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Learning paths
01 · SavingsFrom reserves and deposit terms to rates, inflation and savings risk.02 · MarketsMarket participants, trading infrastructure and settlement risk.03 · StocksShareholder rights, dividends, dilution and total return.04 · BondsBond cash flows, coupons, yield, maturity and rate risk.05 · Financial statementsBalance sheets, profit and cash flow, with clear reporting boundaries.06 · Company analysisBusiness economics, working capital and earnings quality.07 · ValuationMultiples, discounting and value scenarios without false precision.08 · PortfolioPortfolio risk, diversification and rebalancing.09 · DerivativesFutures and options: obligations, leverage, margin and expiry.
Guides by topic
Savings (28)
A liquidity ladder: matching savings access with payment datesHow to assign functions to cash balances by timing without turning an example into advice about allocations or products.Amortizing debt: check the balance and payment compositionRead an educational repayment schedule, the equal-payment formula and the composition of interest expense.Annuity and contribution timing: future value, present value and payment datesHow to value equal payments, compare beginning and end-of-period contributions and understand the limits of a perpetuity model.Back-solving a savings goal: find the contribution and check the horizonHow to solve the reverse problem when the target, starting amount and available horizon are known.Bank discount and interest rate: different bases for one cash flowWhy a percentage of future par differs from return on the amount actually advanced.Budget and paper portfolio: a safe activity with an adultUse tokens and cards without real trades, personal data, loss penalties or product recommendations.Continuous compounding: the frequency limit and equivalent rateDerive the exponential model without confusing the same printed percentage with the same annual growth.Effective rate: converting periods into a comparable resultHow to distinguish a nominal rate from the result of capitalization without treating an annualized figure as a promise of return.Emergency fund: a reserve for specific disruptionsHow to describe unexpected expenses, test reserve access and build an educational replenishment plan.Future payment: how much to set aside as a single amount todayBring a personal goal to a present amount without turning a calculation rate into a promise of return.Household cash calendar: why a positive budget does not prevent a cash gapDistinguish the monthly surplus from the ability to pay bills on particular dates.Household-budget stress: fixed commitments, variable spending and resilienceTest a combination of falling income and rising mandatory expenses without presenting a scenario as a forecast.How deposit interest is actually accruedWhy 12% per year does not mean 12% for every term, and how to check a simple calendar-day scenario.How to compare deposit terms, not advertised ratesA terms card, comparable cash flows and an early-exit scenario instead of a ranking of current offers.Inflation and real return: measuring purchasing powerHow to compare the growth of an amount with rising prices and avoid treating nominal income as increased purchasing power.Irregular income: separate monthly revenue from the amount available for livingBuild a smoothing cash plan without assuming that average income arrives every month.Partial periods: days, changing rates and early exitHow to split a term into intervals and distinguish mathematical daily income from the contractual result at closure.Rates change: build scenarios instead of extending today’s number foreverCheck accumulation under different rates by period and separate known terms from assumptions about the future.Read a financial contract as a map of payments and obligationsSeparate parties, package components, promised amounts, contingent payments and exit rules.Reconciling percentages to the kopeck: precision, rounding and annualizationFind the source of a difference between two calculations without calling every kopeck a bank error.Regular withdrawals: how long capital lasts and what preserving it meansDistinguish spending principal, nominal preservation and preservation of purchasing power.Savings risks: safety, access and purchasing powerHow to map the risks of holding money and check a product’s legal status without promising complete safety.Several deposits and withdrawals: build the balance period by periodBuild a verifiable timeline and separate personal contributions from earned income.Simple and compound interest: where the accrual goesHow separate interest payments differ from adding interest to the base for the next calculation, with educational examples.Sinking fund versus emergency reserve: do not count the same money twiceHow to save for a periodic payment while keeping the reserve’s purpose transparent.The capitalization calendar: from a date to the next day’s baseHow to map accruals, payments and balance changes, and explain why equal months can produce different results.They promise high returns: check the offer before transferring moneyHow to separate warning signs, legal-entity checks and evidence of real activity.Who pays the salesperson? Examine conflicts of interest without accusationsHow compensation can change recommendations and which questions to ask before deciding.
