Puzzled by investing jargon?

We clear up terms such as margin of safety, risk-free rate of return and sensitive stocks.

Adam Zoll 13 April, 2015 | 5:00PM

Earlier this year we began asking readers which investment terms are most puzzling to them. The goal was to identify jargon found on financial sites (including Morningstar.ca) or in financial statements and shareholder letters that many people just don't understand or don't understand well. Judging by the response, the financial-services industry has quite a ways to go when it comes to communicating with individual investors. Readers have submitted scores of terms for us to define -- from those covering the most basic investing concepts to others that are more abstract.

You can find our first batch of jargon definitions here and the second batch here. In the months since those articles ran, we've received additional submissions from confused readers asking us to clear up some of the fog. So, as an ongoing public service, let's tackle some more. 

Bid-ask spread: The difference between a security's ask price and its bid price. A tighter spread is likely to lead to more trading while a wider spread is likely to produce less.

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Adam Zoll

Adam Zoll  Adam Zoll is an assistant site editor with Morningstar.com

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