Trading Glossary Explained
Trading is a complex process, which includes many actions that a person unfamiliar with the financial world will find puzzling. Once you launch your trading career, you will be swamped with trading terms whose meaning you will not know. You will not immediately grasp how the market value of a business differs from its book value. Nor will you understand what CPI stands for and how it is different from IPO, unless we supply you with a glossary of all confusing terms that you meet in a trading business.
To help you avoid confusion, we have compiled a comprehensive glossary of financial terms used at the markets. All trading glossary is presented in our glossary in the alphabetical order and is explained with linguistic precision. Any financial term that sounds baffling to you now will become crystal clear once you read its definition in our glossary below.
There are currently 181 names in this directory
Accrual
It is an accounting term. It describes the method for recording revenues and expenses when they are incurred. It is not of no importance for this method of recording when cash is exchanged.
Acquisition
This term refers to a company’s takeover of another company. The acquiring company will take over another company by buying its ownership stake, whether the majority of it or its entirety.
Alert
Quantafxai alerts, also called trading alerts, allow traders to set specified criteria and be immediately notified once these criteria have been met. There are three types of alerts in trading: economic announcements, price alerts, and indicator alerts.
Amortization
It is the process of spreading the repayment of a loan or the cost of an intangible asset over a specified time frame. Banks or copyright agencies set the condition of the spreading the repayment, allowing for amortization for a number of months or years. Amortization usually incurs interest payments, set at the discretion of the lender.
Analyst
It is a financial professional who is qualified to evaluate investments and makes recommendations to sell, buy, or hold an asset.
Annual General Meeting (AGM)
It is a yearly gathering between a company’s shareholders and its board of directors. It is the only time when shareholders and directors meet. At AGM, directors present the company’s annual report.
Arbitrage
It is a term related to trading. It is the practice of buying and selling an asset simultaneously to take advantage of a difference in price. The asset is usually sold in a different market, in a different form, or with a different financial product.
Asset
It is an economic resource that is owned or controlled to return a profit or a future benefit. In financial trading, the term relates to what is being exchanged on markets; that is, to stocks, bonds, currencies, and commodities.
Bar Chart
It is a type of the chart which consists of four significant points: the high and the low prices, which form the vertical bar; the opening price, which is marked with a horizontal line to the left of the bar; and the closing price, which is marked with a horizontal line to the right of the bar.
Base Currency
It is a term related to trading. it is the first currency quoted in a forex pair. It is also the accounting currency used by banks and other businesses.
Basing
A chart pattern used in technical analysis that shows when demand and supply of a product are almost equal. It results in a narrow trading range and the merging of support and resistance levels.
Bear Market
A market is referred to as Bear Market when it follows a prolonged downward trajectory. Traders then have no hope for a rally.
Bearish
This word refers to investors’ attitude to a market. When traders or investors say that the market or an asset is bearish, they believe that it is going to experience a downward trajectory.
Bid
This term refers to trading and investing. It is an amount a buyer is willing to pay to buy a financial instrument.
Bid Price
This is the price at which the market is prepared to buy a product. Prices are quoted two-way as Bid/Ask. In FX trading, the Bid represents the price at which a trader can sell the base currency, shown to the left in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the Bid price is 1.4527, meaning you can sell one US Dollar for 1.4527 Swiss francs. In CFD trading, the Bid also represents the price at which a trader can sell the product. For example, in the quote for UK OIL 111.13/111.16, the Bid price is £111.13 for one unit of the underlying market.
Blue-Chip Stocks
These are shares of companies that are financially stable, reputable, and long-established within their sector.
Bonds
It is a form of financial investment involving lending money to an institution for a predetermined period of time. Bonds can be of two types: corporate bonds and government bonds, depending to what institution the lending is made.
Book Value
This type of value refers to what a business is worth according to its financial records. It is contrasted to market value, a company’s worth according to financial markets. The company’s market price is the current market price per share multiplied by the total number of outstanding shares.
Brent Crude
This type of value refers to what a business is worth according to its financial records. It is contrasted to market value, a company’s worth according to financial markets. The company’s market price is the current market price per share multiplied by the total number of outstanding shares.
Broker
It is an independent person or a company organizing or executing financial transactions on behalf of another party. Brokers do this across different asset classes such as stocks, forex, real estate, and insurance. They usually charge a commission to execute an order.
