for every dollar of asset a company owns. It measures how well assets are being used to produce revenue. Asset Turnover is calculated by dividing revenue (net sales) by total assets.

Beta - is a measure of volatility of an investment. Beta for the market is 1, therefore stocks with beta over 1 are more responsive to market moves, where stocks with beta bellow 1 are less responsive. Stocks with higher beta are usually riskier investments, but could offer greater returns, especially if the market is doing well.

Book Value per Share - Equals to the book value of a company divided by the number of shares outstanding. Book value is a good way of judging if the stock market value is reasonable compared to company's true value.

Market value - is what the investment community's expectations are and book value is based on costs and retained earnings. Market value is usually higher than the book value. A good indication of safer investment is if the stocks market capitalization is close to the book value.

For example, if the market value is more than twice of the book value, company might be over-valued. However, buying a stock based only on a book value is not recommended. As always, other things need to be considered, such as: earnings, economic conditions, etc.

A thing to remember is that during bull markets the stock price is more likely to trade much higher than book value, and in a bear market the two value's may be much closer.

Blue Chip Stock - Stock of a large, high reputation company, known by its regular payment of dividends. Blue Chip Stocks are usually less volatile than other stocks, and tend to be risk free investment.

Compound Annual Growth Rate (CAGR) - is the rate at which an investment grows annually to reach a given end value. It's calculated by taking the nth root of the total percentage growth rate where n is the number of years in the period being considered. CAGR doesn't represent reality. It's an imaginary number that describes the rate at which an investment grew as though it had grown at a steady rate, which is rarely the case.

Chartered Financial Analyst (CFA) - is a professional designation offered by the CFA Institute to financial analysts who complete a series of three examinations and work for at least four years in the investment decision making process. CFA charter holders are also obliged to adhere to a strict Code of Ethics and Standards governing their professional conduct. The CFA designation is generally considered amongst the most prestigious in the world of finance.

Investment Dictionary

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