Market ABC

The key terms around markets and money, explained simply: from spread, limit order and dividend to P/E ratio, volatility and the key interest rate.

B

Business cycle: The ups and downs of the economy over months and years. Upswings are followed by downturns and recoveries, but never on a fixed schedule.

C

Country ETF: An ETF that tracks a country's economy. In Leonis it follows the country's sector mix and its own country factor, moved by elections, rate decisions or strikes.
Country risk: The risk that a country does worse because of politics, strikes, currency or commodity prices. Spreading across several countries can reduce it.
Credit rating (company): How safely a company can service its loans, roughly by interest cover (operating profit divided by interest). Below a cover of 2, lenders charge a rate premium, which cuts profit. Shown in the company profile from 21 Jan 2027.

D

Debt-to-equity: Debt divided by equity. The higher it is, the more the company works with borrowed money and the more interest weighs on it.
Diversification: Spreading money over many assets so a single crash does not hit everything.
Dividend: A share of profit a company pays to shareholders. On Leonis it lands in your account quarterly.
Dividend growth: How much the dividend rose or fell compared with the previous year.
Dividend yield: Dividends of the last 12 months divided by the price. €0.80 dividend at a €20 price is 4%.
Drawdown: The deepest fall of a price from its previous high, for example within a year. Shows how painful a weak phase was.

E

Earnings per share (EPS): The company's profit divided by its number of shares. Analysts expect a figure, the deviation counts.
Earnings quality: Good profits show up in cash: free cash flow grows roughly like profit. If profit grows much faster than cash flow, take a closer look. Costs may be booked too late or the figures flattered.
Economic cycle: How parts of the economy affect each other: when inflation rises, the central bank tends to raise rates. Loans get dearer, households and firms spend less, sales and profits fall and firms hire less. That slows inflation again. Falling rates work the other way.
Equity: The money that belongs to a company's owners: what is left after all debt. It grows with retained profit and shrinks with losses.
ETC: An exchange-traded security on a commodity such as gold or oil. Not a stake in a company.
ETF: A fund that bundles many stocks into one asset traded on the exchange. Spreads the risk.
Event chain: One event leads to the next, for example: oil rises, transport and production get dearer, prices rise, the central bank raises rates, loans get dearer, spending falls, profits and prices come under pressure. In Leonis at most one chain runs at a time and each ends after a few weeks with an all-clear.
Ex-date: Whoever holds the stock before this day gets the dividend. Buyers afterwards do not. From the quarterly results after 21 Jan 2027 the price drops by the dividend on the ex-date, as on real exchanges.
Exchange rate: How much one currency is worth in another, for example €1 = 11.6 Norwegian kroner. When a currency weakens, exports get cheaper and income from there brings fewer euros.

F

Free cash flow: The cash left after operations and investment. A company uses it to pay dividends, repay debt or buy back shares.

G

Government debt: A state's debt, usually relative to economic output (GDP). High debt makes bonds riskier and so dearer for the state.
Gross domestic product (GDP): The value of all goods and services a country produces in a year. When GDP grows, the economy is doing well.

I

Index: An average of many assets showing how the market does overall. The Leonis index tracks all stocks on the Leonis exchange.
Insolvency: A company can no longer pay its debts. Its share falls to almost zero and stops trading. You can write it off in your portfolio and the loss counts in your tax overview.
IPO: A company offers its shares on the stock market for the first time. Until the start the issue price applies, from the first trade demand sets the price. It often jumps on day one and settles over the following days. Short and leverage are only available 10 days after the IPO.

K

Key rate: The rate set by the central bank. When it rises, loans get dearer and saving pays more; when it falls, the opposite.

L

Leverage: You move a larger sum with a small stake. Gains and losses grow with it and a total loss comes faster.
Limit order: An order with a price you choose. It only executes once the price reaches your level or better.
Liquidation: If a leveraged loss eats your whole stake, the exchange closes the position by force.
Liquidity: How easily an asset can be traded. With high liquidity the spread is small and even large orders barely move the price. With low liquidity trading costs more.

M

Market cap: Price times the number of all shares: what the whole company is worth on the market.
Market lab: A look back in Leonis: what would an amount have become if you had put it into a stock, an ETF, a coin or your current portfolio earlier? With dividends, crises and events. Plus forward scenarios (rates, oil, revenue, costs). Not a forecast.
Market order: An order without a price limit that executes right away: buy at the ask, sell at the bid. In Leonis it is called “Market”.
Market phase: The state of the economy: boom, normal growth, uncertainty, downturn, crisis or recovery. In Leonis it affects prices, profits, rates, loans, the job market, property and spending.

P

P/B ratio: Market cap divided by equity. Below 1 the company costs less on the market than the equity on its books.
P/E ratio: Price divided by earnings per share over the last 12 months: how many years of profit the market value costs. Only meaningful compared with the sector and the past.
P/S ratio: Market cap divided by revenue over the last 12 months. Helps compare when a company is not yet profitable.
Payment date: The day the dividend reaches your account. On Leonis two trading days after the ex-date.
Payout ratio: The share of profit paid out as dividends. Above 100% the company pays out more than it earns.
Price: The current price of an asset. It keeps changing as buyers and sellers agree on a price.
Profit margin: Which part of revenue is left as profit. 10% means €10 of profit from €100 of revenue.

Q

Quarterly results: A company publishes its figures every three months. Surprises often move the price a lot.

R

Reinvestment: Dividends paid out are put straight back into the same stock. The new shares then earn dividends too, and the effect grows over time (compounding).

S

Savings plan: You invest a fixed amount regularly no matter the price. That smooths your entry price.
Scenario: An if-then calculation: you change one assumption (for example the key rate) and work out what would follow. The base scenario is the comparison, often “nothing changes”. A scenario is not a prediction; it shows relationships.
Short: A bet on falling prices. You earn when the asset drops and lose when it rises.
Spread (bid/ask): The gap between the price you can sell at (bid) and buy at (ask). It is the hidden cost of trading.
Stock split: The company divides each share into several new ones. The price falls by the same ratio and you get more shares, so your value stays the same.
Stop order: An order that triggers once the price hits a level, for example to limit losses or buy a breakout.
Stop-limit order: A stop order with a price cap: once the price hits the stop, it turns into a limit order. You never get a worse price than your limit, but in a crash the order may stay open.
Stop-loss / take-profit: Automatic levels on leveraged positions: stop-loss closes at too much loss, take-profit locks in a gain.

T

Trade balance: A country's exports minus its imports. A surplus means it sells more abroad than it buys.
Trading halt: If a price moves more than 5 % within 15 minutes, trading pauses briefly so the market can calm down.
Trading volume: How many units of an asset trade in a day. It rises with big news and strong price moves.

V

Volatility: How strongly a price swings. High volatility means opportunity and risk at once.

W

Whale: An investor with a lot of capital. Their buys and sells can move the price noticeably.