52-Week High/Low: The highest and lowest prices that a stock has traded at during the previous year. Many traders and investors view the 52-week high or low as an important factor in determining a stock’s current value and predicting future price movement.

Arms Index: The Arms Index was developed by Richard W. Arms in 1967. It is a technical analysis indicator that compares advancing and declining stock issues and trading volume as an indicator of overall market sentiment. The Arms Index, or TRIN (Traders Index), is used as a predictor of future price movements in the market primarily on an intraday basis. An Arms Index value above 1 is bearish, a value below one is 1 and a value of 1 indicates a balanced market.

Audited P/E: The price earnings ratio that is calculated by considering the latest audited annual net profit. It can be expressed as P/E0.

BETA: BETA measures the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. BETA in the stock market exhibits the tendency of the stock to move up or down relative to the overall movement of the index.

Bollinger Bands: A band plotted two standard deviations away from a simple moving average, developed by famous technical trader John Bollinger. Because standard deviation is a measure of volatility, Bollinger Bands adjust themselves to the market conditions. When the markets become more volatile, the bands widen (move further away from the average), and during less volatile periods, the bands contract (move closer to the average). The tightening of the bands is often used by technical traders as an early indication that the volatility is about to increase sharply.

CAPM: A theory developed by William Sharpe, a finance professor at Stanford University. It asserts that the expected return on a financial asset is the sum of two components: the risk-free interest rate and a risk premium. The latter in turn is the product of the asset’s beta and the differential between the expected return on the market portfolio and the riskfree rate. Beta measures the systematic risk of the asset. Therefore, CAPM implies that only the systematic risk is priced.

CAR: Capital adequacy ratio (CAR) determines a bank’s or financial institution’s capacity to address credit risk, operational risk, and market risk. Technically, it is the sum of the core capital and the supplementary capital, expressed as a percentage of the total risk weighted assets.

Combined Ratio: The combined ratio is comprised of the claims ratio and the expense ratio. It is a measure of profitability used by an insurance company to indicate how well it is performing in its daily operations. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums.

Correlation: Correlation is a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management.

Correlation Coefficient: Correlation Coefficient is a measure that determines the degree to which two variable’s movements are associated. The correlation coefficient will vary from -1 to +1. A -1 indicates perfect negative correlation, and +1 indicates perfect positive correlation.

Covariance: Covariance is a measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means returns move inversely.

Cum-dividend: CD comes before Ex-dividend (XD). A stock is said to be CD indicates that the company is paying out dividend in the near future which serves like a preempt notice to investors. The company would have announced the amount of dividend to be paid out but has yet to. If the shareholder sells a CD stock, he/she is not entitled to the dividend.

Current Assets: A firm’s investment in short-term assets such as cash, marketable securities, inventory, and accounts receivable. Here “current” means “ease of converting into cash”. The amount of current assets depends on the firm’s policy on working capital management.

Current Liabilities: A firm’s sources of short-term financing. They typically include accounts payable, short-term loans, maturing long-term loans, accrued taxes and other accrued expenses such as wages. The amount of current liabilities depends on the firm’s policy on working capital management.

Current Ratio: It is the ratio of current assets over current liabilities. It measures a firm’s ability to satisfy the claims of short-term creditors using exclusively current assets such as cash and marketable securities.

Debt Equity Ratio: Debt Equity Ratio is a measure of a company’s financial leverage calculated by dividing its total liabilities by stockholders’ equity. It indicates what proportion of equity and debt the company is using to finance its assets. A high debt to equity ratio signifies high level of financial leverage.

Debt-Service Coverage Ratio: Debt-Service Coverage ratio measures the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments. In general, it is calculated by dividing net operating income by total debt service.

Diluted EPS: Diluted Earnings Per Share (diluted EPS) is a company’s earnings per share (EPS) calculated using fully diluted shares outstanding (i.e. including the impact of stock option grants and convertible bonds). Unless the company has no additional potential shares outstanding (a relatively rare circumstance) the diluted EPS will always be lower than the simple EPS.

Dividend Yield: A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is a way to measure how much you are getting for each Taka invested in an equity position.

