Introduction
Navigating the financial markets requires a solid understanding of key terms and concepts. Whether you're an investor, trader, or finance enthusiast, this comprehensive glossary demystifies essential Nasdaq-related financial terminology—from bonds and ETFs to derivatives and emerging markets.
Core Financial Terms
1. Bond
A bond is a long-term debt instrument issued by governments, municipalities, or corporations. Investors lend capital to the issuer in exchange for periodic interest payments and principal repayment at maturity.
Keywords: Bonds, debt instruments, fixed income
2. Futures
Futures are contracts to buy/sell an asset (e.g., commodities, indices) at a predetermined price on a future date. Example: E-mini Nasdaq-100 Futures track the Nasdaq-100 Index’s performance.
3. Exchange-Traded Fund (ETF)
ETFs are baskets of securities traded like stocks. Passive ETFs, such as Invesco QQQ (tracking Nasdaq-100), mirror indices for diversified exposure.
Keywords: ETFs, Nasdaq-100, passive investing
4. Benchmark
A benchmark measures investment performance. The NASDAQ Composite Index (2,500+ stocks) is a key equity benchmark.
5. Index
An index tracks market segments statistically. The Nasdaq-100 Index includes 100 top non-financial companies by market cap.
Investment Vehicles
6. Index Fund
A fund replicating an index (e.g., Vanguard Russell 2000 ETF for small-cap stocks).
7. Mutual Fund
Pooled investments managed by professionals (e.g., Fidelity Emerging Markets Fund).
8. Hedge Fund
Alternative investments using strategies like long/short equity or global macro.
Key Metrics & Analysis
9. Earnings Per Share (EPS)
EPS = Net Income / Outstanding Shares. Assess profitability using tools like Quandl for alternative data insights.
10. Credit Rating
Evaluates debt repayment likelihood (e.g., Apple’s S&P rating: AA+).
11. Valuation
Determines a company’s worth (e.g., pre-money vs. post-money valuation).
Advanced Instruments
12. Derivatives
Contracts deriving value from underlying assets (e.g., options, futures).
Risk Note: High leverage amplifies gains/losses.
👉 Learn about leveraged trading
13. Options
Call options (buy rights) and put options (sell rights) offer strategic flexibility.
14. Cryptocurrency
Decentralized digital currencies (e.g., Bitcoin) powered by blockchain tech.
Market Types & Strategies
15. Emerging Markets
High-growth, high-risk economies (tracked via Nasdaq Emerging Market Index).
16. Passive vs. Active Investing
- Passive: Index funds (low cost).
- Active: Fund managers pick stocks.
FAQs
1. What’s the difference between Nasdaq-100 and NASDAQ Composite?
The Nasdaq-100 includes 100 top non-financial firms, while the Composite covers 2,500+ stocks.
2. Are ETFs safer than individual stocks?
ETFs diversify risk but still carry market volatility.
3. How do futures work?
Futures lock in prices for future transactions, aiding in hedging/speculation.
4. What’s a junk bond?
High-yield bonds with ratings below BBB (higher risk/default likelihood).
5. Why use leverage?
Leverage boosts returns but increases potential losses—use cautiously.
Conclusion
Mastering these terms enhances your ability to analyze markets, manage risk, and capitalize on opportunities. For real-time data, leverage platforms like 👉 OKX to stay ahead.