Financial markets (64)
Accrued coupon interest: why a bond’s full price differs from its quoteHow accrued coupon interest allocates a coupon between holders, where costs arise and why accrued interest is not free profit.Amortizing bond: building cash flows from the remaining principalWhy principal repayment is not income and how a declining base changes later coupons.Bond fund and individual bond: whose term ends?Maturity of an issue is not the return of a fund-unit price; portfolio value, distributions and continuing interest-rate risk must be separated.Bond interest-rate risk: why price changes while the coupon stays the sameThe inverse relationship between price and required yield, the effect of maturity, duration limits and holding-to-maturity risks.Bonds: cash flow, obligations and non-payment riskHow to read a simple bond, distinguish par from price and check the risks around promised payments.Broker and dealer: the role in the transaction matters more than the labelAgency execution, principal trading and embedded compensation explained through the trade confirmation.Buyback: why higher earnings per share is not automatically value creationA buyback uses company cash; the smaller denominator cannot be analysed apart from changed resources.Calendar spread: different maturities do not remove riskHow to decompose a calendar futures spread into two maturities, calculate each leg and check delivery, margin and basis movement.Call and put at expiration: payoff is not profitBuyer and seller profiles including premium, contract multiplier and asymmetric potential loss.Chart patterns: from recognition to a testable ruleDefine support, breakout or a pattern before seeing the result and test every match, including failures.Common and preferred shares: compare rights, not namesTreat voting, distribution priority and residual assets as separate terms of the specific share class.Coupon and yield: why the same rate can produce a different resultThe difference between coupon rate, current yield, yield to maturity and the holder’s realized result.Credit spread: the difference in yields does not equal the probability of defaultHow to choose a comparable benchmark, count basis points andCurrency exchange and CFDs: the same chart, different rightsWhy receiving currency, settling a price difference, counterparty risk and the effect of small margin must not be collapsed into the word “forex”.Custody chain: why nominal entry does not meanOwner accounting, cumulative entry and corporate transferDefault and debt recovery: why one word does not determine the lossRecovery amount, timing and costs change the result; event probability is not loss given the event.Depositary receipts: underlying shares, ratio and additional risksHow a receipt relates to an underlying share, what determines payments, and why a convenient trading form does not remove currency or infrastructure risk.Dividend policy, resolutions and entitlement: not one promiseSeparate a profit-distribution policy, a decision for a particular period, the conditions for identifying a recipient and the actual receipt of money.Duration and convexity: how accurate is a bond’s linear estimateMeasure sensitivity to a small yield shift, calculate a second-order adjustment and understand the limits of one-rate analysis.Exchange, clearing and settlement: why concluding a trade is not the endThe path from an order to an account entry, the roles of the broker and depositary, the spread, and the difference between a trading event and a settlement event.Financial history: learn from it without fitting it to todayHow to compare historical returns while accounting for payouts, currency, institutions and markets that disappeared, without treating the past as a forecast.Floating coupon: index, spread and reset delayHow a known formula can leave the future cash payment unknown, and why a floating rate does not remove every risk.Forwards and futures: the terminal difference does not describe the whole cash pathIndividual terms, standardization, interim settlements and counterparty risk compared in two explicitly defined models.Fund net asset value and exchange price: why they are different numbersAssets minus liabilities, value per unit, creation of new units and a secondary-market premium without a list of available funds.Futures and options: obligation, right and leverage riskThe difference between futures and options, collateral and variation margin, buyer and seller loss limits, and hedging limits.Futures basis: why the futures price differs from the spot priceThe sign of the basis, carrying costs and the futures curve do not promise a future move in the underlying asset.Hedging: which risk is offset and which risk remainsMatch the underlying flow and derivative contract while identifying basis, quantity, timing and interim-liquidity risk.How to classify a market: four independent questionsPrimary issuance, resale, funding term and execution term are different axes, not mutually exclusive labels.How to read a financial chart without the illusion of a forecastScales, intervals, candles, adjusted series and returns: what a chart shows and what it cannot prove.Index replication: why a fund can lag the right benchmarkFull and sampled replication, costs, tracking difference and variation in deviations, without ranking funds.Inflation-indexed bonds: what is actually linked to inflationIndexation of principal or payment, index lag and purchase price explain why a label does not promise an investor’s personal real return.Initial margin and variation margin: different monetary rolesAn open contract, mark-to-market and account funding explained without assuming that the initial deposit caps the possible loss.Intermarket and inter-commodity spreads: comparability firstHow to compare related commodities and venues, align units and leg sizes, and understand why a historical relationship can break.Issuer and identifiers: do not confuse a company with an issueA legal entity, trading code, ISIN and registration number serve different purposes; a shared brand does not prove identical rights.Leverage and price gaps: how a loss can exceed own fundsSeparate the borrowed amount, position value and residual capital after a sharp price move, without assuming guaranteed closing.Liquidity depth: why the best price is not enough for a large orderCalculate an average execution price across levels, distinguish turnover from available size and understand the limits of a static snapshot.MACD and RSI: what the indicator transforms and why a signal is not proofHow MACD, its histogram and RSI are constructed, which parameters change the result, and why an extreme value does not promise a reversal.Market and limit orders: what exactly constrains an instructionPrice, execution probability, partial results and validity period considered separately, without choosing a trading tactic.Market efficiency: what the hypothesis says about information and priceWhich information is assumed to be reflected in price, how to test the efficiency hypothesis and why it does not guarantee fair value.Markets as complex systems: feedback and the limits of forecastingHow interaction and adaptation change financial systems, and why causal models must be separated from vivid analogies.Maturity, offer and early call: different events in a bond’s lifeHow to distinguish the final maturity, a holder’s right to tender a bond and an issuer’s right to end the debt early.Momentum and reversal: descriptive effects, not entry promisesDistinguish continuation from reversal, preserve the horizon and avoid turning historical effects into trading guarantees.Moving averages: smoothing, lag and parameter choiceSMA, EMA and weighted averages on one synthetic series, with weights, lag and limits on conclusions from crossings.Netting and delivery versus payment: two different reductions of settlement riskOffsetting obligations, cash needs and conditional security delivery explained separately from market performance.New share issuance: when ownership falls but value does not necessarilyOwnership dilution, new cash received and the change in value per share must be calculated separately.Option expiry: when the right ends and the money needed to exercise itLast trading time, exercise style, settlement value and required assets cannot be replaced by one date on a screen.Option premium: intrinsic value and the price of remaining uncertaintyWhy being right about the underlying direction does not guarantee an