EBIT: Earnings Before Interest and Taxes. It is an indicator of a company’s profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT is also referred to as “operating earnings”, “operating profit” and “operating income”.

EPS: Earnings Per Share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. It is derived through dividing the net income by the total outstanding number of shares. Earnings per share serves as a major indicator of a firm’s profitability.

EV: Enterprise value (EV) is a measure of a company’s value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

EV/EBIT: EV/EBIT is enterprise value of a company divided by its Earnings Before Interest and Taxes. This metric is used to determine how a company is being valued per each Tk. Of EBIT. A high (low) EV/EBIT mean the company is potentially overvalued (undervalued).

EV/Net Premium: EV/Net Premium is enterprise value of an insurance company divided by its Net Premium This metric is used to determine how an insurance company is being valued per each Tk. Of Net Premium. A high (low) EV/Net Premium mean the company is potentially overvalued (undervalued).

EV/Revenue: EV/Revenue is enterprise value of a company divided by its Revenue. This metric is used to determine how a company is being valued per each Tk. Of Revenue. A high (low) EV/Revenue mean the company is potentially overvalued (undervalued).

Ex-dividend: There has to be a cutoff date that the company has to set, so as to confirm the list of shareholders to receive dividend. When the list is finalized, the stock is said to go XD. Once XD status is declared, the shareholder who sells his/her shares will still be entitled the dividends, while the new owner will not.

Expense Ratio: The percentage of insurance premiums used to pay for an insurer’s expenses, including overhead, marketing and commissions. Expense ratio is calculated as underwriting expense divided by net premiums earned.

Forward P/E: The price earnings ratio that is calculated by considering the expected (estimated by annualizing the latest quarterly net profit) net profit. It can be expressed as P/E1.

Gross Margin: Gross margin is a company’s total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. It represents the percentage of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold.

Gross Profit Margin: Gross Profit Margin is a financial metric used to assess a firm’s financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings.

Interest Coverage: Ratio Interest coverage ratio or times interest earned is calculated by dividing a company’s earnings before interest and taxes (EBIT) of one period by the company’s interest expenses of the same period. This is a measure of a company’s ability to honor its debt payments.

Loss Ratio: The ratio between the premiums received by an insurance company and the expenses it incurs in settled claims, expressed as a percentage. For example, if an insurer pays out $50 in claims for every $100 it collects in premiums, its loss ratio is 50 percent (formula = losses divided by earned premiums). The lower the loss ratio, the more profit the insurer is making.

MACD: Moving Average Convergence-Divergence (MACD) was developed by Gerald Appel in the late seventies. MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

MACD: Histogram Developed by Thomas Aspray in 1986, MACD histograms are a popular tool used in technical analysis to gauge the strength of an asset’s momentum. An increasing MACD histogram signals an increase in upward momentum while a decreasing histogram is used to signal downward momentum.

Market Capitalization: Market capitalization is the current market value of all of a company’s outstanding shares. Market capitalization is calculated by multiplying a company’s shares outstanding by the current market price of one share. If a company has 5000 shares outstanding, each with a market value of TK. 100, the company’s market capitalization is Tk.500000 (5000 x Tk. 100 per share).

Mean: Mean is the simple mathematical average of a set of two or more numbers. For example, if stock XYZ closed at $50, $51 and $54 over the past three days, the arithmetic mean would be the sum of those numbers divided by three, which is $51.67.

MFI: The money flow index (MFI) is used as a measure of the strength of money going in and out of a security and can be used to predict a trend reversal. The MFI is range-bound between 0 and 100 and is interpreted in a similar fashion as the RSI.

NAV: Net asset value (NAV) is the value of an entity’s assets less the value of its liabilities. This is also the same as the book value or the equity value. NAV may represent the value of the total equity, or it may be divided by the number of shares outstanding held by investors and, thereby, represent the NAV per share.

Net Margin: Net margin is the percentage of net income to net revenue for a firm, which shows how much of each taka earned by the company is translated into profits. Net profit margin is an indicator of a company’s pricing strategies and how well it controls costs.

