Investor's glossary

are securities giving title to a given share of a company, a voting right at the General Shareholders’ Meeting, and a right to a dividend and a liquidation share.

is an investment strategy designed to reduce the risk by investing in different investment classes: shares, bonds, etc., including securities of one class but issued by different issuers and different states.

are bonds and other similar securities (financial instruments) created as a result of a loan extended by the holder of such securities to their issuer.

is the person that has issued the securities and is bound upon them to the holders of such securitie

are debt securities issued and guaranteed by the state. The owner of such securities is a creditor of the state. The Bulgarian state issues treasury securities to cover its short-term, medium-term, and long-term needs of financial resources. Treasury securities can be denominated in BGN, EUR, USD, or a different currency. All Bulgarian treasury securities are guaranteed by the Republic of Bulgaria and are considered low-risk or risk free instruments.

According to the Bulgarian legislation mortgage securities are issued only by banks. The banks issue these securities to refinance their operations and to increase the assets in their credit portfolios. Important feature of mortgage bonds is that they are backed by mortgage credits,  granted by the particular bank, which, according to current legislation, exceed the total amount of the issue by at least 10%. The receivables of the bondholders are considered triply-secured: firstly, by the mortgage credits themselves; secondly, indirectly, by the collaterals for the mortgage credits; and thirdly, by the fact that the debtor is a bank, which needs to meet capital adequacy requirements and is a trustworthy debtor in its own right. As a result, mortgage bonds are considered low-risk financial instruments. 

Issued to raise funds in order to complete an investment program, improvements in the municipal infrastructure and similar activities. They can be secured (by municipal real estate or other assets) and unsecured (only guaranteed by reputation of the issuing municipality). When the issuing municipality is in good financial condition or the provided collateral is of high quality, this type of debt securities is also considered low-risk financial instruments.

are a vehicle for raising financial resources used by corporations. The risk of each issue depends on the operations, financial condition, and the credit rating of the issuing company, as well as the collateral of the issue. The bond yields are usually higher than the yields of treasury, mortgage, or municipal bonds with comparable maturity terms.

means the ability of an asset to be timely sold (to convert the investment to cash) at any desired time without suffering any price loss upon the sale compared to market levels.

are debt securities and preference units on which pre-set fixed or floating income is paid.

are securities with long-term credit rating not lower than “BBB+” by Standard and Poor’s and Fitch or “Baa1” by Moody’s, and short-term credit rating not lower than “A-2” by Standard and Poor’s, “F-2” by Fitch or “P-3” by Moody’s.

Statistical measure, reflecting the change in the contractual fund’s return during a specified time period. The standard deviation does not provide information about the actual return of the investment, but rather shows what deviation from the average return can be expected – the probability of deviation in positive as well as negative direction. High standard deviation means that the variability (volatility) of the results during the period of interest was high. Published on the website, the standard deviation is calculated on yearly basis and uses data on the changes of weekly NAV per unit during the last 52 weeks. The published standard deviation is updated on the first working day of the week.

are internationally recognized rating agencies, which offer services related to the evaluation of credit risks of securities.

also called derivative securities are instruments whose value depends on the value and dynamics of another security, index or investment (underlying asset). E.g., options, futures, etc. Because of so-called ‘leverage’ the derivatives may multiply both investor’s gains and losses.

is a strategy to eliminate (neutralize) investment risk. It is frequently based on transactions with derivatives.
Instruments also called financial (investment) instruments are judicial documents materializing contractual relationship or established property rights (in many cases the unconditional promise of payment) or property rights that have not been specified in a document. The term is used as a synonym of securities.