Asset: Credit that a natural or juridical person has against third parties. Property right over any tangible or intangible that has economic value, such as coins, bills, Bank deposits, shares, buildings, bonds, etc.

Amortization: Accounting annotation which allows to impute the amount of an investment as expenditure over several years. Recognizing therefore, the loss of value or depreciation of an asset over its physical or economic life.

Advanced payment: Money delivered or paid before the final conclusion of a contract, or monthly payroll calendar.

Appreciation: Increase in the price of the national currency expressed in foreign currency. It corresponds to a decline in the nominal exchange rate in a free float regime.

Arbitrage: Purchase process of a real or financial asset In a market to sell it to a different person in order to benefit from the price differences between them. It causes a tendency to equalize the prices of the assets involved in the process.

ATM: Automatic Teller Machine.

Active Interest Rate: Interest rate charged by banks to their customers.

Back Office: Set of accounting, financial and administrative activities generated by a written confirmation of an operation negotiated by the agents of the Front Office of a stock exchange. All the processes that runs behind and that the user does not normally know, but which are nevertheless fruitful, are fed from the front and fed again, in some cases other front or the same low front on certain conditions.

Bait: Profit before interest and taxes. This figure appears in the profit and loss account and used in many analysis tools, It represents the results of the company during a fiscal year and does not show effects of indebtedness or taxes


Balance sheet: Company accounting statement that reflects its equity situation In a given moment of time. With two main items: active and passive, whose value must be equivalent.

Bank: Company specialized in credit intermediation, whose main objective Is the accomplishment  of profits derived from rate differentials between collected operations and placement of resources


Beneficiary: The Beneficiary is in favor of whom the obligation must be fulfilled. It is the creditor before whom he guarantor’s obligation is ensured.

Bonds: Debt instrument that represents the issuer’s commitment to repay the capital originally received from investors, usually paying a periodic interest.

Broker: An agent that’s acting on commission and on behalf of others, as an intermediary in different financial markets, putting buyers and sellers in contact.

Bank Reserves Surpluses: Difference between the reserves held by the banks and the reserves required by the Law (legal reserve).

Balance: This is the amount that results from compensating the debit with the credit of an account. It can be positive or negative.

Banking system: They are all depository financial institutions in a country, Such as banks, savings banks, official banks, credit unions and the central bank.

Bank Spread: Difference between the Asset and Liability Rate is known as the bank spread, which is the value used to cover administration costs, bank overheads and bank profits in lending operations.

Controlling Shareholder: It is the one with the largest package of shares within a company. You can be a controlling shareholder with 20% of the shares or any other percentage, not needing to have 51% of the capital.

Creditor: The one who has the right to request compliance with the obligations of any society.

Central Bank: Bank that manages the operation of a country’s financial system.  responsible for  the issuing of currency, system monitoring, the issuance of public debt , reserves and  country currencies.


Commercial Bank: It is an establishment of private or public origin, duly authorized by law, responsible for consolidating and regulating credit operations. In other words, it admits money in form of deposit, to be able to (together with its resources) grant loans, cash discounts and , mostly, all kinds of banking operations.

Clearing house: Mechanism created by the Central Bank and Banks with the purpose of facilitating the exchange of checks, and thus settle the differences between the checks received and paid by financial institutions with the least possible movement of cash.

Change Control: Policy of the monetary authority aimed at controlling the purchase and sale of foreign currency. May involve the determination of the exchange rate and/or  the volume of foreign exchange traded. It tends to prevent free convertibility between the national and foreign currency.

Credit: Contract by which a natural or legal person temporarily obtains an amount of money with a return commitment plus an interest charge and commissions pre-established in a given period. // Accounting entry that implies an increase in the asset accounts.

Cash Flow: It is made up of cash flows; comprised by the net profits plus the depreciation considered as the non-cash outflows. Cash flow is the money generated by a company through its ordinary activity. Two cash flow are considered the mechanism that is calculated by adding to the net operating profit, the amortization of the period, since it does not generate cash outflow. And the financial cash flow is obtained by subtracting from the operating charges, the payments of these. A general definition would be like the accounting instrument that best reflects the flow of liquid resources generated internally by a company.