Bull Market
This term refers to a market or an asset that is consistently following an upward trajectory.
Bullish
This term refers to investors’ attitude to markets or assets. Bullish investors and traders believe that the market is going to experience an upward price movement. They also buy an underlying market in order to profit by selling the market in the future, when the price has climbed.
Call Option
It is a contract that gives a buyer the right to buy a specific asset at a specific price on a specific date of expiry. The buyer is never obliged to do this, however. The value of a call option appreciates, if the asset’s market price goes up.
Candlestick Chart
A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, this area of the chart is not shaded.
Cash Flow
This is the amount of money coming into and going out of company’s accounts. It is reported in the company’s earnings announcements.
Closing Price
This is the last level at which an asset was traded before the market closed on any given day. Closing prices are used as a marker, when the assets’ movements over a longer period of time are evaluated.
Commission
It is the charge which an instrument broker levies for making traders on a trader’s behalf.
Commodity
It is a basic physical asset, used as a raw material in the production of goods or services. In trading, commodities are of four types: metals, energy, agricultural, and livestock. The most common examples of commodities traded these days at financial markets are oil, natural gas, gold, silver, platinum, grains, and beef.
Contracts for Difference (CFDs)
This is a type of financial derivative used in CFD trading. they are used to trade a variety of financial markets like shares, foreign exchange, commodities, indices, and bonds.
CPI
This is a Consumer Price Index, an average of several consumer goods and services used to give an indication of inflation.
Currency
This is any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency Option
It is a type of option contract that gives the holder the right to buy or sell a currency pair at a given price before a set time of expiry. The buyer is not obliged to do so, however. The holder of the option pays a premium to the seller.
Currency Pair
These are the two currencies that make up a foreign exchange rate. For example, EUR/USD (Euro/U.S. Dollar).
Current Account
This is the sum of the balance of trade (exports minus imports of goods and services), net factor income (interest and dividends), and net transfer payments (foreign aid). The balance of trade is typically the key component to the current account.
Current Ratio
It is a measure used to establish a company’s ability to sell its tangible assets to pay off its short-term debt. The current ratio is useful in establishing the liquidity position of a business.
Daily Funded Bet (DBF)
This term is used in spread betting to describe a position that remains open until a trader decides to close it. For each day that a bet remains open, an interest adjustment is made to a trader’s account to reflect the cost of funding his or her position.
Day Order
This is a type of order or an instruction from a trader to a broker to buy or sell a certain asset.
Day Trading
It is a strategy of short-term investment that involves closing out all trades before the market closes.
Derivatives
These are financial products deriving their value from the price of an underlying asset. Traders often use derivatives as a device to speculate on the future price movements of an asset, without buying the asset itself.
Digital Options
This option, also known as a digital 100, enables a trader to predict whether a statement about a market is true or false. If traders are correct in their predictions, they earn a profit. If they make a mistake, they lose money.
Dividend
This is the portion that a company chooses to return to its shareholders, usually expressed as a percentage.
Double Bottom
This is a technical analysis reversal price pattern. After an established downtrend, the last bottom fails to move lower than the previous bottom and prices rise above the last top.
Earnings Per Share (EPS)
This is a metric is a company’s earnings figures. EPS are calculated by dividing the total amount of profit generated in a certain period by the number of the company’s shares listed on the stock market.
EDSP
This is an abbreviation for Exchange Delivery Settlement Price. It refers to the price at which exchange-traded derivative contracts are settled. Stock markets use EDSP to calculate the amount that each party to an options or futures contract owes at the time of that contract’s expiry.
Exchange
It is an open, organized marketplace for commodities, stocks, securities, derivatives, and other financial instruments. The terms exchange and market are used interchangeably.
Expert Advisor
It’s an automated set of detailed programming instructions on how to open, modify and close trading positions without human intervention.
Federal Reserve
This term refers to the Federal Reserve Banks or Feds. It is the central bank which is in charge of financial stability in the US.
Fiat Currency
This is a national currency that is not pegged to the price of gold or silver. The value of fiat currency is based on the people’s faith in the country’s government or central bank that issue this currency.
Financial Instrument
It is a monetary contract between two parties – the buyer and the seller, which can be traded and settled. The contract represents an asset to the buyer and a financial liability to the seller.