option profit, and why time value is not a fixed percentage.Order book: why two best prices exist at the same timeHow to read bid and offer sides, absolute and relative spread, and why the last trade is not necessarily an executable price.OTC transaction: counterparty, price and settlement processWhy OTC does not automatically mean fraud or no clearing, and which questions determine other-side risk.Power-law distributions: company size, concentration and the limits of extrapolationHow to read a power-law tail and rank distribution, check scale and avoid treating a straight line on a log plot as a law.Processing spreads: feedstock, product yield and conditional marginHow crack, crush and spark describe different processing models, how to account for product yield and why a price spread is not plant net profit.Reinvestment risk: why well-known coupons do not fix the final capitalIntermediate money, single future date and unknown ratesRepo: two legs, collateral haircut and the need to provide additional resourcesWhy transferred securities and financing are linked, but a change in collateral value can create an additional cash need.Secured and subordinated debt: one “bond” label, different waterfallsWhy collateral, seniority and group position must be checked separately, and why collateral does not guarantee full recovery.Shares: an interest in a business, rights and uncertain returnsHow to distinguish shareholder rights from return expectations, read a worked result and avoid treating a dividend as a guarantee.Stock splits and reverse splits: what changes in the units of accountHow to recalculate quantity and comparable price, separate a corporate action from return and check fractional remnants.Technical analysis: hypotheses, testing and the limits of evidenceHow describing a historical series differs from forecasting, and what must be tested before calling a trading rule useful.The wisdom of the crowd: when diversity helps and imitation hindersWhen pooling scores helps, why is agreement not equal?Trading frequency: infrastructure and costs across horizonsWhich costs change with turnover, how intraday infrastructure differs from a long horizon, and how to test net results.Volatility, gaps and trading halts: three different eventsWhy a price can jump across a level, historical variability does not cap a loss and a trading pause does not insure a position.Volume and open interest: different measures of activityHow contracts traded differ from outstanding obligations, how to calculate open-interest changes and what OBV does not prove.Why a financial market is needed: capital, liquidity and risk allocationPrimary financing and secondary trading, the role of price and infrastructure, and the limits of the market’s useful functions.Yield curve: maturities, slope and a conditional forward rateHow to compare like maturities, distinguish coupon yield from spot rates and avoid treating a curve as a forecast.Zero-coupon bond: return between price and the single paymentHow a discount becomes an annual rate, why there are no interim coupons and which risks remain until maturity.
Financial statements (46)
Amortized Cost of Debt: Why Interest Expense Is Different fromTrace the movement of the balance sheet liability between receiptsBalance classification: term, purpose and availability are different questionsDistinguish maturity, liquidity and economic function so payment resources are not overstated.Balance sheet: what an organization owns and whom it owesHow to distinguish assets, liabilities and equity, read balance-sheet changes and avoid confusing value with available cash.Business segments: why overall growth can hide a weak divisionRead segment sales and results together with reconciliations, internal turnover and changes in group structure.Cash conversion cycle: how inventory, receivable and payable days connect working capitalCompare the time money is tied up without turning average ratios into a promised payment calendar.Cash-flow classification: operating, investing and financing without confusionAnalyze the economic substance of receipts and payments instead of treating total cash growth as operating efficiency.Cash-flow statement: where money came from and where it wentHow to separate operating, investing and financing flows and check the link between cash movement and the ending balance.Complex customer contract: service bundle, price allocation and variable considerationRead bundled-contract revenue through separate promises and uncertain price, not only the payment calendar.Consolidated and separate financial statements: where the business boundary liesCompare results within one perimeter and do not count intra-group turnover as external sales.Debits, credits and T-accounts: how a transaction preserves balance equalityFollow a journal, account turnovers and closing entries through one fictional workshop.Debt maturities and covenants: when moderate debt becomes urgentCompare contractual dates, headroom to limits and available repayment sources without assuming refinancing is guaranteed.Deferred tax: why tax expense does not equal cash paidDistinguish current tax, temporary differences and the conditional realisation of a deferred tax asset.Depreciation methods: time, output and useful-life revisionsCompare cost-allocation schedules under different consumption models without confusing them with tax depreciation.Earnings quality: repeatability, accruals and reconciliation of adjustmentsTest the durability of a result without automatically trusting adjusted earnings or accusing a company on one signal.Equity method and cross-holdings: do not count income twiceDistinguish control from significant influence, reconcile the investment balance and separate an investor’s own business from interests in other companies.Equity roll-forward and comprehensive income: why profit does not explain the whole resultBuild an equity bridge through profit, owner transactions and other comprehensive income.Expenses by nature and function: how cost structure changes the reading of profitCompare expenses and operating leverage without double counting and without assuming that every cost moves with sales.Financial ratio map: each question needs its own denominatorDistinguish liquidity, turnover, profitability, debt and market price without combining them into a universal assessment.Financial statement adjustments: correction, estimate or analytical measureHow to distinguish accounting changes from additional measures and test the rationale for each adjustment.Fixed assets: capital expenditure, maintenance and movements in carrying amountHow to connect the purchase and use of fixed assets with expenses, cash investment and carrying amount.Goodwill after an acquisition: what remains above identifiable assetsSeparate the acquisition price from later operating performance and do not treat goodwill as a cash reserve.Horizontal and vertical analysis: do not mistake a change of scale for improvementAlign periods and bases, read percentages with absolute changes and flag incomparable data.How to read financial statements: a beginner’s routeWhich questions to ask of the balance sheet, income statement and cash flows, and how to connect the answers.Impairment: why depreciation is not enough to test an asset’s valueSeparate planned allocation of cost from recoverability testing and read cash-generating-unit tests without false precision.Income statement: from revenue to the period resultHow to read profit levels, distinguish expenses from payments and analyse changes without inventing universal norms.Indirect method: how profit becomes operating cash flowCheck the signs of working-capital changes and do not explain the entire cash flow with depreciation alone.Intangible assets: value without physical formWhy a useful idea does not always become an accounting asset, and how to read recognition, amortisation and valuation limits.Inventory and depreciation: when a purchase becomes an expenseHow goods held for sale differ from equipment in use, and how both affect results and cash.Inventory: costing and write-down answer different questionsDo not confuse allocating purchase cost with checking whether the remaining cost can be recovered through sale.Lease reporting: right of use, debt and comparabilityWhy lease recognition changes the structure of assets, liabilities and expenses without cancelling contractual payments.Leverage and payment coverage: an earnings ratio versus cash burdenDistinguish debt