Investment Definitions

As we continue to define investment terms, we come to technology stocks and emerging markets. Each of these terms is similar in that they define a type of stock that could be important to your portfolio, but each term is also different from the other. Let's take a look at what each entails.

Technology Stocks

As we continue our Investment Definitions series, we come to a term that may be thrown about quite casually. But when you're first beginning to learn about investments, even one of the most-used terms can trip you up. For that reason, we'll cover the Rate of Return in detail.

What is the Rate of Return?

As we delve deeper into investing terms, we come across the book value per share. This ratio is listed on stock ratio sheets, and it is an important term to know. However, the book value per share is not one of the most integral ratios for investors to consider. Instead, it is often used within a company to determine the health and safety of the company, as determined on a per share basis. Even so, let’s take a look at this ratio definition.

What is Book Value per Share?

As we continue on our stock market definitions path, we come to the price-to-book ratio. Also known by the terms the price/book ratio, the price/equity ratio and the P/B ratio, this stock ratio tells you if a stock is a good deal or a company is in trouble. Want to know more? Well, let’s take a gander.

Definition, Please

One of the more important stock terms to read up on is the debt-to-equity ratio. This ratio can tell you at a quick glance the general financial practices of the company, and it is one of the ratios used most often in stock analysis. For that reason, the debt-to-equity ratio is pretty darned important, and we should spend a little time going over the details.

What Exactly is the Debt-to-Equity Ratio?

When we looked at return on invested capital a few weeks ago, we briefly touched on the weighted average cost of capital. While the brief definition helped us to define ROIC, it wasn't nearly as in-depth of a definition as this term deserves. So let's take a ride through the ins and outs of weighted average cost of capital (WACC).

WACC: The Basics

First, before we go too far, let's quickly redefine capital: capital is anything of cash value that the company owns, including cash and goods that can be sold for cash. Okay, now that that is out of the way, let's look at WACC.

As we return to our stock term definitions, we come to another integral term: Return on Invested Capital (ROIC). This term can help investors determine if a company is using its money well to churn out returns. However, the ROIC is a little deeper than this; to really grasp ROIC in its entirety, we have to define "capital" and "cost of capital." Let's look at each of these and at ROIC a little more in depth.

From the Top: Capital

When it comes to general investment terms that could make a difference to you as a stock market investor, day trading is one term that should be defined. This term very well could affect you, and it might come with a few rules and regulations. So let's take a look at day trading.

What is Day Trading?

We continue our finance definitions series with our focus on stock-related terms, and we now come to the phrase "periods of illiquidity." This term is rather simple, so we'll get a little break from our intense stock terms. Even so, the phrase is an important definition to know and keep in mind as you invest, so let's dive right into the definition!

The Basic Definition

As we continue our financial definitions series, we come to two related terms: the trade date and the settlement date. These two dates define when you purchase a stock and when you take ownership. Confusing? Well, let's take a closer look.

Trade Date