Financial Market
It is a medium through which assets are traded, with their value determined by supply and demand.
Floating Exchange Rate
This term refers to a currency whose price is determined by supply and demand factors relative to other currencies. A Floating Exchange Rate is different from a Fixed Exchange Rate, determined by the government of the given currency.
Force Open
This is a function on the trading platform that allows traders to enter a new bet in the opposite direction to an existing bet on the same market.
Forward Contract
This is a contract which has a defined date of expiry. This contract may vary between different instances. This makes it a non-standardized entity which can be customized according to a traded asset, expiry date, and a particular trading account.
Funding Charges
These fees are also called Interest Charges. They are levied on leveraged positions held open overnight.
Futures Contract
This is an agreement between two parties to trade an asset at a predefined price on a specified date in the future.
GDP
This an abbreviation of Gross Domestic Product, which is the total value of goods and services produced in a country over a specified period of time. It is used as an indicator of the health and size of a country’s economy.
Gearing Ratio
It is a measure used by investors to establish a company’s financial leverage, which is the amount of funds acquired through creditor’s loans, compared to the funds acquired through equity capital.
Gross Profit Margin
It is a way to measure the amount of profit a company has left after subtracting the direct costs associated with selling its goods and services. Gross Margin demonstrates whether a company is generating revenue despite its outgoings.
Guaranteed Stop
It is a form of stop loss offering a guarantee of executing your trade at the level a trader specifies.
Hawks and Doves
These are terms used by analysts to categorize members of the Central Bank committee ahead of their votes on monetary policy. Hawks are those members who advocate keeping inflation low as the top priority in monetary policy. Doves are more in favor of expansionary monetary policy, including low interest rates. Hawks tend to favor “tight” monetary policy.
Hedge
It is an investment or trade meant to reduce a trader’s exposure to risk. The process of reducing risk via investments is called hedging.
Index (pl. Indices)
It is a grouping of financial assets that are used to give a performance indicator of a particular sector. Examples of the largest global indices are MSCI ACWI Index, MSCI World, S&P Global 100, S&P Global 1200, The Global Dow – Global version of the Dow Jones Industrial Average, Dow Jones Global Titans 50, FTSE All-World index series, and OTCM QX ADR 30 Index.
Inflation
This is the increase in the cost of goods and services in an economy. It is also a devaluing of currency, because in the time of inflation, each unit of the currency’s economy is worth less of any good or service.
Interest
This term refers to several things in finance. It refers to the charge levied against a party for borrowing money, which can be a cost or a means of making profit for a trader. Interest can also refer to the portion of a company’s stocks held by a particular shareholder.
Interest Rate
This is an amount charged by a lender to a borrower for the loan of an asset, usually expressed as a percentage of the borrowed amount. This percentage usually refers to the amount paid each year (Annual Percentage Rate). But it can refer to payments on a more or less regular basis.
Intrinsic Value
This is the true or perceived value of an asset. Intrinsic value is not always identical to an asset’s market price, because assets can be either undervalued or overvalued. Investors use Intrinsic Value in option pricing or assess stocks.
IPO
This is an abbreviation for Initial Public Offering. This term means that a company goes public on a stock exchange.
J-Curve
This term refers to a trendline showing an initial loss immediately followed by a large gain. In a chart, this pattern of activity follows the shape of a capital letter “J”.
January Effect
This term refers to a seasonal increase in stock prices during January. This increase in prices is attributable to an increase in buying, which follows the decrease in prices typically happening in December, when investors prompt a sell-off.
Job Market
This is the market where employers look for employees and employees search for jobs. Also known as the labor market, this is not a physical place but a concept demonstrating the interplay between different labor forces.
Joint-Stock Company
This is a business owned by its investors, with each of them owning a share based on the amount of acquired stocks. Usually, joint-stocks companies are too expensive for an individual to fund. The owners of such businesses share in their profits.
Jurisdiction Risk
This is the risk that arises when operating in a foreign jurisdiction. Usually, people face such risk when they do business or lend money in another country.
Key Performance Indicators (KPIs)
This term refers to a set of qualifiable measurements used to estimate a company’s overall long-term performance. In particular, KPIs help determine a company’s strategic, financial, and operational achievements, compared to similar companies in the same industry.
Key Rate Duration
This is the measurement used to estimate the value of a debt security or a debit instrument portfolio – bonds – changes at a specific maturity point along the entirety of the yield curve.
