Alphabetical list of terms

above par

  • 1. In the stock exchange, a quoted price in excess of 100%, i.e., above the shares’ nominal or face value.
  • 2. In fixed-income security issues, the expression denotes an offer in excess of face value.
  • 3. In equity issues, the expression denotes an issue price at a premium.

acquisition price

The price to be paid to acquire something.

annual percentage rate (APR)

Standardized method of quoting the effective interest rate on consumer loans by compounding interest.

ask price

In financial markets, the ask refers to the price or return a seller is willing to accept for a financial asset. The ask price is also known as the offer price, offer, or simply ask.

assessment or appraisal

  • 1. Estimate of the value of a good or service.
  • 2. Assessment of damages by an insurance inspector.
  • 3. Report issued by an expert appraiser.

asset valuation model

Model used by investors to assess whether to place their financial resources in one market security or another.

bad debt

A past due and unpaid bill.


  • 1. In banking, the amount in favor of the customer or the financial entity, depending on whether it is positive or negative, at a point in time for a given account.
  • 2. In accounting, the outcome of offsetting debits and credits.

balance of payments

A statement that summarizes economic transactions between residents of one country and residents of all other countries. This document is of vital importance in macroeconomic analysis, as it presents a more general and comprehensive picture of a country’s economic health than sector analysis.

bank draft

A promissory note issued by a bank which can be used as a means of payment.


When an individual or firm fails to meet its payment obligations as a result of which the creditor forecloses on the assets.

bear market

A market in which prices and trading volumes are falling on a sustained basis, inspiring pessimism.

bearer instrument

Securities that grant a right to or establish an obligation on the part of their holder, i.e. the holder’s name is not recorded in the issuer’s register.

bill of exchange

Full name of the draft commonly known as a bill. A written order issued by a person or business which directs the recipient (drawer) to pay a fixed sum of money to a third party (drawee) at a specific future date. Bills of exchange can be endorsed.

bull market

A market in which prices and trading volumes are rising on a sustained basis, inspiring optimism.


  • 1. A more generic term than “company” denoting an activity engaged in with the intention of generating a profit.
  • 2. A place where a for-profit activity is engaged in.
  • 3. In the context of the International Financial Reporting Standards, a business is defined as the integrated set of activities and assets conducted and managed for the purpose of providing a return to investors, or lower costs or other economic benefits directly and proportionately to policyholders or participants. A business generally consists of inputs, processes applied to those inputs, and resulting outputs that are, or will be, used to generate revenues. If goodwill is present in a transferred set of activities and assets, the transferred set shall be presumed to be a business.

call option

Contract between two parties, one of which acquires the right to acquire an underlying asset in exchange for payment of a premium, at a fixed price and at a specific date or over a defined period of time; the option writer is obliged to deliver the underlying at the request of the option holder under the terms agreed to.


There are several definitions for this term.

  • 1. According to the dictionary of the Royal Spanish Academy (DRAE), capital is the factor of production comprising property, machinery and plant of all kinds which, in conjunction with other factors of production, essentially labor, is used to produce goods.
  • 2. From a financial perspective, an entity’s net worth.
  • 3. An entity’s productive capacity in relation to the number of units produced daily.
  • 4. The sum of an entity’s material and financial resources.
  • 5. Goods used to produce other goods.
  • 6. One of the three factors of production, together with land and labor, generated via the accumulation of wealth.
  • 7. Amounts of money invested or on loan.

capital loss

The cost of selling a capital investment for a price that is less than its purchase price.

capital markets

Markets where medium- and long-term debt and equity securities are traded.

capture deposits

Obtain financial resources from savers as a source of financing.

cash equivalents

Highly liquid financial resources held to make current payments, usually held on deposit in a sight bank account.

cash flow

  • 1. Net cash received by a company in its ordinary course of business and from other sources, i.e., cash receipts minus cash payments.
  • 2. Cash inflows and outflows generated by a project, investment or other economic activity.

clearing system

System used by credit entities to exchange data and documents related to fund and securities transfers.


