---
type: "Learn"
title: "Investment Encyclopedia — Glossary & Concepts"
description: "Investment encyclopedia / glossary covering essential financial terms, concepts, and strategies. Each entry provides clear definitions and practical examples to help investors understand key market concepts."
locale: "en"
url: "https://longbridge.com/en/learn.md"
count: 100
datetime: "2026-07-31T03:57:57.803Z"
locales:
  - [en](https://longbridge.com/en/learn.md)
  - [zh-CN](https://longbridge.com/zh-CN/learn.md)
  - [zh-HK](https://longbridge.com/zh-HK/learn.md)
---

# Investment Encyclopedia — Glossary & Concepts

> Comprehensive financial glossary covering essential investment terms, market concepts, and trading strategies.

- [SEC Form N-1A Explained for Mutual Funds and ETFs](https://longbridge.com/en/learn/n-1a-200021.md)
  > SEC Form N-1A is the required registration form for establishing open-end management companies. The form can be used for
- [Frequency Distribution: Definition, Uses, Pitfalls](https://longbridge.com/en/learn/frequency-distribution-100812.md)
  > A frequency distribution is a representation, either in a graphical or tabular format, that displays the number of obser
- [Merton Model: Measure Corporate Default Risk Using Options](https://longbridge.com/en/learn/merton-model-100781.md)
  > The Merton model is a mathematical formula that stock analysts and commercial loan officers, among others, can use to ju
- [Annual Return: Real Annualized Performance Measure](https://longbridge.com/en/learn/annual-return-100793.md)
  > The annual return is the return that an investment provides over a period of time, expressed as a time-weighted annual p
- [Buyer's Market: Definition, Drivers, Examples and Mistakes](https://longbridge.com/en/learn/buyer-s-market-100755.md)
  > A buyer's market refers to a situation in which changes to the underlying economic conditions that shape supply and dema
- [Lintners Model: Classic Dividend Smoothing Framework](https://longbridge.com/en/learn/lintner-s-model-100731.md)
  > The Lintner model is an economic formula for determining an optimal corporate dividend policy. It was proposed in 1956 b
- [Uncovered Option Explained: Naked Option Selling and Risk](https://longbridge.com/en/learn/uncovered-option-100754.md)
  > In option trading, the term "uncovered" refers to an option that does not have an offsetting position in the underlying 
- [Allocational Efficiency: Definition and Formula](https://longbridge.com/en/learn/allocational-efficiency-100807.md)
  > Allocational efficiency, also known as allocative efficiency, is a characteristic of an efficient market where the optim
- [Eurobond Guide: Definition, Uses, Pros and Risks](https://longbridge.com/en/learn/eurobond-100802.md)
  > A Eurobond is a debt instrument that's denominated in a currency other than the home currency of the country or market i
- [Par Value Explained: Bonds, Stocks and Face Value](https://longbridge.com/en/learn/par-value-100810.md)
  > Par value, also known as nominal or original value, is the face value of a bond or the value of a stock certificate, as 
- [Zero-Based Budgeting (ZBB): Definition and Process](https://longbridge.com/en/learn/zero-based-budgeting--100734.md)
  > Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The pro
- [American Options: Definition, Pricing, Pros vs European](https://longbridge.com/en/learn/american-option-100769.md)
  > An American option, aka an American-style option, is a version of an options contract that allows holders to exercise th
- [Exculpatory Clause Meaning, Examples, Limits, Pitfalls](https://longbridge.com/en/learn/exculpatory-clause-100773.md)
  > An exculpatory clause is a contract provision that relieves one party of liability if damages are caused during the exec
- [Bull Trap: Definition, Examples, How to Avoid It](https://longbridge.com/en/learn/bull-trap-100798.md)
  > A bull trap is a false signal, referring to a declining trend in a stock, index, or other security that reverses after a
- [Adverse Selection: Asymmetric Info in Insurance Pricing](https://longbridge.com/en/learn/adverse-selection-100792.md)
  > Adverse selection refers generally to a situation in which sellers have information that buyers do not have, or vice ver
- [Itemized Deduction: Definition, Examples, How It Works](https://longbridge.com/en/learn/itemized-deduction-100777.md)
  > An itemized deduction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your taxable 
- [Poverty Trap: Definition, Causes, Examples, Misconceptions](https://longbridge.com/en/learn/poverty-trap-100811.md)
  > A poverty trap is a mechanism that makes it very difficult for people to escape poverty. A poverty trap is created when 
- [Bullish Abandoned Baby Pattern for Downtrend Reversals](https://longbridge.com/en/learn/bullish-abandoned-baby-100797.md)
  > The bullish abandoned baby is a type of candlestick pattern that is used by traders to signal a reversal of a downtrend.