Knock-In Option
It is a latent option contract that begins to function as a normal option only when a specific price level is reached before expiration.
Knock-Out Option
It is an option with an inherent mechanism to expire worthless if a predetermined price level in the underlying asset is reached. This option sets a cap on the level an option can reach in the holder’s favor.
Know Your Customer (KYC)
This is a standard in the investment industry which ensures companies and advisors know detailed information about their clients’ risk tolerance, investment knowledge, and financial position. KYC protects investment advisors and clients alike.
Leverage
This is the concept enabling traders to multiply their exposure to a financial market without committing more money.
Leveraged Products
These are financial instruments enabling traders to gain greater exposure to the market without increasing their capital investment. They do so by using leverage.
Liabilities
These are debts and obligations that detract from a company’s total value. They have to be paid over a certain period of time.
Limit Order
This is an instruction given by a trader to a broker to execute a trade at a particular level which is more favorable than the current market price.
Liquidity
This is a term that describes how easily an asset can be sold or bought in the market without affecting its price. When there is a demand for an asset, there is a high liquidity, because in this period, it is easy to find a buyer or a seller for this asset.
Margin
In trading, this term refers to the funds which are required to open and maintain a leveraged position.
Market Capitalization
Often shortened as market cap, this term refers to the total market value of a company’s shares on the market. It is an easy way to determine a company’s size, which, in turn, helps assess the risk of investing in its shares.
Market Data
It is the live streaming of all information related to trade. It includes information about price, bid/ask quotes, and market volume. Market data also encompasses reports on assets and financial instruments. Market data is available across all global markets – stocks, forex, and commodities, and is distributed to companies and individual traders.
Market Order
It is an instruction from a trader to a broker to execute a trade immediately at the best available price.
Moving Average (MA)
It is a common indicator in technical analysis, used to analyze price movements of assets while lessening the impact of random price spikes.
Multiplier Effect
This term describes the impact that changes in monetary supply have on economic activity. When a government, business, or individual spends money, it can have an unforeseen effect on businesses and people.
Negative Balance Protection
This protection ensures that traders do not lose more than the balance on their account.
Net Change
This term refers to the difference between the closing price of the current trading session, compared to the closing price of the previous trading session. Net change can be positive or negative, because it shows whether the markets were up or down a day before.
Net Operating Income (NOI)
It is a calculation used to analyze the profitability of income-generating real estate investments. NOI equals revenue from the property, excluding all necessary operating expenses.
Non-Current Asset
It is a company’s long-term investment, for which the full value is not realized during the accounting year. Non-current asset can also be an item without an inherent value, such as intangible assets, or assets with no fixed expiry, such as land or property.
Offer
This term refers to a trader’s expressed intention to buy an asset or financial instrument from another trader or institution.
On Balance Volume (OBV)
It is a form of technical analysis enabling traders to make predictions about future price movements based on the asset’s previous trading volume.
Open Position
This term refers to a trade still able to generate a profit or incur a loss. when a position is closed, all profits and losses have been realized, and the trade is no longer active. Open positions are either long or short; that is, they allow traders to profit when markets are on the rise and when they are sliding.
Option
It is a financial instrument that offers traders the right to buy or sell an asset when its price moves beyond a certain price within a specified time period.
Order
It is a request sent by a broker or a trading platform to make a trade on a financial instrument.
Out of Money (OTM)
This term refers to a contract that has not yet reached the value of its strike price. In other words, it has no intrinsic value and will expire worthless.
P/E Ratio
This is an abbreviation for Price-to-Earnings Ratio. It is a method of measuring a company’s value and is calculated by dividing the company’s market value per share by the earnings per share.
Position
This term refers to a trade that can currently incur a loss or make a profit, known as an open position, or to a trade that has recently been cancelled, known as a closed position. Profit or loss on a position is realized only after it has been closed.
Profit and Loss Statement (P&L)
It is a financial report providing a summary of a company’s revenue, expenses, and profit. It shows to investors how the company is operating and how much profit it is generating.
Pullback
It is a temporary pause or dip in an asset’s overall trend. It should not be confused with a reversal, a more permanent move against the asset’s prevailing trend.