An entity with separate legal personality, duly incorporated under corporate law, with the power to acquire assets, incur obligations and engage in the corporate purpose set down in its bylaws, made up of one or more shareholders which may or may not be liable to the entity’s creditors depending on its legal form.

continuous market (SIBE for its initials in Spanish)

  • The electronic trading platform of the securities exchanges that replaced the open outcry system and enables automated trading on the four official Spanish exchanges (Madrid, Barcelona, Valencia and Bilbao).

convertible bond or debenture

A debenture or bond that can be exchanged at the option the holder for shares or securities of the issuer at a price below the market price, designed to facilitate placement and, on occasion, reduce an issuer’s interest burden.


Acronym for the Consumer Price Index.


  • 1. In an accounting context, the right hand column of the accounting ledger where increases in liabilities, decreases in assets and gains in the income statement are recorded.
  • 2. In a bank statement, credit memoranda reflect all amounts paid to customers.

credit market

The market comprising all loan and credit transactions performed by economic agents.

currency risk

Exposure to variability in exchange rates. See “exchange risk”.

currency swap

An arrangement in which two parties exchange a series of cash flows in one currency for a series of cash flows in another currency, at agreed intervals over an agreed period.

current account

Bank deposit at a credit institution where the accountholder(s) has/have a check book which enables them to withdraw funds from the account or make payments against it and from which, as a general rule, it can set up direct debits.

current assets

Liquid assets, including cash and other assets readily convertible into cash. Synonym: “quick assets”.


Medium- or long-term fixed income security or debenture issued by a company or governmental agency in exchange for proportional interest paid half-yearly or yearly. These instruments are issued to raise external financing for the issuer’s activities.

debt security

An instrument that evidences an obligation to pay principle and interest on the part of the issuer at a specified maturity date.


The lowering of a currency’s official exchange rate.

discounted bill

A bill of exchange that is delivered to a credit institution for early payment in exchange for a fee and the corresponding interest charges.


Payment made out of a company’s earnings to the holders of shares or units in the company in proportion to their percentage ownership stake.

economic loss

A financial loss or damage.

end-of-day gross settlement systems

Designated-time settlement systems in which final settlement of fund or security transfers takes place only once, at the end of the processing day, and without netting the credit and debit positions, although orders are received throughout the day.

equity market

Primary and secondary market in which marketable fixed-income and equity securities are traded. Synonym: “stock market”.

European System of Central Banks (ESCB)

A system comprising the ECB and the national central banks of all EU Member States. Under the terms of the EU Treaty, the ESCB is charged with formulation and implementation of monetary policy in the eurozone, conducting foreign exchange operations, holding and management of the official currency reserves of the Member States and the promotion of the proper functioning of payment systems.

exchange risk

Risk derived from exposure to fluctuations in the exchange rates of foreign currencies in which an individual or entity’s debts and credits are denominated. Synonym: “currency risk”.


An accounting entry to recognize the fact that a company’s net worth has declined as a result of an outflow of money to acquire a good or pay for a service, or to fund financial transactions or other extraordinary transactions.

extraordinary general shareholders’ meeting

An Extraordinary General Meeting may be held at any time as circumstances dictate, as long as the rules for its calling are complied with.


Stipend paid to a professional for his or her work in a professional capacity.

finance lease

The most common form of lease. A finance lease is a medium- or long-term financial transaction entailing the transfer for a defined period of time of an asset by its owner in exchange for a periodic rent, granting the lessee the right to acquire the asset at a pre-established residual value at the end of the lease term.

financial market

Marketplace encompassing the markets where financial assets are traded: the capital markets, money markets and currency markets. The term can also be used in reference to any of the three.

financial risk

Exposure to financial losses arising on an investment due to changes in several variables, such as interest rates, exchange rates, etc.

fixed-income security

A marketable security with a constant yield that is independent of the issuer’s earnings performance. Bonds and debentures are the most common forms.

floating capital

Net working capital or that part of capital that is invested in current assets.


The goal pursued by companies established or operated with the intention of making a profit.

forward market

Complementing the spot market, the forward market comprises transactions to buy and sell currencies, commodities and other securities for future delivery at prices agreed upon today. It is also known as the “derivatives” or “futures” market.

forward transaction

A transaction realized in the futures and options markets on commodities, currencies, marketable securities and other financial assets where delivery of the underlying and settlement of the payment obligation takes place at a future date.

free market

Deregulated market where free competition reigns, governed solely by the laws of supply and demand.

fund transfer system

Formal arrangement in which the many participating parties agree to common rules and standards for the transfer and settlement of monetary obligations arising among its members.


