Glossary of Investment Terms J P. Morgan Asset Management

A method of valuation of company accounts which can determine how a company is spending its money, calculated by dividing a company’s net income by its stockholder equity. The possibility of reinvesting the distribution in the same fund. Certain funds offer investors a special reinvestment discount on the issuing price if the annual distribution is reinvested. It is calculated by dividing the current market price by the earnings per share. Percentage change in the value of an investment, plus any accumulated income, and corrected for inflows and outflows of funds during a defined period of time .

Investors who cannot hold an investment for the long term should not invest. In the most sensible investment strategy for PE investing, PE should only be part of your overall investment portfolio. The PE portion of your portfolio may include a balanced portfolio of different PE funds. For additional information, including Moonfare’s affiliates, please see here. “Spray and pray” is a derogatory term for an investment strategy where very early stage investors (angels, pre-seed and seed-funds) invest a small amount of money in many different companies. The thinking is that early-stage venture capital is a “grand slam” home run business, with one or maybe two grand slam investments providing the returns for a fund.

Performance Fees

Typically about three weeks before the dividend is paid to shareholders of record. Bull market – Any market in which prices are advancing in an upward trend.

An exempt offering—sometimes referred to as a private offering—is commonly used to describe the offer and sale of securities that is exempt from registration under the Securities Act. Each exemption has specific requirements that a company must meet. While “equity” can refer to multiple concepts in the world of investing, in the context of capital raising, “equity” typically refers to an ownership interest in a company. For example, common stock is a form of equity interest in a corporation and membership interest is a form of equity interest in a limited liability company.

Modified Internal Rate of Return (MIRR)

Series A is the first big funding round for startups that have a product and evidence of traction. The Series A round is typically funded by VCs who seek to obtain equity. Runway refers to how long your business can sustain itself Learn the Lingo of Private Equity Investing before running out of money and is based on your income and expenses. Bootstrapping gives business owners more room to experiment with the business and product since there’s no pressure to meet the expectations of investors.

Mutual fund – Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities or money market securities. Expense ratio – Amount, expressed as a percentage of total investment that shareholders pay annually for mutual fund operating expenses and management fees. Equities – Shares issued by a company https://online-accounting.net/ which represent ownership in it. Ownership of property, usually in the form of common stocks, as distinguished from fixed-income securities such as bonds or mortgages. Stock funds may vary depending on the fund’s investment objective. Balanced fund – Mutual funds that seek both growth and income in a portfolio with a mix of common stock, preferred stock or bonds.

Series B and Beyond

LBO modelling, the private equity deal process and LBO modelling in the lower middle market. I am not going to list the entire table of contents here as you can just check it on their site,.

• Stock options are often used as long term incentive compensation for management and employees at high-growth companies.
• Refers to the depth of the legal commitment of the document.
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A “write-up” is when the carrying value of an investment is increased. “Strategy shift” occurs when a private equity fund manager strays from the fund’s stated strategy.