- [Trade Credit: 0% B2B Financing Terms Pros and Cons](https://longbridge.com/en/learn/trade-credit-100766.md)
  > Trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods without paying cash up fro
- [Dividend Per Share DPS Guide: Definition Formula and Yield](https://longbridge.com/en/learn/dividend-per-share--100767.md)
  > Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding. The 
- [Bull Spread Strategy: Calls, Puts, Payoff and Risk](https://longbridge.com/en/learn/bull-spread-100796.md)
  > A bull spread is an optimistic options strategy designed to profit from a moderate rise in the price of a security or as
- [Current Liabilities Guide to Short Term Obligations](https://longbridge.com/en/learn/current-liabilities-100742.md)
  > Current Liabilities, also known as short-term liabilities or liquid liabilities, are obligations and debts that a compan
- [Gate Provision Explained: How Funds Limit Redemptions](https://longbridge.com/en/learn/gate-provision-100771.md)
  > A gate provision refers to a statement in a fund's offering documents that establishes the fund manager’s right to limit
- [Ponzi Scheme: Definition, How It Works, Red Flags, Examples](https://longbridge.com/en/learn/ponzi-scheme-100806.md)
  > A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. A Ponzi sche
- [Seller Financing: Owner Financing, Purchase Mortgage](https://longbridge.com/en/learn/seller-financing-100760.md)
  > Seller Financing is a real estate agreement in which the seller handles the mortgage process instead of a financial inst
- [Dollar Duration: Measure Bond Interest Rate Risk](https://longbridge.com/en/learn/dollar-duration-100770.md)
  > The dollar duration measures the dollar change in a bond's value to a change in the market interest rate. The dollar dur
- [Gross Sales: Formula, Examples and Net Sales](https://longbridge.com/en/learn/gross-sales-100762.md)
  > Gross sales is a metric for the total sales of a company, unadjusted for the costs related to generating those sales. Th
- [Anchoring in Behavioral Finance: How Anchors Affect Decisions](https://longbridge.com/en/learn/anchoring-100763.md)
  > Anchoring is a heuristic in behavioral finance that describes the subconscious use of irrelevant information, such as th
- [Reverse Takeover RTO Guide: Go Public Without an IPO](https://longbridge.com/en/learn/reverse-takeover--100791.md)
  > A reverse takeover (RTO) is a process whereby private companies can become publicly traded companies without going throu
- [Goal-Based Investing Guide: Practical GBI Explained](https://longbridge.com/en/learn/goal-based-investing-100785.md)
  > Goal-based investing is a relatively new approach to wealth management that emphasizes investing with the objective of a
- [Leading Indicator Guide: Definition and How to Use It](https://longbridge.com/en/learn/leading-indicator-100740.md)
  > A Leading Indicator is an economic variable that changes before the economy starts to follow a particular trend, providi
- [Zero-Coupon CD Explained: Discount Pricing and ROI](https://longbridge.com/en/learn/zero-coupon-certificate-of-deposit--100736.md)
  > A zero-coupon certificate of deposit (CD) is a type of CD that does not pay interest during its term. Instead, zero-coup
- [Buy to Open BTO: Open Long Calls and Puts](https://longbridge.com/en/learn/buy-to-open-100759.md)
  > "Buy to open" is a term used by brokerages to represent the establishment of a new (opening) long call or put position i
- [Moores Law Explained: Exponential Computing Growth](https://longbridge.com/en/learn/moore-s-law-100779.md)
  > Moore's Law states that the number of transistors on a microchip doubles every two years. The law claims that we can exp
- [Held Order Explained: How Pending or Frozen Orders Work](https://longbridge.com/en/learn/held-order-100748.md)
  > A held order, also known as a pending order or frozen order, is a type of trading instruction that is temporarily not ex
