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Glossaries

Term Main definition
SEC

Short for Securities and Exchange Commission, which aims to "maintain fair, orderly, and efficient markets". All U.S. listed companies have to file their financial statements with the SEC.

Author - Nick Kraakman
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Shareholders equity

A balance sheet item which indicates the sum of the money originally invested in the firm and the retained earnings it has accumulated over time. It is equal to total assets minus total liabilities.

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Shares outstanding

The number of tradeable stocks held by investors. Essentially, this number indicates into how many pieces the business is divided. This number is used to calculate earnings per share and market cap.

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standard deviation

A measure of volatility which tells us how far the historical returns have been deviating from the mean return over time.

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strike price

Strike price, also known as "exercise price", is the price at which a stock may be bought (call option) or sold (put option) by the holder of the option.

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Sustainable competitive advantage

Sustainable competitive advantages are advantages that are not easily copied and, thus, can be maintained over a long period of time.

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Sustainable growth rate

A measure of how much a firm can grow without borrowing more money.

Sustainable growth rate = Return on equity x (1 - Dividend payout ratio)

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