CPI: Statistical indicator that measures the evolution of prices of a basket of goods and services representative of the family consumption during a determined period. For the calculation of the CPI, a reference year is adopted, called the base year, whose initial level is 100, and a representative list of goods and services consumed by households (the basket) is selected. The relative importance of each item in household consumption expenditure is determined, which in technical terms is called the CPI weighting structure.

Capital Markets: Some economists define the Capital Market as the engine of a country’s economy; That is to say, through this market, the saving is transformed into Investment, and the investment in turn generates the Economic Growth necessary for the development of a country. In other words, the Capital Market, like any other financial market, acts as a channel for domestic savings in order to offer a return to the investor; while for the companies of a country, the Capital Market is constituted as a source to obtain funds, thus exploiting its economic growth. Within the Capital Market, certain markets are defined as: the stock market or equity market; Debt markets or fixed income markets such as the bond market; The Money Market specializing in very short-term obligations; the futures and options market, among others.

Commercial papers: Securities issued in the short term (between 15 and 270 days) by public limited companies that have previously obtained the corresponding authorization from the National Securities Commission, to offer them to the public.

Capital gain: A profit that is produced when selling an asset at a price higher than its acquisition. It is called potential or theoretical surplus value calculated on the basis of the market price, but without having made the sale.

Creditor balance: It is the balance that appears in the credit of an account or credit. It is a positive balance.

Credit Cards: Plastic card issued by a financial institution in the name of a third party, containing an automatic credit for the purchase of goods and services.

Dealer: An agent that’s acting in organized markets, operating on own account, as holder, or on account of clients, as intermediary

Debit: Account entry that implies a decrease in the account of the asset or an increase in the liabilities

Deflation: Sustained decline in the general price level. It is the opposite phenomenon to inflation

Depreciation: Depreciation is considered as a loss of the value of goods and this always translates into loss of money. Devaluation and depreciation have the same economic significance (weakening of the currency), but while the first is the result of political decisions, the second one is the result of market forces.

Debtor: A person that owes or bound to satisfy a debt.

Devaluation: Reduction, by decision of the monetary authority, of the value of the own currency with respect to the foreign ones. It is the equivalent of a currency depreciation in a fixed exchange rate system.

Dividends: It is the remuneration to the investment that is granted in proportion to the number of shares possessed with resources originating in the profits of a company during a determined period and can be delivered in money or in shares. The decision to pay dividends to shareholders is adopted by the General Assembly which in turn indicates the periodicity and manner of payment.

Dumping: For a company, it is the fact of selling its production at very low price or cost to compete effectively in the market. It is used as a synonym of unfair competition. It is considered fundamentally as an action on export prices, so it is carried out by the state government state (through subsidies), or with the state government support, and by a groups of companies.

Debtor balance: It is the balance that appears in the debit of an account or credit. It is a negative balance.

Debit Card: Plastic card issued by a financial institution that serves to turn over accounts of deposits of the holder.

Earnings per Share: Financial index obtained by dividing the total profit of a company between the number of shares circulating

Economic depression: Stage of an economic cycle characterized by a prolonged and strong contraction of aggregate demand, underutilization of installed capacity, and very high unemployment.

Endorsement: Signature of the legitimate holder of a title on the back of it to transfer their property or to constitute a mandate or power.

Emerging Markets: Developing country markets are called emerging markets. In these countries the situation must be that the economy grows very fast and strongly, but they risk an unstable political situation.

Equity: The net value of the total assets of a person or a company. Accounting standpoint is the difference between the assets of a person, whether natural or legal, and liabilities contracted with third parties. Equals the net wealth of society.

Equity: A set of values whose future flows are not fixed or known with certainty beforehand. Equities include, among others, shares, convertible debentures and mutual fund shares.

Exchange Rate: The amount of the national currency needed to acquire a foreign currency is known as the Exchange Rate

Financial leasing: Contract by which a company obtains certain properties or lease rights of a financial institution that charges a fee and offers the purchase option for the residual value of the asset upon the contract term’s expiration, given the temporary nature of it.

Future Contracts: It is the obligation to deliver and receive products or services at a future date.