Put Option
It is a contract that gives the buyer the right to sell an asset at a specified price and at a specific date of expiry. The buyer is not obliged to sell, however. The value of a put option increases if the asset’s market price decreases.
Qualified Dividend
It is a dividend that falls under capital gains tax rates which are lower than the income tax rates on unqualified, or ordinary, dividends. Qualified dividends are taxed as capital gains at rates of 20%, 15%, or 0%, depending on a specific tax bracket.
Quantitative Easing (QE)
It is a form of monetary policy in which a central bank buys longer-term securities from the open market in order to boost the money supply and encourage investment and lending.
Quarter
This is a three-month period on a company’s financial calendar acting as a basis for periodic financial reports and the paying of dividends. A quarter refers to one-forth of a year and is expressed as “Q1” for the first quarter, “Q2” for the second quarter, “Q3” for the third quarter, and “Q4” for the fourth one.
Quote Currency
It is the second currency listed in a forex pair. It is also called the counter currency.
Quote Price
It is the price at which an asset was last traded. It is defined as the point where supply meets demand, since it is the price on which the buyer and seller agree.
Rally
It is a period in which a price of an asset experiences sustained upward movement. A rally usually happens after a period in which prices have been flat, traded in a narrow band, or experienced a drop.
Range
It is the difference between a market’s highest and lowest price in a given period. Range is an indicator of volatility. If the range at the market is wide, this means that it is volatile.
Reserves
These are the liquid assets set aside for future use by an individual, business, or central bank. Reserves are usually currencies or gold. For traders, reserves are kept in cash that is quickly accessed.
Resistance Level
It is the point on a price chart at which an upward price trajectory is checked by an overwhelming inclination to sell the asset. If a market price is close to a resistance level, a trader can close his or her position taking the profit instead of waiting for the price to fall back.
Return on Capital Employed (ROCE)
It is a long-term profitability ratio measuring how effectively a company uses its capital. The metric tells you the profit generated by each dollar or any other currency used.
Reversal
It is a turnaround in the price movement of an asset; that is, when an upward trend becomes a downward trend or vice versa.
Risk Management
It is the process of identifying potential risks in a trader’s investment portfolio and taking steps to minimize them.
Scalp
It is the act of opening and then closing a position very quickly, in the hope of profiting from small price movements.
Share Buyback
This term refers to a company’s repurchasing of its own shares from investors. This is a tax-efficient way to return money to shareholders. When shares have been repurchased, they are considered cancelled. However, they can be kept for redistribution in the future.
Share Price
It is the price of one share in a company. The prices of a share fluctuate according to market conditions. They usually increase if a company is estimated to be doing well; they fall, when a company is not meeting expectations.
Shares
These are the units of the ownership of a company, usually traded on the stock market. They are also called stocks and equities.
Shares Trading
It is the process of buying or selling of a company’s stock or derivative products based on stock to make a profit.
Short Selling
It is an act of selling an asset that traders do not currently own, because they hope that its value will drop and they will close a trade at a profit.
Slippage
This term refers to a situation where an order executed does not match the price at which it was made.
Spot
This term refers to the price of an asset for immediate delivery or to the value of an asset at any exact given time. It differs from an asset’s futures price, defined as the price for delivery at some date in the future.
Spot Price
This term refers to the current value of an underlying asset, for which it can be bought or sold with the expectation of immediate delivery. This term is often used in the forex and commodities market.
Spread
This is the difference in price between the buy (bid) and sell (offer) prices quoted for an asset.
Stock Exchange
It is a centralized location where the shares of publicly traded companies are bought and sold. Stock exchanges differ from other exchanges in that the tradable assets are limited there to stocks, binds, and exchange traded products (ETPs).
Stock Index
It is a group of shares used to give an indication of a sector, exchange, or economy. A stock index is made up of a set number of the top shares from a given exchange.
Stop Order
This is a type of order that instructs a broker to execute a trade when it reaches a particular level, usually one which is less favorable than the current market price. They are also called stop-loss orders.
Strike Price
This is the price at which an option can be executed. It is a fixed price under which an underlying asset can be bought or sold.
Tangible Assets
These are assets on a company’s balance sheet that have a physical form, including equipment property, machinery, and materials used in production.
Time Value
This term refers to the portion of an option’s premium that is attributable to the amount of time left until the option expires. An investor is ready to pay more for an option with a longer time until expiry, because the option has more time to expire in the money.