An exchange-traded contract that requires delivery of a bond, currency, marketable security, commodity or other financial asset, at a specified price, on a specified future date.

futures market

A market in which participants buy and sell contracts on commodities, currencies and interest rates for delivery on a specified future date.


Residual amount after netting all expenses (including, where necessary, capital maintenance adjustments) from revenue. Where expenses exceed revenue, this residual amount is a loss. All capital in excess of that required to restore capital to its original level at the beginning of the year is a gain. Synonym: “profit”.


Acronym for gross domestic product, the value of the goods and services produced in a country over a given period of time (generally one year).

general shareholders’ meeting

General meeting of the shareholders of a limited company, in which decisions on the most important matters for the management of the company are ratified, e.g. appointment of the Board of Directors or replacement of Directors, approval of the financial statements, authorization for M&A transactions, etc. The general meeting may be called on an ordinary or extraordinary basis.


An asset pledged to guarantee settlement of a payment obligation.

guaranteed bill

A bill of exchange whose payment is fully or partially guaranteed by a third party which becomes a joint and several creditor.


A person or firm that guarantees the obligations of another person or firm.

holding company

A company that owns or controls the majority of the shares or units of a financial group.

human capital

A company’s human resources, including their skills.


Such rapid loss of a currency’s purchasing power as to render the figures resulting from transactions and other events taking place in different moments in time, or even within the same accounting period, incomparable.


Terminology from the new Spanish GAAP to bring prevailing accounting standards in line with IFRSs. Impairment charges were formerly referred to as provisions. Survey to determine whether the company is carrying assets at amounts that are higher than their fair value.

in the red

An expression used to denote a deficit or loss which harks back to when red ink was used to distinguish debit balanced in ledgers from credit balances, which were written using black ink.


The overall and general upward price movement which correspondingly diminishes purchasing power.


The regular periodic payment that a borrower agrees to make to a lender.


Remuneration paid or received as compensation for the temporary use of an amount of money, calculated as a percentage of the amount borrowed or loaned.

interest rate

A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal.

interest rate risk

Risk that the interest rate accrued on assets will fall or that the interest rate carried on liabilities will rise.

intrinsic value

The actual value of a security.

investment or mutual fund

A collective investment scheme that pools money from a number of investors, called "unitholders," to invest in stocks, property or financial assets and is administered by a management company . The shares, called “units,” are deposited at a custodian.


An individual who commits money to a company to enable it carry out its business.


The initial listing, sale and trading of a company’s shares on an exchange to the public. In this way the company taps an additional source of financing, i.e., the proceeds from the purchase of its shares by investors.

law of supply and demand

Economic principle whereby prices function to equalize the quantity demanded by consumers, and the quantity supplied by producers.


Type of lease with a purchase option.


  • 1. Sum of payment obligations assumed by a company vis-à-vis third parties, including its share capital.
  • 2. In a banking context, money deposited on account by its customers.
  • 3. In an accounting context, liabilities are an entity’s present obligations arising from past events, the settlement of which will result in an outflow of economic benefits or sacrifice of future economic benefits from the entity, and include provisions.


Acronym for the London InterBank Offered Rate, the average rate on the London interbank market. It is widely used as the benchmark rate in large scale international interbank lending.


Availability of cash or financial assets readily and rapidly convertible into cash.

liquidity risk

Exposure to losses arising from a lack of available funds to meet payment obligations.


A fixed amount of funds that an individual or firm, generally a financial institution, makes available to another party, the borrower, which assumes the obligation to repay the face amount at or before maturity together with accrued interest payments.


  • 1. A public place where good and services are bought and sold.
  • 2. Series of activities performed by economic agents without the intervention of the public authorities.
  • 3. Series of transactions involving a sector of goods or services.
  • 4. A subdivision of consumers considered buyers of a product or service.

market capitalization

  • 1. In reference to a specific company, the market value of its equity determined by multiplying the number of shares outstanding by the current quoted share price.
  • 2. In relation to an exchange as a whole, the total value of the shares traded on that exchange.

market risk

  • 1. Risks of losses due to overall changes in the market which cannot be hedged.
  • 2. Risk that the fair value of a financial instrument will vary due to changes in market prices.

marketable security

Fungible equity or debt instrument that is listed on an exchange and can be readily bought or sold.


