Say What? Investment Jargon Explained

Unpicking 10 phrases commonly used in investment but less commonly understood

Holly Cook 11 October, 2012 | 9:28AM

Jargon and acronyms are par for the course in the world of business. But don't despair if you sometimes feel linguistically lost. Morningstar is here to help you understand various commonly used, but difficult to decipher, bits of business jargon.

1. Alpha
A share or fund’s alpha is a measure of how much that security will tend to move during a period when its benchmark index does not move. The Beta, meanwhile, represents how far that security will move when the benchmark index rises one point.

The two terms are part and parcel of Capital Asset Pricing Model, a widely-accepted system for valuing securities in terms of risk and return.

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About Author

Holly Cook

Holly Cook  is Managing Editor of Morningstar.co.uk

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