Trading Floor
This is where financial instruments such as stocks, bonds, commodities are bought and sold. They are usually electronic.
Treasury Stock
This is the portion of a company’s shares that it keeps in reserve. These shares are not available to the public and do not count towards the total amount of listed outstanding shares.
Trend
This term refers to the time when a market is making sustained moves upwards or downwards. Identifying the beginning and ending of trends is crucial for market analysis. Trends apply to individual assets, sectors, interest rates, and bond yields.
Unborrowable Stocks
These are stocks that are not lendable to short sellers. When shares in a company become unborrowable, it is impossible to short sell them in a traditional way.
Underlying Asset
This term refers to the financial assets upon which a derivative’s price is based. A derivative is a financial instrument with a price based on a different asset.
Unemployment Rate
This term refers to the percent of the labor force that does not have a job. This indicator rises and falls in the wake of changing economic indicators but does not anticipate them.
Unlimited Liability
This term refers to the full legal responsibility that business owners and partners assume for all business debts. This liability is not capped. Business owners can pay their obligations through the seizure and sale of owners’ personal assets.
Upside
This term refers to the potential increase in value of an investment. It is measured in monetary or percentage terms. A higher upside means that the stock has more value than is currently reflected in the stock price.
Valuable Cost
This is a business’ expense which is subject to change when sales volumes change. This means that valuable costs either increase or decrease depending on the company’s present output.
Value Chain
It is a business model that describes the full range of activities needed to create a product or service.
Variable Cost
This is a corporate expense that changes in proportion to production output. Variable costs decrease or increase depending on a company’s production volume.
Volatility
This term refers to the situation at the market when there is a high likelihood of making major, unforeseen short-price movements at any given time.
Volume
It is the amount of a certain asset that is being traded over a certain period of time. It is often given together with price information, since this information offers another dimension with which traders examine an asset’s price history.
West Texas Intermediate (WTI)
It is an oil benchmark central to commodities trading. It is one of the three major oil benchmarks used in trading, alongside with Brent and Dubai/Oman.
White Paper
It is an informational document usually issued by a company to promote or highlight the features of a solution, product, or service that it offers.
Wholesale Price Index (WPI)
It is an index that measures the changes in the price of goods in the stages before the retail level. It refers to goods sold in bulk and traded between entities or businesses, not between customers.
Wire Transfer
It is an electronic transfer of funds via a network that is administered by hundreds of banks and transfer service agencies around the world. This transfer can also be made cash at a cash office.
Working Order
This term refers to the opening of a stop order or a limit order. It is used to advise a broker to execute a trade when an asset reaches a specific price.
X-efficiency
This term refers to the degree of efficiency maintained by firms under conditions of imperfect competition. Efficiency in this context means a company getting the maximum outputs from its inputs, which includes employee productivity and manufacturing efficiency.
XD
It is symbol used to signify that a security is trading ex-dividend. It tells investors key information about a specific security in a stock quote.
XTR
It is an extension printed after the ticker symbol for a stock. It indicates that the stock is trading on an ex-rights basis, which means that the buyer of the stock does not have the rights to purchase more shares at a lower price anymore because those rights have expired.
Yield Spread
A yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings, issuer, or risk level, calculated by deducting the yield of one instrument from the other. This difference is most often expressed in basis points (bps) or percentage points.
Yield Tilt Index Fund
A yield tilt index fund is a type of fund that invests in stocks or securities that mirrors the holdings of a market index but contains a higher weighting towards higher-yielding investments. A yield tilt index fund can be a mutual fund, which is a basket of securities that are actively managed by a portfolio or fund manager.
Yield-Based Option
A yield-based option allows investors to buy or sell calls and puts on the yield of a security rather than its price.
Yuan
The yuan is the base unit of currency in China. The renminbi is the name of the currency in China, where the Yuan is the base unit.
Zero Balance Account (ZBA)
It is a checking account where a balance of zero is maintained. When funds are required in this account, the exact amount of money needed is automatically transferred from a central or master account.
Zero-Based Budgeting (ZBB)
It is a method of budgeting according to which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base.” Every function within a company is then analyzed for its needs and costs.
Zero-Coupon Bond
It is a debt security that does not pay interest. Instead, it trades at a deep discount and renders a profit at maturity, when the bond is redeemed for its full-face value.