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Our Glossary

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Equity A property security representing a share in a joint-stock company associated with the rights of the shareholder as a partner to participate in the management of a joint-stock company and its profit and in liquidation surplus in the case of dissolution of the company. It allows two kinds of yield – the dividend (or share in the profits of the company) and exchange rate (capital) yield resulting from the favourable movement of share prices. Neither the dividend nor the exchange rate yield is guaranteed in advance. The rates of shares may fluctuate significantly, for example, under the influence of different stages of the economic cycle or the success rate of the company’s management.
Equity Funds Mutual funds, whose investment strategy is focused on shares traded on public markets. Equity funds were reaching the highest yields in the long run, which, however, is associated with greater fluctuations in the prices of share certificates and a higher risk. The risks are similar to those of shares with the difference that the probability of failure of all investments in a mutual fund is much lower than a failure of a single company in the case of investment in only one of them (diversification).
Equity Funds or Stock Funds Funds that have made at least 66% of their investments in equities. Short-term fluctuations of rates are typical of them representing even dozens percent in a few months. These funds are very risky and suitable for the longest investment horizon due to the advantage of a long-term highest appreciation potential.
Equity Risk – General Risk of loss related to a change in a certain stock market, i.e. a change in the broad stock index.
ETF (Exchange Traded Funds) The securities of these funds are traded on stock exchanges just like shares. Investors may be “long” or “short” making it possible for the ETFs to hedge (get protected) against market decline. Most ETFs attempt to replicate the major stock indices, such as S&P500 or Hang Seng, but also the indices of sectors, such as technology, pharmaceuticals or the indices of commodities, such as gold or crude oil, and/or directly of individual regions, such as China or Brazil.


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