Glossary of stock portfolio terminology
Basis
Purchase price including commissions and fees
Capital gain
Net amount realized from a closing trade, calculated for a long position as the difference between the proceeds of the sale and the basis of the stock sold
Diversification
Combination within a portfolio of a number of different securities so as to minimize the risk from any single security
Financial capital
Purchasing power in the form of money available for consumption or investment; created by earning more income than the corresponding amount of consumption during a period of time
Interest rate
Price paid to a lender by a borrower of money, expressed as a percentage rate over a period of time; compensation to the lender for delaying present consumption to the future
Investment portfolio
Group of investments held by an investor
Principal
Beginning amount of an investment
Return
Income received by an investor, expressed as a percentage relative to the principal invested
Risk
Probability that expected return exceeds actual return
Tax lot
Shares of a security held in a portfolio that have the same cost basis and trade date
Turnover rate
Degree to which a mutual fund trades securities, expressed as the ratio of security sales to average assets over a year
Valuation
Economic value of a financial product, based upon its underlying assets