- [Gig Economy Guide: Definition, Examples, Pros and Cons](https://longbridge.com/en/learn/gig-economy-100732.md)
  > A gig economy is a labor market that relies heavily on temporary and part-time positions filled by independent contracto
- [Notional Value Explained: Definition, Formula, Examples](https://longbridge.com/en/learn/notional-value-100774.md)
  > Notional value is a term often used by derivatives traders to refer to the total value of the underlying asset in a cont
- [Adhesion Contract Guide: Standard-Form Deals Explained](https://longbridge.com/en/learn/adhesion-contract-100794.md)
  > An adhesion contract is an agreement that usually has non-negotiable terms and conditions. Generally, it's prepared by a
- [Zero-Day Attack Explained: Detection, Patches, Impact](https://longbridge.com/en/learn/zero-day-attack-100735.md)
  > A zero-day attack (also referred to as Day Zero) is an attack that exploits a potentially serious software security weak
- [Path Dependency Explained: How History Locks in Choices](https://longbridge.com/en/learn/path-dependency-100750.md)
  > Path dependency explains the continued use of a product or practice based on historical preference or use. A company may
- [Leadership Grid Guide: 5 Blake Mouton Leadership Styles](https://longbridge.com/en/learn/leadership-grid-100739.md)
  > The Leadership Grid is a model of behavioral leadership developed in the 1960s by Robert Blake and Jane Mouton. Previous
- [Greenwashing: How to Spot Misleading Green Marketing](https://longbridge.com/en/learn/greenwashing-100751.md)
  > Greenwashing is the process of conveying a false impression or misleading information about how a company’s products are
- [Quant Fund Guide: Models, Strategies, Pros and Cons](https://longbridge.com/en/learn/quant-fund-100726.md)
  > A quant fund is an investment fund whose securities are chosen based on numerical data compiled through quantitative ana
- [Aleatory Contract: Definition, Examples, Pros and Cons](https://longbridge.com/en/learn/aleatory-contract-100803.md)
  > An aleatory contract is an agreement whereby the parties involved do not have to perform a particular action until a spe
- [Current Assets Guide: Definition, Formula, Examples](https://longbridge.com/en/learn/current-assets-100743.md)
  > Current Assets, also known as short-term assets or liquid assets, are assets that a company expects to convert into cash
- [Zero Lot Line House Guide: Pros, Cons, Zoning Rules](https://longbridge.com/en/learn/zero-lot-line-house-100738.md)
  > A Zero-Lot-Line House is a type of residential building where one or more sides of the structure are built directly on t
- [Joint Supply Explained: Definition, Examples, Mistakes](https://longbridge.com/en/learn/joint-supply-100723.md)
  > Joint supply is an economic term referring to a product or process that can yield two or more outputs. Common examples o
- [Overwriting Strategy: Sell Overpriced Options for Income](https://longbridge.com/en/learn/overwriting-100756.md)
  > Overwriting is a trading strategy that involves selling options that are believed to be overpriced, with the assumption 
- [Bid-Ask Spread: Definition, Formula, Examples, Pitfalls](https://longbridge.com/en/learn/bid-ask-spread-100758.md)
  > A bid-ask spread is the amount by which the ask price exceeds the bid price for an asset in the market. The bid-ask spre
- [Lemons Problem Explained: Asymmetric Information in Markets](https://longbridge.com/en/learn/lemons-problem-100795.md)
  > The lemons problem refers to issues that arise regarding the value of an investment or product due to asymmetric informa
- [Express Warranty: Coverage, Examples and Buyer Rights](https://longbridge.com/en/learn/express-warranty-100776.md)
  > An express warranty is an agreement by a seller to provide repairs or a replacement for a faulty product, component, or 
