A Beginner’s Guide to Essential Financial Terms
Macroeconomics
Basis Point (BPS)
A common unit of measure for interest rates and other percentages in finance; one basis point is equal to 1/100th of 1%.
REIT Metrics
Capitalization Rate (Cap Rate)
The rate of return on a real estate investment property based on the income that the property is expected to generate.
REIT Metrics
Distribution Per Unit (DPU)
The amount of cash paid out to investors for every unit they own in the REIT.
Equity Analysis
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization; used to compare the profitability of companies with different capital structures.
Equity Analysis
Free Cash Flow (FCF)
The cash a company produces through its operations, minus the cost of expenditures on assets.
REIT Metrics
Gearing Ratio
The ratio of a REIT’s total debt to its total assets; a key measure of financial leverage and risk.
Fixed Income
Inflation-Indexed Bonds
Bonds where the principal is indexed to inflation or deflation on a daily basis (e.g., Singapore Savings Bonds or TIPS).
Fixed Income
Interest Coverage Ratio
A debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt.
Technical Analysis
Moving Average (MA)
A technical indicator that levels out price data by creating a constantly updated average price over a specific period (e.g., 50-day or 200-day).
REIT Metrics
Net Property Income (NPI)
Gross revenue minus property operating expenses (taxes, maintenance, utilities). It reflects the core profitability of the assets.
Equity Analysis
Price-to-Earnings (P/E) Ratio
A valuation ratio of a company’s current share price compared to its per-share earnings.
Macroeconomics
Quantitative Easing (QE)
A form of monetary policy in which a central bank purchases at-scale government bonds or other financial assets to inject money into the economy.
Technical Analysis
Relative Strength Index (RSI)
A momentum oscillator that measures the speed and change of price movements, used to identify overbought or oversold conditions.
REIT Metrics
Weighted Average Lease Expiry (WALE)
A metric used to measure the vacancy risk of a portfolio, calculated by the area or rental income of expiring leases.
Fixed Income
Yield to Maturity (YTM)
The total return anticipated on a bond if the bond is held until it matures.