  • 1. Date on which a financial liability must be settled.
  • 2. Expiry date for exercising an obligation or availing of rights granted.


Voluntary union of two or more companies to form a new company with a separate legal identity.

monetary base

The sum of reserves on deposit at credit institutions and currency in the hands of the general public.


A collateral guarantee in which ownership of a property is pledged to endorse settlement of a payment obligation, so that if the payment is not made, the creditor has the right to foreclose on the property to recover its loan.


Residual amount after deduction of discounts and expenses.

net present value

The present or discounted value of an investment's future net cash flows minus the initial investment.

net realizable value

The estimated selling price of an asset in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The net realizable value refers to the net amount that the entity hopes to obtain on the sale of its inventories in the ordinary course of business. The fair value reflects the amount at which the same inventory could be traded in the marketplace among knowledgeable and willing buyers and sellers. The former is an entity-specific ,value while the latter is not. The net realizable value of inventories may not coincide with fair value less costs to sell.


Net settlement of mutual obligations to minimize financial flows and transaction expenses.


Acronym of the initials in Spanish for the national identity number for tax purposes.


Tokyo Stock Exchange. Short for Japan's Nikkei 225 Stock Average, it is a price-weighted index composed of Japan's 225 most heavily traded companies. Tokyo is the world’s second largest stock exchange by trading volume. Other indices on the Tokyo exchange include the TOPIX and the J30.


  • 1. Any debt whose payment is mandatory.
  • 2. In the context of the International Financial Reporting Standards, an obligation is the duty or responsibility to act or perform in a certain way. Obligations can be legally enforceable and arise from execution of contractual arrangements or mandates under a legal framework. Obligations can also be constructive or equitable, created or inferred from the company’s normal business practice, custom or the desire to behave as a good corporate citizen.

open outcry system

Former securities market trading system prior to the advent of electronic trading in which trades were crossed via verbal communication and hand signals in sessions that lasted 10 minutes for each sector. Today this system is only used for very illiquid stocks.

operating lease

A short-term lease arrangement that can be cancelled by the lessee in which there is no purchase option.


A contract traded on the futures markets granting one of the parties, subject to payment of a premium, the right but not obligation to sell or purchase an underlying asset at an agreed price at a specific date or over a defined period of time.

ordinary general shareholders’ meeting

An Ordinary General Meeting must be held once a year during the six months following the year-end. The performance of the Board of Directors, the financial statements and, where appropriate, the payment of dividends must be put before shareholders for approval.

par value

The nominal dollar amount assigned to a security by the issuer.

payment order

  • 1. Instructions to transfer funds from a bank account.
  • 2. A document or draft by virtue of which an importer requests that its financial entity transfer funds to the exporter.

portfolio management

The process of managing assets on behalf of clients with the goal of generating a return on such assets in exchange for a fee or commission.


The monetary value of a good or service.

primary market

Market for new securities issues.

public treasury

Aggregate of income, taxes and sundry other goods managed by the state or other public authorities.


  • 1. A quantity measured with respect to another measured quantity.
  • 2. A charge levied in exchange for the use of certain services or exercise of certain activities.


An indicator used to classify companies in relation to their creditworthiness.


Numerical expression of the relationship between two quantities.

real time gross settlement systems

Defined as a system that can effect final settlement of fund or security transfers on a continuous basis during the processing day.

Rental or full-service lease

Full service rental of goods without granting the lessor a purchase option in exchange for payment of a fixed installment over the life of the arrangement, which covers all the maintenance and insurance required to enable or facilitate use of the asset.


  • 1. In the context of securities markets, the return of the investor’s principal in a bond or debenture at or prior to maturity.
  • 2. A secondary meaning in a securities context is payment on securities acquired under a repurchase commitment.
  • 3. In a banking context, a payment made by a credit institution to the customer.
  • 4. In relation to a debt, repayment of principal plus accrued interest.

replacement value

The value of an asset as determined by the estimated cost of replacing it.

restricted reserves

Share capital that cannot be increased or decreased without first amending the company’s bylaws.