structure, interest coverage and the ability to meet the entire calendar of obligations.Linking the three statements: one transaction in different dimensionsBuild a checkable bridge between the balance sheet, profit and cash movement without replacing one statement with another.Liquidity under stress: why the current ratio is not enoughMove from a static balance sheet to a time-based scenario of available cash and mandatory payments.Materiality, accrual and going concern: three different reading filtersDo not confuse the size of an error, the recognition period and the assumption that operations continue.Notes and the audit opinion: read what does not fit in the headline lineFind the limits of reported figures in the notes and understand what an audit opinion does not promise an investor.Policy, estimate and error: preserve comparability after figures changeHow to classify a revision and avoid attributing business growth to a change in the accounting basis.Profit margin: separate price, volume, mix and costsHow to explain a change in profit margin through economic drivers rather than confusing revenue growth with improved efficiency.Provisions and contingent obligations: uncertainty does not mean there is no debtHow to distinguish a recognised obligation, a disclosed risk and an analyst’s own scenario.Receivables: ageing, expected credit losses and sales qualityHow to separate gross claims, expected credit-loss estimates and actual collection of receivables.Related parties: separating ordinary transactions from dependence on the resultHow to read turnover and balances with related parties without assuming that every such transaction is unlawful or arm’s length.Research and development: when costs become an asset and how this affects profitHow to assess development capitalisation without confusing accounting recognition with a project’s economic success.Revenue recognition: when a sale becomes a resultHow to distinguish payment from contract performance and ask when and how much revenue should be recognized.ROE and the DuPont decomposition: high return on equity does not always mean a strong businessSeparate margin, turnover and financing structure while keeping profit and equity on a consistent base.ROIC and additional capital: average returns do not promise returns on growthAlign operating profit and invested capital, then test the return on new investment separately.Why profit is not the same as cashHow sales on credit, advance payments and depreciation separate operating results from the cash balance.Working capital: why resources are not yet cashHow to read the difference between current assets and current liabilities and test its composition and timing.
Valuation and company analysis (33)
Allocating capital and teams across segmentsIndivisible projects, a limited budget, management capacity and comparison of incremental value rather than revenue.Business model: what the customer pays for and where cash flow arisesWhy “the company operates in a growing market” does not by itself explain the business model.Capital allocation: compare projects, debt and distributions on one basisManagement uses money through more than dividends; compare alternatives with consistent dates, cash flows and risk.Competition and cooperation: how others’ decisions change the resultHow to build a payoff matrix, distinguish one-off competition from repeated interaction and avoid turning a model equilibrium into a company forecast.Competitive cycle: why record profit can mean an expensive businessWhen high profit attracts new capacity, today’s success can create tomorrow’s price pressure.Corporate governance: who decides, who executes and who checksSeparate owner rights, board oversight and management work, and analyse delegation without abandoning control.DCF sensitivity and scenarios: do not confuse a table slope with outcome probabilityA sensitivity table answers how a result changes when a parameter changes.Discount rate consistency: align currency, inflation, risk and timeA discount rate is not a decorative cell selected to produce a desired answer.Discounted cash flows: a model with explicit assumptionsAn educational calculation of present value, terminal value and sensitivity without forecasting a real company.Dividends and total return: do not count the payment apart from priceHow to include price change, payments, expenses and reinvestment over a comparable period.Economic advantage: how to support its strength and durationThe word “brand” does not prove an economic advantage.EV/EBITDA, leases and replacement equipment: where necessary costs disappearEV/EBITDA simplifies comparison but does not remove the business’s need for premises, equipment and working resources.FCFF versus FCFE: identify the cash-flow recipient before choosing the discount rateDistinguish free cash flow to the firm from free cash flow to equity and keep the recipient, financing and discount rate aligned.From EV to shareholders: debt, available cash and non-controlling interestsValuing the operating business is not the same as valuing the parent company’s shares.Fundamental analysis: test the business story with numbersA working sequence for reading a business and its reports while separating observations, assumptions and unknowns.Gordon model: which dividends and growth belong in the formulaDerive D1/(ke−g), test payout sustainability and identify the limits of dividend valuation.Growth and value: two languages of expectations, not two lists of winnersHow to connect development rate with price, investment quality and profit durability without choosing an investment style for the reader.Insurance float: funding with future obligationsHow premiums received before future claims create insurance funding, why float is not profit and how to consider its cost and liquidity.Investor relations: read disclosure, not the presentation storyMove from an investor presentation to primary disclosure, reconcile KPIs and separate management intentions from achieved results.Management and incentives: what the system rewardsCompare compensation metrics, share ownership and resource allocation without the myth of one ideal manager.Margin of safety: a discount does not insure against model errorWhy the gap between estimated value and price is conditional on the model, not a universal safe-buying percentage.Market capitalization and multiples: compare the right quantitiesHow to distinguish equity value from business value, choose a ratio denominator and test the limits of the comparison.Negative P/E: why loss-making companies cannot be ranked on the usual scaleNegative P/E is the quotient of a positive price and negative earnings per share; the familiar “lower is cheaper” rule loses meaning.P/B: why book cheapness means different things for a bank and a manufacturerHow the price-to-book ratio links market equity value with accounting equity, and why sector, asset quality and future returns matter.P/S and EV/Sales: revenue is shared, residual rights differWhy equal sales do not make companies equally cheap: debt, margin and capital needs.Peer comparison: comparability first, median secondHow to build a fair comparison group and detect differences in dates, earnings, debt and business structure.Reverse valuation: what growth and margin are already priced inHow to invert a valuation model and distinguish a price’s conditional requirements from a single market forecast.ROIC versus WACC: growth creates value only with sufficient returnCompare operating return with the required return on capital, while separating mature assets from incremental investment.Terminal value: perpetual growth and exit multiple answer different questionsWhy the end of a detailed forecast is not the end of a business, and how to keep continuation assumptions visible.Trailing, forward and normalized EPS: three different P/E basesWhy two services can show different P/E ratios at the same price because they divide by different earnings measures.Unit economics: a profitable order does not yet mean a profitable customerUnit economics examines revenue and costs for a chosen business unit.Valuation range: how to communicate uncertainty without inventing a confidence intervalPrice is an observable exchange condition at a particular time and size; value is a model conclusion under stated assumptions.Value per customer or megawatt: checking an industry denominatorHow to use valuation units without treating registration as a customer or capacity as cash flow.
