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A standard of reference against which the performance of a security, a portfolio, or an investment manager can be measured. Generally, indices of the broad stock and bond markets, or segments thereof, are used for this purpose.


A financial debt instrument issued to investors for a predetermined duration of time and interest rate. Investors in the bond market are typically paid a fixed interest rate (coupon) for the duration of their loan and returned their initial investment upon maturity. As such, bonds are often referred to as fixed-income securities. Bond issuers can take the form of private companies, supranational institutions, or public entities (municipal, state, or federal).

Credit Rating

A grade classification of a debtor’s creditworthiness assigned by specialized agencies, the most prominent of which include Standard & Poor’s, Moody’s, and Fitch Ratings. Credit ratings for corporations and countries are holistically determined through investigations and the analysis of several credit metrics. The resulting rating is typically some variation of a letter grade, ranging in Standard & Poor’s case from AAA (highest quality) to D (lowest quality). Higher credit ratings results in lower costs to mobilize resources from capital markets (that is, the costs they pay on bonds issued).



An evaluation of a borrower’s ability to manage current and potential debt obligations that is performed by rating agencies and lending institutions. Creditworthiness is based on several metrics that include, but are not limited to, a borrower’s credit history, assets, and liabilities.


A person or firm in the business of buying and selling securities for their own account, whether through a broker or otherwise. A dealer is defined by its role as principal in trading for its own account, as opposed to a broker who acts as an agent in executing orders on behalf of clients. 


Any financial instrument that represents ownership of private property, including but not limited to shareholder stock in a privately held company. The value of equity corresponds to the ownership value of the asset net of all associated debt.


Structured Product

Also known as a market-linked investment, generally a prepackaged investment strategy based on derivatives, such as a single security, a basket of securities, options, indices, commodities, debt issuance or foreign currencies, and to a lesser extent, swaps.


A company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body. An underwriter works closely with the issuing body to determine the offering price of the securities, buys them from the issuer, and sells them to investors via the underwriter’s distribution network.