Financial Crisis: Situation characterized by instability in money and credit markets, followed by bankruptcy of banks and loss of the public’s confidence in financial institutions.

Financial Disintermediation: Situation characterized by a smaller participation of financial institutions in the process of intermediation of savings and credit. Financial disintermediation occurs when banks capture savings from the public and do not lend in the same proportion or invest in bonds and public bonds.

Foreign exchange: Exchange rate in a currency other than the national or domestic currency

Front Office: They are processes, including their interfaces, developed in front of the user.

Financial expenses: Expenses incurred by a company in obtaining financial resources and which are represented by interest rates and premiums on promissory notes, bonds, etc. Issued by a company

Financial Intermediation Index: Index Calculated by dividing the amount of the loan portfolio among the public deposits

Fixed interest: We talk about it when the interest rate does not change over the agreed, nor does it depend on the behavior of other economic factors as in the case of a variable interest.

Financial Intermediation: Situation in which the relations between agents that need financing and those who have the capacity to grant it are indirect. It is linked with the banks’ growing presence on the markets. // Difference between funds raised by financial institutions (deposits) and funds granted by them to economic agents (credits).

Financial Intermediation Margin: It is established by the difference between the interest rates of placement and the interest rates of funding. The intermediation margin is the difference between the passive rate and the active rate. In order to make us understand and sacrifice a little precision, the margin of intermediation is something like the margin of profit of the financial sector. Just as the profit margin in the industrial or commercial sector depends on the level of competition, so the margin of financial intermediation reflects the degree of competition of the sector of an economy; to less competition, the higher the intermediation margin.

Financial Market: Set of markets formed by the capital market, the money market and the foreign exchange market. In them, cash and futures are traded (options and futures). It is a market in which only financial assets are contracted.

Fiscal Policy: Decisions taken by the national government that involve both the financing and use of resources and expenditures, as well as the decisions of change in the governmental management necessary for the attainment of proposed objectives.

Fixed rent: Set of values whose future flows are known with certainty beforehand. This profitability is independent of the results obtained by the issuing entity.

Guarantee: Own securities, by which a natural or juridical person responds to the exchange obligations assumed by the endorser (Person by whom he is backed up)

GDP per capita: Relationship between gross domestic product and the population of a country in a given year. Generally, it is associated with the relative degree of development of a country. For example, the World Bank classifies countries according to the per capita GDP level.

Gross domestic Product: Sum of the production of an economy that reflects the flow of goods and services produced in a territory of a country in a certain period of time. It can be calculated from three dimensions, quantitatively equivalent:

  1. From the point of view of origin, it represents the contribution of the different productive sectors and is measured by the sum of the aggregate values of each of these sectors (value added method)
  2. From the point of view of destination, it represents the use of the product and is measured as the sum of the final demands of the economy (expenditure method).
  3. From the point of view of income generated by productive factors (labor and capital).

International Finance Corporation (IFC): It is an entity attached to the World Bank, in charge of providing financial assistance and advice on the growth of private and productive enterprises in developing countries.

Inflation: Phenomenon characterized by the continuous and generalized increase of the prices of goods and services that are commercialized in the economy.

Interest on arrears: The demanded or imposed as penalty of the debtor’s delay in the satisfaction of the debt.

Interbank Market: The system through which private banks lend or borrow from other private banks. For practical purposes, it is the “wholesale” market of money and only banks participate.

Interest Rate: It is the percentage expression of the interest applied on a capital. Interest rates can be expressed in nominal terms (simple interest) or effective (compound interest). It is the price of money, costs to borrow money. This expression leads to all the returns that are obtained with the different investments. There are so many interest rates and terms to lend money.

Internal Rate of Return (IRR): The maximum interest rate at which a project does not generate losses or gains. The golden rule of the investor is to carry forward the investments that give him an IRR higher than the market interest rates. If not, it is better to put the money in the bank.

Junk bonds: High and low risk rating title, which offers a high throughput to balance the previous characteristics

Joint Venture: Company whose shareholders are two or more independent firms that enter into a company for a specific purpose.