Portfolio (25)
Backtest overfitting: how many attempts hide behind one beautiful curveA beautiful historical curve may be the winner of thousands of random variants.Correlation and covariance: why the result depends on the scale and window of the dataCorrelation describes the linear joint movement of two seriesCurrency prices, cash flows and country of riskOne fictitious company: revenue and debt currencies, quoteDiversification: look for independent causes, not just namesHow to find hidden concentration and understand the limits of spreading risk through fictional examples.Expected value in decisions: probability and outcome sizeAccount for probability and outcome size, test decision robustness and avoid confusing positive expectation with acceptable risk.Factor exposure: explaining returns is not promising a risk premiumA factor model describes joint return movements through selected risk sources or statistical characteristics.Fat tails: why rare losses cannot be removed by an averageWhy standard deviation does not describe all risk and how to build a rare-loss scenario without inventing a precise probability.Financial records: prepare the data without guessing the taxKeep a transaction journal and supporting documents while separating financial arithmetic from jurisdiction-specific tax conclusions.Forecast calibration: assess probability, not confident toneHow to record testable probabilistic forecasts, calculate the Brier score and distinguish calibration from informativeness.Housing: the service of living, credit and comparison with rentingModel a mortgage, repairs, utility, concentration and liquidity without choosing housing for the reader.Index and active approaches: compare implementation cost and purpose, not labelsAn index approach seeks to reproduce a chosen benchmark; an active approach departs from it for its own purpose.Martingale and position increases: why a loss need not recoverHow doubling after a loss differs from planned contributions, and why lowering average price does not remove capital risk.Mean reversion and extrapolation: test the mechanism, not the shape of the seriesDistinguish statistical regression to the mean, an economic recovery mechanism and an irreversible regime change.Portfolio objectives and liabilities: build the spending calendar before choosing asset riskHow to evaluate a portfolio against future payments, dates, currencies, access and funding gaps rather than return alone.Portfolio risk: losses, horizons and co-movementHow to separate price fluctuation from unacceptable consequences and read educational stress scenarios without turning them into personal advice.Position sizing: measure the contribution of error, not confidence in the storyPosition size translates the error of analysing one asset into consequences for the whole portfolio.Purchase price as an anchor: test the thesis instead of defending the old decisionWhy an entry price can distort analysis through anchoring, loss aversion and confirmation seeking.Rebalancing and behaviour: restore the rule, not a market guessHow to distinguish restoring an educational structure from changing the objective, compare methods and account for costs.Returns with contributions: money-weighted and time-weighted resultsWhy two correct percentages for one account can answer different questions.Sequence of returns: why equal percentages leave different balances with withdrawalsAverage return does not fully describe the outcome of a portfolio with regular withdrawals.Survivors and future knowledge: two errors that quietly improve a backtestA historical test can be mathematically correct and still describe an impossible strategy.The cost of rebalancing: turnover, spread and expenses matter more than elegant frequencyRebalancing restores a rule, but every transaction has a price.Verifying a financial source: date, scope and reproducibilityHow to build a financial-evidence card, check dates and scope and explain a mismatch between two published figures.Volatility and drawdown: identical changes can produce different loss pathsVolatility measures return dispersion; drawdown measures the fall from a previous peak along a chosen path.When IRR misleads: multiple roots, no solution and the wrong scaleTreat internal rate of return as an equation solution, not a universal measure of attractiveness.
Glossary alphabetically
A (13)
Accounts payableA company’s obligations to settle with suppliers and other creditors.Accounts payable turnoverThe relationship between purchases and the average trade debt owed to suppliers.Accounts receivableAmounts and claims that other parties are required to settle in the company’s favor.Accounts receivable turnoverA measure relating credit sales to the average amount owed by customers.Accrual basisRecognizes economic events when the applicable recognition requirements are met, not simply when cash moves.Accrued coupon income — ACIThe portion of a coupon accrued between payment dates and accounted for under the terms of the particular transaction.Annual interest rateThe rate expressed on a yearly basis; actual income depends on term, day count and accrual rules.Annuity as a payment sequenceEqual-amount payments at equal intervals in a specified financial model.Annuity dueA sequence of equal payments made at the beginning of each equal period.Ask priceThe price at which a participant offers to sell an instrument in the order book under review.Asset allocationChoosing the shares of asset classes and sources of risk in a portfolio in line with its objective and constraints.Asset turnoverRevenue for a period divided by the average carrying amount of assets.AssetsResources controlled by a company and used to obtain economic benefits.