- [Eurocurrency Market: Definition, Uses, Pros and Cons](https://longbridge.com/en/learn/eurocurrency-market-100801.md)
  > The eurocurrency market is the money market for currency outside of the country where it is legal tender. The eurocurren
- [Quantitative Trading Explained: Strategies, Models and Risks](https://longbridge.com/en/learn/quantitative-trading-100727.md)
  > Quantitative trading consists of trading strategies based on quantitative analysis, which rely on mathematical computati
- [United States Treasury UST: Definition, Debt and Yields](https://longbridge.com/en/learn/united-states-treasury--100768.md)
  > UST is the abbreviation for the United States Treasury, the federal government division that manages U.S. finances. UST 
- [Target Markets: Definition, Examples, Pros and Mistakes](https://longbridge.com/en/learn/target-markets-100783.md)
  > A target market is a group of people that have been identified as the most likely potential customers for a product beca
- [Quantitative Easing (QE): Definition, Pros and Cons](https://longbridge.com/en/learn/quantitative-easing-100728.md)
  > Quantitative easing (QE) is a form of monetary policy in which a central bank, like the U.S. Federal Reserve, purchases 
- [Buy To Cover: Definition, Mechanics, Examples and Pitfalls](https://longbridge.com/en/learn/buy-to-cover-100757.md)
  > Buy to cover refers to a buy order made on a stock or other listed security to close out an existing short position. A s
- [Zero Coupon Bond Guide: Pricing, YTM, Risks, Use Cases](https://longbridge.com/en/learn/zero-coupon-bond-100737.md)
  > A zero-coupon bond, also known as an accrual bond, is a debt security that does not pay interest but instead trades at a
- [Management by Objectives MBO: Definition Pros and Cons](https://longbridge.com/en/learn/management-by-objectives--100782.md)
  > Management by objectives (MBO) is a strategic management model that aims to improve the performance of an organization b
- [Backwardation Explained: Spot Prices vs Futures](https://longbridge.com/en/learn/backwardation-100790.md)
  > Backwardation is when the current price, or spot price, of an underlying asset is higher than prices trading in the futu
- [Plowback Ratio Retention Ratio Formula Meaning and Examples](https://longbridge.com/en/learn/plowback-ratio-100745.md)
  > The retention ratio, also known as the plowback ratio or retained earnings ratio, is the proportion of net income that i
- [Freemium Model: How Free to Paid Works with Examples](https://longbridge.com/en/learn/freemium-100772.md)
  > A combination of the words "free" and "premium," freemium is a type of business model that offers basic features of a pr
- [Six Sigma Guide: DMAIC Process, Pros, Cons, Use Cases](https://longbridge.com/en/learn/six-sigma-100749.md)
  > Six Sigma is a methodology for process improvement developed by a scientist at Motorola in the 1980s. Six Sigma practiti
- [Nominal Interest Rate (NIR): Definition, Formula, Examples](https://longbridge.com/en/learn/nominal-interest-rate-100775.md)
  > Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can also refer to the ad
- [Ethical Investing: Values for Smarter Portfolios](https://longbridge.com/en/learn/ethical-investing-100753.md)
  > Ethical investing refers to the practice of using one’s ethical principles as the primary filter for the selection of se
- [Joint Account Guide: Definition, Pros and Cons, Rules](https://longbridge.com/en/learn/joint-account-100725.md)
  > A joint account is a bank or brokerage account shared between two or more individuals. Joint accounts are most likely to
- [Trade Finance: How It Works, Key Instruments, Pros and Cons](https://longbridge.com/en/learn/trade-finance-100765.md)
  > Trade finance represents the financial instruments and products that are used by companies to facilitate international t
- [Energy Sector Guide: Definition, Industries, Examples, Risks](https://longbridge.com/en/learn/energy-sector-100789.md)