Gain on capital. Synonym: “interest”.

savings bank

A non-for-profit credit institution which to an extent retains its original social purpose. In the place of share capital, these institutions are capitalized with a charitable fund. The portion of unretained profits earmarked for social welfare initiatives. Various legally stipulated stakeholders (depository entities, local corporations, founding entities and other social stakeholders, such as employees) are represented on their governing bodies.

secondary market

Market in which the financial assets traded are not new, so that the proceeds are not received by the issuer but rather by the security holders.

secondary share offering

A publicly announced offer to sell a significant number of existing shares of a company. In Spain, this kind of offering is called an oferta pública de venta, or OPV. This is the method customarily used by the government to privatize a state-owned enterprise.

securities settlement system

System comprising all entities engaged in securities trade pre-settlement, settlement and safekeeping duties, except custodian entities.


  • 1. Assessing the absence of risk in combination with return and liquidity considerations.
  • 2. A legally valid instrument that grants a right or establishes an obligation, i.e. which offers evidence of debt or equity.

share capital

Funds contributed by shareholders to incorporate a company and which form part of the company’s equity, regardless of whether or not they are paid in. Share capital also confers a series of rights, such as entitlement to collect dividends or participate in subsequent equity raises.

sight bill or draft

Bill of exchange payable on the day it is presented to the drawee, as opposed to a term bill which sets a fixed payment date.

spot market

A market in which assets are bought or sold and delivered immediately. This market functions on a complementary basis with the forward market.

spot transaction

  • 1. In general, a transaction in which the parties commit to settle within two working days from when the contract is executed.
  • 2. In the context of currency markets, spot transactions refer to currency swaps which must be realized within 48 hours.


The total amount of goods and services available in the market to meet demand; price is determined as a function of the relationship between the two forces if state intervention is absent.


A financial instrument consisting of a contract on a derivative that gives rise to an exchange of streams of payments between two parties.


A group of investment banks which jointly underwrite and distribute among themselves a significant loan or credit line and the corresponding risk.

systemic risk

The risk on a portfolio of financial investments that cannot be eliminated through diversification.


A universal and legally mandatory fiscal charge or levy imposed usually as a function of the financial capacity of the corresponding taxpayer(s).

tender offer

A takeover bid in the form of a public invitation to shareholders of a publicly listed company to sell their shares at a certain price within a defined deadline and subject to other terms and conditions which are generally more favorable than prevailing market conditions. In Spain a tender offer must by notified to the Spanish securities market regulator, the CNMV. The bidder generally seeks to take control of the company, or at least of a large enough stake to enable it to exercise significant influence over its management.

total utility

The aggregate level of satisfaction or fulfillment that a consumer receives through the consumption of a specific good or service.

trade balance

A macroeconomic term for the balance of all flows of goods and services between a specific country and another country or group of countries during a specific time period, usually a year.


The purchase and sale of goods or services.

trading volume

The number of shares, bonds or contracts traded during a trading session or a given period and for a security or an entire exchange.


An agreement between a buyer and a seller to exchange an asset for payment, or less commonly, another asset.

treasury bill

A short-term debt obligation issued by the Treasury for a nominal value of €,000 maturing in three, six or 12 months.

unit of account

Unit by which value of a thing is accounted and compared.

unit-linked policy

Mixed life assurance (savings + life cover), where most of the premium is invested in portfolios of financial assets, functioning in the same way as an investment fund (guaranteed or otherwise). The main advantages relative to other investment instruments such as mutual funds is their tax treatment, as these policies maintain the legal characteristics of insurance policies.


Person using a service or entitled to use an asset that he or she does not own.


In economics, a measure that is to be maximized in any situation involving choice.


  • 1. Degree of utility of a good or service
  • 2. Monetary quantification of the degree of utility of a good or service.
  • 3. Date on which an amount is considered paid or charged for the purposes of calculating interest payments.

value date

Date on which an amount is considered paid or charged for the purposes of calculating interest payments


  • 1. Deviation from benchmark values.
  • 2. In the stock market, a statistical measure of the dispersion of returns for a given security or the market as a whole.


An option certificate written or sold entitling its holder to purchase (call warrant) or sell (put warrant) securities, usually shares, at a specific price and for a fixed period of time. Warrants function like options, with the difference that warrants are listed on a stock exchange.