B (10)
Backtest overfittingFitting a strategy to features of historical data so that past success transfers poorly to new observations.Balance sheetA report of recognized assets, liabilities and equity at a specific date.BCG matrixA framework using four quadrants of growth and relative market share, with limits on its application.Bid priceThe price at which a participant offers to buy an instrument in the order book under consideration.Bid–ask spreadThe difference between the best displayed offer to sell and the best displayed offer to buy in a selected snapshot.BondA debt security with payment terms defined by the issue documents.Bond convexityA measure of the curvature of the price–yield relationship under a selected cash-flow model.Bond couponAn interest payment on a bond whose amount and payment procedure are set by the issue terms.Bond redemptionPerformance of the issue terms requiring the issuer to return the face amount or part of it.Brier scoreThe mean squared difference between the stated probability of a binary event and its actual outcome.
C (16)
Carryover inventoryThe meaning of “carryover inventory,” an editorial example and its limits of application.Cash conversion cycleAn analytical estimate of how long cash remains tied up in inventory and receivables after supplier payment terms are considered.Cash flowCash receipts and payments during a period; net cash flow is the difference between them.Cash-generating unitA group of assets with independent cash inflows, used in certain impairment tests.ClearingDetermining participants’ obligations after trades and preparing their execution, including netting where provided for.Collateral haircutThe difference between the valuation of posted collateral and the amount of funding supported by it, expressed on a specified basis.Compound annual growth rate (CAGR)A constant calculated annual rate linking an indicator’s starting and ending values.Conflict of interest when selling a financial serviceA difference between the incentives of a client and the person explaining or selling a product.Consolidated financial statementsPresenting a parent organization and its subsidiaries as a single economic entity.Contingent liabilityA possible or certain unrecognized liability for which disclosure and uncertain events matter.Counterparty riskThe risk that the other party to a transaction will not perform its obligations under the specified terms.CovenantA contractual condition that limits a borrower’s metrics or actions.Credit spreadThe difference between the yield of a debt instrument and a selected comparable benchmark.Current bond yieldAnnual coupon income relative to a selected market price of the bond.Current ratioThe ratio of current assets to current liabilities in a common analytical formula.Cycle inventoryInventory that covers ordinary consumption between successive deliveries in a selected supply model.
D (11)
Debt amortizationThe gradual repayment of an obligation’s principal through a sequence of payments.DefaultFailure to perform an obligation on the terms set by a contract or offering documents.Deferred taxTax consequences of temporary differences and certain unused tax amounts, distinct from the current tax payment.Deposit termThe contractual period for which money is placed. Exact calendar dates can matter more than a rounded number of months.Depreciation and amortizationThe systematic allocation of an asset’s depreciable amount over its useful life.Derivative financial instrumentA contract whose value or payments depend on an underlying asset, indicator or event.Discounted cash flow valuation (DCF)A valuation model based on expected future cash flows brought back to the present.DiscountingBringing future cash amounts to a common point in time using a selected rate.DiversificationDistributing investments across different sources of risk to reduce dependence on individual adverse events.DividendA distribution of company funds to shareholders under a corporate decision and the terms of the relevant share rights.DurationA measure of a bond’s cash-flow timing and sensitivity to yield changes; the type of duration must be specified.
E (14)
Earnings per share (EPS)Profit attributable to ordinary shareholders, calculated per weighted-average number of shares.EBIT — earnings before interest and taxesAn analytical measure of profit before interest expense and income tax.EBITDA — earnings before interest, taxes and depreciation and amortizationAn analytical profit measure before interest, income tax and depreciation and amortization; it is not the same as cash flow.Economic order quantityThe EOQ model, its formula, an example and the conditions under which the optimum no longer applies.Effective annual rateThe annual result of a specified capitalization model; it is not automatically the same as a product’s total cost or a regulatory indicator.Emergency fundAccessible reserves for unexpected expenses and temporary income reductions.Enterprise value (EV)An analytical valuation of a business for different capital providers, not only shareholders.EquityThe residual interest in a company’s recognized assets after deducting its liabilities.Equity dilutionA reduction in an owner’s share or in earnings per share when the number of shares or potential shares increases.Equity risk premiumA model-based or observed return increment relative to a selected base rate; the method must be specified.EV/EBITDA: enterprise value relative to EBITDAThe ratio of analytical enterprise value to EBITDA for a comparable period.ExchangeAn organized venue that sets rules for admitting instruments and conducting trading.Expected valueThe average result in a probabilistic model, calculated by weighting outcomes by their probabilities.Exponential moving averageA recursively smoothed series in which the influence of past observations gradually declines.
F (7)
Financial riskUncertainty of an outcome, including loss or failure to reach a financial goal.Floating couponAn interest payment determined by a formula with a changing reference value on specified dates and under specified rules.Forecast calibrationThe correspondence between stated probabilities and observed event frequencies in a comparable series of forecasts.Free cash flow to equity (FCFE)Analytical cash flow available to equity holders after reinvestment and corresponding debt-financing transactions.Free cash flow to the firm (FCFF)Operating-business cash flow after necessary reinvestment and before distribution between debt and equity capital.Future valueThe amount on a selected future date when cash flows and accumulation factors are explicitly specified.Futures contractA standardized contract for future delivery or settlement under specified terms.