  > The energy sector is a category of stocks that relate to producing or supplying energy. The energy sector or industry in
- [Derived Demand: Definition, Examples, Pricing Impact](https://longbridge.com/en/learn/derived-demand-100804.md)
  > Derived demand, in economics, is the demand for a good or service that results from the demand for a different, or relat
- [Retained Earnings: Definition, Formula, Balance Sheet](https://longbridge.com/en/learn/retained-earnings-100747.md)
  > Retained earnings, also known as undistributed profits, retained surplus, or accumulated earnings, are the portion of a 
- [Wholesale Energy Guide: Trading, Pricing, Market Structure](https://longbridge.com/en/learn/wholesale-energy-100809.md)
  > Wholesale energy is a term referring to the bulk purchase and sale of energy products—primarily electricity, but also st
- [Inferior Goods Definition Examples and Misconceptions](https://longbridge.com/en/learn/inferior-goods-100730.md)
  > An inferior good is an economic term that describes a good whose demand drops when people's incomes rise. These goods fa
- [Wholesale Trade: What It Measures and Why It Matters](https://longbridge.com/en/learn/wholesale-trade-100808.md)
  > Wholesale trade is an economic indicator that measures the value in U.S. dollars of all merchant wholesalers' sales and 
- [Greenshoe Option: IPO Over-Allotment Tool for Underwriters](https://longbridge.com/en/learn/greenshoe-option-100752.md)
  > A greenshoe option is an over-allotment option. In the context of an initial public offering (IPO), it is a provision in
- [European Option: Expiration-Only Exercise Pros and Cons](https://longbridge.com/en/learn/european-option-100800.md)
  > A European option is a version of an options contract that limits execution to its expiration date. In other words, if t
- [Hard-To-Borrow List: Definition, Uses, Risks, Comparisons](https://longbridge.com/en/learn/hard-to-borrow-list-100787.md)
  > A hard-to-borrow list is an inventory record used by brokerages to indicate what stocks are difficult to borrow for shor
- [Nash Equilibrium: Definition, Examples, Finance Uses](https://longbridge.com/en/learn/nash-equilibrium-100786.md)
  > Nash equilibrium is a concept in game theory where the optimal outcome is when there is no incentive for players to devi
- [Quantum Computing Explained: Qubits, Interference, Use Cases](https://longbridge.com/en/learn/quantum-computing-100729.md)
  > Quantum computing is an area of computer science that uses the principles of quantum theory. Quantum theory explains the
- [Joint Bond Guide: Definition, Risks, Returns, Examples](https://longbridge.com/en/learn/joint-bond-100724.md)
  > A joint bond is sold with a guarantee of the payment of principal and interest by at least two parties. In the case of d
- [Witching Hour Explained: Expiration Volatility and Volume](https://longbridge.com/en/learn/witching-hour-100780.md)
  > The witching hour is the last hour of trading on the third Friday of each month when options and futures on stocks and s
- [Goal Seeking Back-Solve the Right Input for a Target Result](https://longbridge.com/en/learn/goal-seeking-100784.md)
  > Goal seeking is the process of finding the correct input value when only the output is known. The function of goal seeki
- [Retention Ratio Meaning and Formula for Investors](https://longbridge.com/en/learn/retention-ratio-100746.md)
  > The retention ratio, also known as the plowback ratio or retained earnings ratio, is the proportion of net income that i
- [Joint Probability: Definition, Formula, Examples, Pitfalls](https://longbridge.com/en/learn/joint-probability-100722.md)
  > The term joint probability refers to a statistical measure that calculates the likelihood of two events occurring togeth
- [Current Ratio: Definition, Formula, Benchmarks, Myths](https://longbridge.com/en/learn/current-ratio-100741.md)