Legal Lace: Total percentage of all deposits that a bank must maintain as a mandatory reserve in the Central Bank. It is legal because the law authorizes the Central Bank to set such reserve at its discretion. Through this instrument, the monetary authority influences the funds available for credit by the banks.

Liabilities: Set of obligations (debts) that a company has. It represents the total obligations of the company, in the short term or long term, whose beneficiaries are generally persons or entities other than the owners of the company. (Occasionally there are liabilities to the company’s shareholders). Bank obligations, obligations with suppliers, accounts payable, etc. fall within this definition.

Minority Shareholder: They are those who do not have the largest package of shares in the society they’ve invested in.

Market economy: Economy whose allocation of resources is guided by the price system. Also called laissez-faire economy.

M1: It is one of the components of the Monetary Offer and is made up of coins, paper money and all demand deposits. This is money defined in the strict sense.

M2: It is the Monetary Offer defined in a broader sense: it includes all the components of M1 plus some liquid or quasi-money assets

Monopoly: Market in which a single offeror determines the price and quantities offered. It can be stable in cases of natural monopoly or legal imposition (for example, tax monopoly to facilitate the collection). It is also produced in new or highly sophisticated products, especially when protected by patents or when there are very strong entry barriers.

Monetary offer: Amount of money held by the public. The real money supply would be the quotient between the nominal amount of money and the price level. There are various types or levels of money supply (M1, M2, M3 …) depending on the instruments being added. See Ml and M2.

Monetary Policy: Decisions of the Central Bank that influence the money supply, interest rates and financial conditions of the economy. Its ultimate objective is to preserve the purchasing power of the currency by creating monetary and financial conditions that favors price stability. The main instruments of monetary policy are open market operations, requirements for bank deposits and loans to banks.

Market Segmentation Consisting of dividing the market into homogeneous groups, of similar customs and that can be accessed as a group.

Nominal Value: Amount of money represented in the title (or paper money) at the time of issuance. Inflation causes the nominal value of money to be reduced in terms of the purchasing power it generates.

Offer: It is the order of sale of a title in the stock market, either by liquidity requirement or for reinvestment in another alternative. It is also the sale of a product or service.

Option: In the future market, the right to buy (call) or sell (put), in a stipulated time and at fixed price, a raw material or a financial product. The right of the purchaser of the option is exercised at its discretion, while for the issuer there is a contingent obligation until the option expires

Open Market Operations: These are the operations carried out by the Central Bank with domestic public debt titles, in order to control the means of payment in circulation.

Operational balance point: Ratio used to measure the degree of operating leverage of a company. It is defined as the level of production or minimum level of sales that is necessary for the company to be able to cover its fixed costs. This point or amount does not necessarily mean that the company earns money, since after covering fixed costs must pay the rest of the expenses including non-financial expenses. Mathematically it is defined as the result of dividing the total of fixed costs by the selling price of product minus the variable costs used to produce it.

Payments Balance: Systematic accounting record which reflects all economic transactions that take place between residents of one country and those of the rest of the world, during a certain period of time.

Public debt bonds: titles- medium and long-term values issued by the Public treasury through an auction system. It is the aliquot part of a loan to the state government, where the  bond owner acts as moneylender and therefore has the right for interest rates perception and the refund of paid-in capital, according to the condition of the loan

Public bonds: Bonds issued by the national government and public organisms.

Public or Fiscal Deficit: Negative balance of the budget of the Treasury or consolidated budget of cash that reflects a situation in which the outflows of cash originated by the public expenses are superior to the inflows due to the current revenues of the State government.

Public debt: Total amount of Government liabilities.

Public spend: Purchases of goods, services and transfers made by public agencies or State Government.

Primary Market: This is the set of purchases and sale transactions carried out within a framework authorized and regulated by law.

Public offer of Shares acquisition: When an individual or a company intends to acquire a significant stake in the capital of a company with shares listed, Must offer to buy from  all the shareholders of the aforementioned company. The above implies to be subject to all the normative requirements of disclosure and specific conditions.

Public Offering: An operation whereby an investor sells a significant interest in a publicly traded company. It is widely used by state government to carry out privatizations.

