Financial glossary

Short definitions of the most searched financial terms, each linked to the calculator where you can apply it with your own numbers.

  • APR (Annual Percentage Rate)

    APR is the real annual cost of a loan or mortgage, expressed as a single percentage that includes both interest and the associated fees.

  • Nominal interest rate

    The nominal interest rate is the percentage the bank charges on the outstanding balance, and it's the figure used directly to calculate the monthly payment of a mortgage or loan.

  • Euribor

    Euribor is the interest rate at which European banks lend each other money, and it's the most common reference rate used to calculate variable-rate mortgage payments in Spain.

  • EBITDA

    EBITDA is a company's earnings before interest, taxes, depreciation and amortization: a measure of its pure operating profitability, without the effect of how it's financed or accounting decisions.

  • P/E ratio (price-to-earnings ratio)

    The P/E ratio is a stock's price divided by its earnings per share, and it shows how many times the annual earnings the market is paying for that company.

  • ROE (Return on Equity)

    ROE measures what percentage of profit a company generates for every euro of capital contributed by its shareholders, and it's one of the most-used indicators to assess a company's efficiency.

  • CAGR (Compound Annual Growth Rate)

    CAGR summarizes the return of a multi-year investment as a single constant annual rate, as if it had grown at the same pace every year.

  • Liquidity

    Liquidity measures how quickly and easily an asset can be converted into available cash without losing significant value in the process.

  • Inflation

    Inflation is the sustained, generalized rise in prices, which reduces the purchasing power of money that isn't earning any return, over time.

  • CPI (Consumer Price Index)

    The CPI is the official indicator that measures how the prices of a representative basket of goods and services change over time, and it's the most common way to calculate a country's inflation.

  • Dividend yield

    Dividend yield is a stock's annual dividend per share divided by its price, and it measures the return you get purely from dividends, not counting price appreciation.

  • Financial leverage

    Leverage means using borrowed money to fund a purchase or investment, which multiplies the effect — positive or negative — of the capital you actually put in.