Bond maturity – The date on which a bond is scheduled to be repaid. Bonds can be classified as short-term (up to 5 years), medium-term (5–12 years), or long-term (more than 12 years).
Counterparty risk – The risk that the other party in a financial contract may not fulfil their contractual obligations, potentially leading to financial loss.
Disinflation – A reduction in the rate of inflation, meaning that prices are still increasing but at a slower pace.
Fungibility – The property of an asset whereby individual units are interchangeable and indistinguishable from one another in terms of value and function.
Marginal cost of production – The cost incurred when producing one additional unit of a product. It helps businesses determine the optimal level of production and pricing.
Risk-on, risk-off environment – An investment setting where asset prices are influenced by changes in investor risk tolerance. In a risk-on environment, investors seek higher-risk investments, while in a risk-off environment, they prefer safer assets.
Underweight/overweight – Terms used to describe the allocation of assets in a portfolio relative to a benchmark. Underweight means holding less of an asset than the benchmark, while overweight means holding more.
Unhedged investors – Investors who do not use financial instruments to reduce the risk associated with their positions, leaving them exposed to market fluctuations.