Net Premium: Net premiums refer to gross premium minus reinsurance premium. Insurance companies commonly purchase reinsurance, which pays for claims above a certain monetary amount. This helps protect the insurance company from having to pay for large, catastrophic losses. The amount paid for reinsuring a policy is deducted from gross premiums.

NPL: Non-performing Loan (NPL) is an amount of borrowed money upon which the borrower has not made scheduled payments for at least 90 days. A non-performing loan is either in default or close to being in default. A high NPL ratio signifies a weak credit policy and soaring level of financial distress.

OCF: Operating Cash Flow (OCF) shows the after-tax earnings plus non-cash expenses. In other words, OCF is the cash a firm generates from its normal business operations that it can reinvest in its business or distribute to shareholders. OCF per share represents the net cash a firm produces, on a per share basis.

Operating Margin: Operating margin is the percentage of total operating income (the profit earned from a firm’s normal core business operations) to net revenue income. A higher operating margin may indicate that the company has less financial risk.

Operating Profit: The profit earned from a firm’s normal core business operations. This value does not include any profit earned from the firm’s investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes. It is also known as “earnings before interest and tax” (EBIT).

Operating Profit Margin: Operating margin is a measurement of what proportion of a company’s revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.

P/E Ratio: P/E ratio is the market price of a share divided by the annual Earnings per Share (EPS). In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with lower P/E. Alternatively, a higher P/E ratio can also mean that investors are paying more, so the stock is more expensive than one with a lower P/E ratio.

PEG Ratio: A ratio used to determine a stock’s value while taking into account earnings growth. PEG is a widely used indicator of a stock’s potential value. It is favored by many over the price/earnings ratio because it also accounts for growth. Similar to the P/E ratio, a lower PEG means that the stock is more undervalued.

Price to Sales Ratio: Price to sales is calculated by dividing a stock’s current price by its revenue per share for the trailing 12 months. A smaller ratio is usually thought to be a better investment since the investor is paying less for each unit of sales; it however, can vary depending on the nature of the business.

Quick Ratio: It is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company.

Reinsurance: Insurance purchased by an insurer on behalf of the company that originally wrote the policy. Reinsurance allows a second company to assume part of the risk and part of the premium on the original policy, freeing up the funds of the primary, or original, insurer so it can sell more policies.

Risk Retention: Ratio Risk retention ratio refers to percentage of net premium to gross premium. For example if gross premium is 100 taka and net premium is 50 taka then the risk retention ratio is 50% that means 50% of the gross premium is reinsured with other insurance company.

ROA: Return on Assets (ROA) is a company’s net income divided by total assets, expressed as a percentage. ROA gives an idea as to how efficient the management of a firm is at using its assets to generate earnings.

ROE: Return on equity (ROE) measures the rate of return on the ownership interest (shareholders’ equity) of the common stock owners. It measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.

RSI: Developed J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. The RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

Sharpe Ratio: The ratio describes how much excess return you are receiving for the extra volatility that you endure for holding a riskier asset. It is calculated as the return of the scheme, less the risk-free rate of return, which is then divided by the standard deviation of the return generated by the scheme.

Standard Deviation: Standard deviation is a statistical tool that measures the dispersion of a set of data from its mean. In finance, standard deviation is applied to the rate of return of an investment to measure the investment’s volatility. For example, a volatile stock will have a high standard deviation while the deviation of a stable blue chip stock will be lower. A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.

Times Interest Earned: A metric used to measure a company’s ability to meet its debt obligations. It is calculated by taking a company’s earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis.

Underwriting Profit: Underwriting profit refers to the profit that an insurer derives from providing insurance or reinsurance coverage, exclusive of the income it derives from investments.

William %R: In technical analysis, this is a momentum indicator measuring overbought and oversold levels, similar to a stochastic oscillator. It was developed by Larry Williams and compares a stock’s close to the high-low range over a certain period of time, usually 14 days. It is used to determine market entry and exit points. The Williams %R produces values from 0 to -100, a reading over 80 usually indicates a stock is oversold, while readings below 20 suggests a stock is overbought.