G (3)
Going concernThe assumption used in preparing financial statements, distinct from a promise of future return or an absence of risk.GoodwillThe residual amount in a business combination, distinct from a separately recognized brand.Gross profitThe difference between revenue and the corresponding cost of sales under the selected presentation.
H (1)
I (21)
Illiquid inventoryAn educational definition of illiquid inventory, with an editorial example and application limits.Impairment of an assetThe excess of carrying amount over recoverable amount under the applicable standard.Income-smoothing bufferA reserve used to cover weaker periods when income is irregular; it is a planning function, not a banking product.InflationA sustained increase in the general price level that reduces the purchasing power of money.Insurance floatFunds held by an insurer until related insurance obligations are performed and potentially available to finance investments.Intangible assetsIdentifiable non-monetary resources without physical substance that meet the conditions for recognition in accounting.Interest capitalizationAdding accrued interest to the amount on which later interest is calculated. The contract determines dates and frequency.Interest coverage ratioThe ratio of a selected profit measure to interest expense for one period.Interest-rate riskThe risk that a financial instrument’s value or cash flows change when market rates change.Internal rate of return (IRR)The discount rate at which the net present value of specified cash flows equals zero.InventoryMaterials, work in progress and goods intended for sale or use in production.Inventory costing by the cost of each purchased unitDefinition of inventory costing by the cost of each purchased unit, with an editorial example and limits of application.Inventory holding costsDefinition of inventory holding costs, with an editorial example and limits of application.Inventory in transitDefinition of “inventory in transit,” an editorial example and the boundaries of its application.Inventory turnoverThe ratio of cost of sales to average inventory for a comparable period.Inventory valuation methodsMethods for allocating inventory cost between period expenses and goods remaining in inventory.Investment horizonThe time until funds are needed for a specific financial goal.Investment portfolioA group of assets and positions considered as one whole for a defined financial goal.Investor behavioral biasesRecurring decision patterns connected with emotions and the way information is perceived.ISIN: international securities identification numberAn international identifier for a financial instrument, used to distinguish it unambiguously.IssuerAn organization or other authorized party that issues securities and assumes the related obligations.
L (8)
LeverageAn increase in market exposure relative to one’s own funds that magnifies possible gains and losses.LiabilitiesExisting obligations of a company to transfer economic resources to other parties.LIFO methodA definition of the LIFO method, an editorial example and limits of application.Limit orderAn order with a price boundary: buy at no more than, or sell at no less than, the specified level.LiquidityThe ability to sell an asset or meet cash obligations on time without unacceptable loss.Liquidity ladderOrganizes resources by when and under what conditions they can fund an expense; it does not guarantee profit or safety.Liquidity ratiosA definition of liquidity ratios, an editorial example and limits of application.Look-ahead biasUsing information in a historical decision before that information was published or available on the relevant date.
M (12)
Maintenance capital expenditureAn analytical estimate of investment needed to preserve a business’s existing ability to operate.Mandatory expenses in a personal planExpenses that cannot be refused or postponed without consequences; mandatory does not mean constant in amount.Market capitalizationThe market value of issued shares, calculated using the price and the corresponding number of shares.Market orderAn instruction to execute against available offers without fixing the exact final price.Material-resource requirement for consumptionDefinition of the material quantity needed to carry out a specified activity program over a defined period, with an editorial example and application limits.Material-resource requirement for incoming deliveriesDefinition of the external replenishment needed after available inventory and other sources covering consumption are taken into account, with an editorial example and application limits.Materiality of informationThe effect of omitting, misstating or concealing information on the decisions of financial-statement users.Maximum historical drawdownThe deepest decline from a preceding peak within a selected window and at a selected observation frequency.Mean reversionThe tendency for a repeat measurement of observations selected for being extreme to be less extreme when a random component is present.Merchandise inventoryGoods acquired or held for sale in the ordinary course of business when this management classification is used.Modified internal rate of returnAn educational definition of the modified internal rate of return, with an editorial example and application limits.Money-weighted return — MWRA return measure that reflects the size and timing of the owner’s external contributions and withdrawals.
N (10)
Nash equilibriumA set of actions in which no participant benefits from changing their own action alone, given the actions of the others.Net asset value (NAV)The value of assets less liabilities; a per-unit figure requires division by the corresponding number of units.Net debtFinancial debt less the cash resources included under the selected methodology.Net incomeA company’s financial result after recognized income, expenses and income tax.Net operating profit after tax (NOPAT)An analytical operating profit after a notional tax, excluding the effect of the chosen financing structure.Net present value (NPV)The sum of a project’s discounted cash flows, including initial and subsequent investments.Net working capitalThe difference between current assets and current liabilities.Non-controlling interestThe share of outside owners in a subsidiary consolidated by the controlling company.Normalized earnings per share (normalized EPS)An analytical EPS estimate on a recurring or otherwise explicitly defined basis, rather than a separate published fact.Notes to the financial statementsExplanations that disclose the composition, measurement methods and uncertainty of reported amounts.
O (9)
Open interestThe number of existing unsettled contracts at a given time, counted on one side of the obligation.Operating profitAn intermediate performance result whose definition must be checked against the presentation used.Operating segmentA business line whose information is disclosed under applicable segment-reporting requirements.OptionA contractual right to take a specified action in relation to an underlying asset on stated terms; the other party’s obligation requires separate assessment.Option premiumThe price paid to acquire an option right; it is not the same as the exercise payment or the seller’s collateral.Order bookA display of visible offers to buy and sell an instrument by price and quantity.Order fulfillment costsDefinition of order fulfillment costs, with an editorial example and limits of application.Other comprehensive incomeIncome and expenses that, under applicable standards, are not included in the profit or loss for the period.Over-the-counter market (OTC)Transactions in instruments outside a centralized exchange mechanism, on the terms of the relevant market or contract.
