Glossary

The periodic interest payment a bond issuer makes to bondholders, usually expressed as an annual percentage of the bond's face value.

A credit rating is an independent assessment of how likely a borrower is to repay debt on time, expressed as a letter-grade scale that helps investors gauge default risk.

A crypto exchange is an online platform where users buy, sell, and trade digital assets such as bitcoin and ether, often acting as custodian of those assets until they are withdrawn.

A crypto wallet is a software application or hardware device that stores the private keys used to access, send, and receive cryptocurrency on a blockchain.

A digital asset secured by cryptography and recorded on a distributed ledger, typically a blockchain, that can be transferred peer-to-peer without a traditional intermediary.

A currency pair is the quotation of two currencies traded against each other, showing how much of the quote currency is needed to buy one unit of the base currency.

An investment or savings account that an adult manages on behalf of a minor beneficiary until the minor reaches a specified age.

Custody is the safekeeping of an investor's assets — in crypto, it comes down to who controls the private keys that move the coins: a third party or you.

A practice trading or investing account that uses simulated money, letting you test a platform and strategies without risking real capital.

A direct bond is an individual bond you own outright, receiving its coupon payments and face value at maturity yourself, rather than holding bonds indirectly through a fund or ETF.

Diversification is the practice of spreading investments across different assets, sectors, and regions so that no single holding can heavily damage your overall portfolio.

A dividend is a portion of a company's profits paid out to shareholders, usually in cash and typically on a regular schedule.

Dollar-cost averaging is an investing approach where you invest a fixed amount of money at regular intervals, regardless of price, so you buy more units when prices are low and fewer when prices are high.

A drawdown is the decline in a portfolio's value from its most recent peak to a subsequent low, usually expressed as a percentage. It helps investors understand how much an investment has fallen before recovering.

Duration measures how sensitive a bond's price is to changes in interest rates, expressed in years.

An ETF (exchange-traded fund) is a pooled investment fund that holds a basket of assets, such as stocks or bonds, and trades on a stock exchange throughout the day like an individual share.

An ETF Sparplan (ETF savings plan) is a recurring investment arrangement where a fixed amount is automatically invested into one or more ETFs at regular intervals, typically monthly.

An exchange rate is the price of one currency expressed in terms of another, showing how much of the second currency is needed to buy one unit of the first.

The expense ratio is the annual fee a fund charges investors, expressed as a percentage of assets, covering management and operating costs. It is deducted automatically from fund returns rather than billed separately.

The expiration date is the final day an options contract is valid; after this date, the option either gets exercised, settled, or expires worthless.

Face value is the amount a bond issuer promises to repay the bondholder at maturity, and the base amount used to calculate coupon payments.

Forex (foreign exchange) is the global market where one currency is traded for another, with prices quoted as currency pairs such as EUR/USD.

A government bond is a debt security issued by a national government to raise money, promising to pay periodic interest and return the face value at maturity.

Hedging is a risk-management technique where an investor takes an offsetting position designed to reduce potential losses in an existing investment, usually at some cost or trade-off.