  > The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due with
- [Zero-Sum Game Definition and Examples in Options Futures](https://longbridge.com/en/learn/zero-sum-game-100733.md)
  > Zero-sum is a situation, often cited in game theory, in which one person’s gain is equivalent to another’s loss, so the 
- [Gross Yield Definition Formula Examples Common Pitfalls](https://longbridge.com/en/learn/gross-yield-100761.md)
  > The gross yield of an investment is its profit before taxes and expenses are deducted. Gross yield is expressed in perce
- [Appropriation Account: Meaning, Uses, Examples and Mistakes](https://longbridge.com/en/learn/appropriation-account-100799.md)
  > Appropriation is the act of setting aside money for a specific purpose. In accounting, it refers to a breakdown of how a
- [Float and Free Float Explained Definition Formula Uses](https://longbridge.com/en/learn/float-100744.md)
  > Float, also known as free float or public float, refers to the number of a company's shares that are available for tradi
- [Balance of Trade (BOT): Definition, Formula, Examples](https://longbridge.com/en/learn/balance-of-trade-100764.md)
  > Balance of trade (BOT) is the difference between the value of a country's exports and the value of a country's imports f
- [In-House Financing: Definition, Examples, Pros, Pitfalls](https://longbridge.com/en/learn/in-house-financing-100788.md)
  > The term in-house financing refers to financing that is provided directly to consumers by retailers or other firms. It a
- [Model Risk: Why Financial Models Fail and How to Manage](https://longbridge.com/en/learn/model-risk-100778.md)
  > Model risk is a type of risk that occurs when a financial model is used to measure quantitative information such as a fi
- [Payout Ratio: Definition, Formula, Dividend Safety](https://longbridge.com/en/learn/payout-ratio-100805.md)
  > The payout ratio is a financial metric showing the proportion of earnings a company pays its shareholders in the form of
- [General Risk Reserve GRR Definition Formula Examples](https://longbridge.com/en/learn/general-risk-reserve-3.md)
  > General risk reserve refers to a practice formed by enterprises based on the risk reserve policy, safety margin requirem
- [Class B Common Stock Voting Rights Dividends and Examples](https://longbridge.com/en/learn/class-b-common-stock-2.md)
  > Class B common stock refers to stocks that have common stock equity, but relatively lower voting rights and dividend rig
- [Three Barrels of Oil: CNPC Sinopec CNOOC Explained](https://longbridge.com/en/learn/three-barrels-of-oil-4.md)
  > The 'Three Barrels of Oil' refers to the listing companies under three largest Chinese oil companies: China National Pet
- [Special Reserve: Meaning, Accounting and Examples](https://longbridge.com/en/learn/special-reserve-5.md)
  > Special reserves are funds established by a company to address specific risks or future needs. Special reserves are usua
- [Class A Ordinary Shares: Definition, Rights, Pros and Cons](https://longbridge.com/en/learn/class-a-ordinary-shares-1.md)
  > Class A ordinary shares refer to stocks that have ordinary equity but have special agreements or restrictions on voting 
- [Gu Shen Xiao Gu Guide: Contrarian Sentiment Barometer](https://longbridge.com/en/learn/gu-shen-xiao-gu-200028.md)
  > Known as "Gu Shen Xiao Gu", a prominent figure in the Longport community and one of 2024‘s Top 10 Influencers, his frequ
- [Yu Guo Guide: ByteDance Veteran, Bitcoin Early Adopter](https://longbridge.com/en/learn/yu-guo-200027.md)
  > Yu Guo, an early senior technical expert at ByteDance, shot to fame online when he announced his retirement at the age o
- [SEC Form N-PX Guide: Proxy Vote Disclosure Explained](https://longbridge.com/en/learn/n-px-200026.md)
  > The SEC Form N-PX is to be completed by mutual funds and other registered management investment companies to disclose pr