Promissory note Written by which a person called subscriber is directly bound to pay another, named beneficiary, or to his order a determined or determinable amount of money on a defined date. Liabilities: Set of obligations (debts) that a company has. It represents the total obligations of the company, in the short term or long term, whose beneficiaries are generally persons or entities other than the owners of the company. (Occasionally there are liabilities to the company’s shareholders). Bank obligations, obligations with suppliers, accounts payable, etc. fall within this definition.

Provisions: Items established to cover assets of slow recovery reserves.

Profitability: Rate of return obtained from an investment in a specific value or some title deed

Passive Interest Rate: Interest rate paid by banks to their depositors.

Risk aversion: Assumption that is usually made in finance regarding the investors’ behavior: It is assumed that investors do not like risk, but someone agrees to assume a greater risk  when making an investment should expect a higher yield of it.

Risk premium: Consists of the greater cost that for the weaker countries means to raise money against the countries with a more powerful economy. The risk premium is an empirical data that measures the expected excess returns that markets demand for an unsecured investment. The expected profitability does not have to match in the end with the real profitability. Their probability of being lower or even negative is high. And it is that probability that markets assign which precisely determines the risk premium. What is curious is that it often happens that the bond and stock markets do not necessarily estimate a similar risk premium for two titles of the same company. The (much more professionalized) bond market tends to assign high risk premiums whereas the stock market tends to be naïve by applying relatively low risk premiums

Reserve: Part of the assets of a company that, under statutory or voluntary legal status, is constituted by the deduction of undistributed profits.

Return: Level of benefits reported by an investment. Used as a synonym for profitability or performance.

Revaluation: This is the appreciation of the bolivar against another reference currency. This is the opposite of devaluation.

Risk: It is the degree of variability or contingency of the return of an investment. In general terms we can expect that, at higher risk, higher return on investment. There are several types of risks: market, solvency, legal, liquidity, exchange rate, interest rate risk.

ROA: Financial indicator that measures the efficiency of the assets to generate profit. It is obtained from dividing the profit between the total assets of the company.

ROE: Return on equity. It measures what a company earns for each monetary unit invested in own funds. It is calculated by dividing profits between own resources.

Rate of exchange: It is the equivalence relation between two currencies, valued by the number of units of a country that must be delivered in order to be able to acquire one monetary unit for another

Share: Allocation of the share capital of a company. They usually grant certain rights to their owners, among others, right to part of the benefits, to a settlement fee in case of dissolution, to vote in general meetings and preemptive right to subscribe for new shares.

Shareholder (Stock Holder): Referring to owners of one or more shares. This term basically used for  members of any corporation.

Stock Market: Organized market in which fundamentally equity securities are traded. In most cases fixed rents are negotiated as well as various assets.

Stock Market Capitalization: Resulting from multiplying the number of outstanding shares of a company by its market price. It indicates the market value of a company.

Stagflation: Situation that occurs when the economy matches with a high rate of inflation and a sharp drop in the pace of economic growth.

Stock index:  Index number reflecting the evolution of prices of a set  of shares over time. They are usually representative of what happens in a given market. Thus an index will differ from another in the sample of values that compose it, the weight of each title, the mathematical formula used to calculate it, the reference date or base and the adjustments that apply to it (by dividends or modifications In the capital).

Secondary Market: Market in which previously issued financial assets are renegotiated.

Syndicated Loans: These are singular, large-volume loans granted by several entities jointly.

Subrogation: It is the substitution of one person for another in the exercise of rights or fulfill obligations that correspond to the one who has been a substitute.

Tax Haven: It is that country where it is treated very beneficially to the foreign investors or to the societies that are domiciled there with very low or zero taxes.

Universal Bank: Form of organization of the banking business  based on the proposal of all products, services and available operations to all potential customers and all operating markets .

Unemployment: Synonym of lack of activity, is a situation in which the production of goods and services, part of the labor force wishing to work, does not get a source of employment.

Value (s): Titles shall mean any transferable title including shares, options on the purchase and sale of shares, bonds, mutual fund quotas, savings plans, commercial effects and, in general, any credit or investment securities.

Volatility: A stock is denominated volatile when its price varies with great amplitude in relation to the variation of the market.

World Bank: Multilateral financial organization that lends money to countries for the financing of development projects