P (18)
P/B — price to book valueThe ratio of market capitalization to the corresponding carrying value of equity.P/E — price to earningsThe ratio of a share price to earnings per share, or of market capitalization to the corresponding earnings.Personal cash shortfallInsufficient accessible money on a payment date because income and expenses arrive at different times.Personal payment calendarA plan of available receipts and payments by date, carrying the balance forward between periods.Planned-expense fundMoney set aside in advance for an expected payment or purchase with a specified purpose.Portfolio rebalancingReturning a portfolio’s structure to preselected weights or ranges after they have changed.Portfolio turnoverA measure of transaction volume relative to portfolio value under an explicitly chosen formula.Power-law distributionA distribution whose tail over a stated range declines as a power of the threshold.Preparation inventoryInventory that covers the time needed to receive, sort, dry or otherwise prepare a resource for use.Principal amortizationRepayment of principal in installments under a specified schedule, reducing the remaining claim.Procurement and supplyThe process of providing operations with the required resources in agreed quantities, quality and time frames.Procurement planA definition of a procurement plan, an editorial example and its limits of application.Production inventoriesIn a management classification, materials and other resources prepared for use in production.Profitability index (PI)In a simple model with one initial investment, the present value of future net receipts per unit of investment.Profitability ratiosA definition of profitability ratios, an editorial example and limits of application.Project payback periodThe period over which cumulative cash inflows compensate for the initial costs in a selected model.Property, plant and equipmentTangible items used in a company’s activities for more than one reporting period.ProvisionAn obligation with an uncertain amount or timing of settlement.
Q (1)
R (12)
Real returnReturn adjusted for changes in the purchasing power of money; expenses and deductions must be considered separately.RepoLinked first and reverse legs of a transaction involving securities and cash settlement under specified terms.ReturnThe result of an investment relative to its value over a stated period and with a defined set of income and costs.Return correlationA unit-free measure of the linear co-movement of returns over a defined set of observations.Return covarianceAn estimate of the joint deviation of returns that preserves the scale of their variability.Return on assets — ROAProfit for a period relative to average asset value; the profit numerator must be specified.Return on equity — ROEProfit attributable to owners relative to the corresponding average equity.Return on invested capital (ROIC)Operating profit after a notional tax charge relative to the average capital engaged in operating activity.Return on investment — ROIThe result of an investment relative to its cost; the result and calculation period must be stated explicitly.Return on salesThe share of a selected profit measure in revenue; net and operating margins describe different results.RevenueIncome from the sale of goods and provision of services before expenses are deducted.Right-of-use assetRecognition of a lessee’s right to use the corresponding underlying asset during a lease.
S (11)
Safety stockA definition of safety stock, an editorial example and its limits of application.Savings accountA bank account whose balance earns interest under its contract; it is not automatically a fixed-term deposit.Seasonal inventoryInventory built for demand, production or supply that is uneven over time.SecurityA financial instrument establishing specified proprietary rights and related rights of its holder.Sequence risk of returnsThe dependence of a portfolio result with cash flows on the order of market changes.ShareA security representing an ownership interest in a company and the rights connected with that interest.Simple interestInterest calculated only on the original amount; previously accrued income does not increase the calculation base.Statement of cash flowsA statement explaining changes in cash through operating, investing and financing flows.Strike priceThe price specified by an option contract for exercising the corresponding right.Survivorship biasA distortion caused by studying only objects that remain instead of the original population.Sustainable competitive advantageA mechanism that allows a business to maintain an attractive return despite competition.
T (9)
Terminal valueAn estimate of the value of a business continuing or ending at the end of the detailed forecast period.TickerA short designation for an instrument in a particular trading or information system.Time-weighted return (TWR)The linked result of subperiods between external cash flows.Total cost of a deposit (Russian-specific historical term)A historical Russian indicator in the cited 2014–2024 materials; the source does not establish a current 2026 methodology.Total inventory management costsDefinition of total inventory management costs, with an editorial example and limits of application.Tracking differenceThe difference between a fund’s result and a selected index over an agreed period, with the sign and method stated explicitly.Tracking errorA measure of the variability of the difference between a fund’s periodic results and an index; the estimation method and periodicity must be specified.Trade settlementPerformance of obligations to deliver money and instruments within the prescribed time and manner.Turnover ratiosMeasures of how intensively resources are used and how quickly they are converted into sales or cash receipts.
U (1)
V (2)
W (2)
Weighted average cost of capital (WACC)An estimated required return for financing sources, taking into account their weights and the assumptions selected.Weighted-average cost method for inventoryAn inventory-costing method that allocates the cost of interchangeable items using a weighted-average price in an agreed manner.
Y (2)
Z (1)
Educational tools
Simple interest by datesFixed amount, rate and calendar without capitalization.Compound interest and contributionsSee how capitalization and contributions change savings.Real returnCompare nominal change with price changes.Percentage change and CAGRCalculate total change and annual growth.Fixed-coupon bond scenarioExplore coupons, payments and yield to maturity.Discounted cash flow (DCF)Test discount rates, growth and terminal value.Valuation multiplesCompare P/E and EV/EBITDA assumptions.