MAWIB Dictionary

Investments & Portfolio Management

• Absolute Return: Strategy targeting positive returns regardless of market direction.
• Active Management: Investment approach relying on discretionary selection of securities.
• Alpha: Excess return relative to benchmark attributable to manager skill.
• Alternative Assets: Non-traditional investments such as PE, VC, hedge funds, infrastructure.
• Annualized Return: Return expressed on a yearly basis.
• Asset Allocation: Distribution of investments across asset classes to optimize return and risk.
• Asset–Liability Matching: Aligning investments with future liabilities.
• Benchmark: Standard against which investment performance is measured.
• Beta: Measure of systematic market risk.
• Black-Scholes Model: Option pricing model used for derivatives valuation.
• Correlation: Degree to which assets move together.
• Custodial Risk: Risk that a custodian fails to safeguard assets.
• Derivatives: Financial instruments whose value is based on an underlying asset.
• Discount Rate: Rate used to discount cash flows to present value.
• Diversification: Spreading investments to manage risk.
• Duration: Sensitivity of bond price to changes in interest rates.
• ETFs: Exchange-traded funds tracking an index or strategy.
• Factor Investing: Investment based on systematic drivers like value, momentum, quality.
• Geographic Exposure: Allocation of portfolio across regions.
• Illiquid Asset: Asset not easily sold without loss of value.
• Index Fund: Passive fund replicating an index.
• Market Timing: Attempt to predict market direction and adjust positions.
• Portfolio Rebalancing: Adjusting weights to target allocation.
• Risk-Adjusted Return: Return measured relative to risk taken.
• Sharpe Ratio: Measure of return per unit of volatility.
• Smart Beta: Rules-based approach improving upon traditional indices.
• Tracking Error: Deviation of fund performance from benchmark.
• Volatility: Degree of price variability over time.
• Value Investing: Strategy focusing on undervalued assets.
• Yield Curve: Graph of interest rates across maturities.

Corporate Finance & M&A

• Acquisition: Purchase of a company or controlling stake.
• Accretion/Dilution: Effect of a deal on earnings per share.
• Asset Purchase: Transaction buying specific assets rather than shares.
• Capital Structure: Mix of debt and equity supporting operations.
• Convertible Bond: Debt instrument convertible into equity.
• Cost of Capital: Required return for providers of capital.
• Credit Spread: Difference between yields of risky and risk-free bonds.
• DCF Valuation: Discounted cash flow method.
• Debt Refinancing: Replacing existing debt with new debt.
• Dividend Recapitalization: Leveraged dividend payment.
• Due Diligence: Comprehensive investigation of a target.
• Enterprise Value: Total company value including debt and equity.
• Fairness Opinion: Independent assessment of financial fairness of a deal.
• Greenmail: Target repurchases shares at premium to avoid takeover.
• Hostile Takeover: Unsolicited acquisition attempt.
• Leveraged Buyout: Debt-funded acquisition.
• Management Buy-In: External managers acquire company.
• Merger: Combination of two companies into one.
• Minority Interest: Ownership stake less than 50%.
• Poison Pill: Defensive measure deterring takeovers.
• Share Swap: Exchange of shares instead of cash in M&A.
• Spin-Off: Creation of an independent company from a parent.
• Squeeze-Out: Forcing minority shareholders to sell.
• Synergies: Efficiency gains from mergers.
• Tender Offer: Public offer to buy shares at premium.
• WACC: Weighted average cost of capital.

Financial Structuring & Holding Vehicles

• ADGM SPV: Abu Dhabi Global Market entity for holding assets.
• Bare Trust: Trustee holds assets without active duties.
• Bearer Shares: Unregistered shares conferring ownership to holder.
• Branch Office: Non-separate legal entity of foreign company.
• C-Corp: Separate taxable legal entity in the U.S.
• Check-the-Box Election: U.S. tax classification election.
• Corporate Veil: Legal separation between entity and owners.
• Family Holding Company: Entity consolidating family assets.
• Foundation Council: Governing body of a foundation.
• GmbH: German limited liability company.
• HoldCo: Entity owning operating subsidiaries.
• IFC Entity: Financial free zone corporate entity.
• LuxCo: Luxembourg holding entity.
• Nominee Shareholder: Party holding shares on behalf of beneficial owner.
• Offshore Company: Entity in tax-efficient jurisdiction.
• Onshore Company: Entity in regulated domestic jurisdiction.
• Partnership: Entity with pass-through taxation.
• RAK ICC: Offshore company structure in Ras Al Khaimah.
• Segregated Portfolio Company: Entity with protected asset cells.
• Series LLC: U.S. entity allowing internal protected series.
• Shelf Company: Pre-registered company available for quick use.
• SPV: Special purpose vehicle for ring-fencing risk.
• Substance Requirements: Local presence required for tax benefits.
• Trust: Relationship where trustee manages assets for beneficiaries.
• UBO: Ultimate beneficial owner.
• Withholding Tax: Tax on outbound payments.

Foundations, Trusts & Asset Protection

• ADGM Foundation: UAE law foundation for succession planning.
• Asset Protection Trust: Trust designed to shield assets.
• Beneficiary: Person entitled to benefit from a structure.
• Clawback Provision: Allows reversal of transfers under certain conditions.
• Cook Islands Foundation: Premier asset protection vehicle.
• Discretionary Trust: Trustee controls timing and amount of distributions.
• Dynasty Trust: Trust lasting multiple generations.
• Enforcer: Oversees foundation council.
• Family Charter: Document outlining family rules and governance.
• Forced Heirship: Mandatory inheritance allocations under civil law.
• Foundation Deed: Document establishing a foundation.
• Letter of Wishes: Guidance from settlor to trustees.
• Protector: Person overseeing trustees/foundation council.
• Settlor: Creator of trust or foundation.
• Shariah Inheritance Rules: Islamic mandatory distribution rules.
• Spendthrift Clause: Prevents beneficiaries from pledging interests.
• Stamp Duty: Transfer tax on asset movements.
• Testamentary Trust: Trust created via will.
• Trust Deed: Governing document of trust.
• Vesting Date: Date beneficiaries receive assets.
• Will Substitution: Foundation used in place of will.

Private Equity & Venture Capital

• Acquisition Finance: Debt used to fund buyouts.
• Bridge Round: Short-term financing prior to equity round.
• Carried Interest: GP performance compensation.
• Club Deal: Multiple PE funds co-investing in a deal.
• Commitment Period: Time during which LPs must fund commitments.
• Convertible Note: Debt converting into equity at discount.
• Co-Investment: LP invests alongside GP in deals.
• Deadweight Loss: Loss from inefficient allocations.
• Dry Powder: Unspent committed capital.
• GP Stakes: Investments in private equity management companies.
• Growth Equity: Capital for scaling mature companies.
• IRR: Internal rate of return.
• J-Curve: Initial negative returns followed by later gains.
• Key Man Clause: Provides protection if key partners leave.
• Limited Partner: Investor providing capital to a fund.
• Management Buyout: Acquisition by management team.
• Preferred Return: Minimum return before carry is paid.
• Pro-Rata Rights: Right to maintain ownership in future rounds.
• Secondary Transaction: Sale of fund interests.
• Side Letter: Special investor rights.
• SPAC: Special purpose acquisition company.
• Term Sheet: Summary of investment terms.
• Vintage Year: Year fund starts investing.
• Waterfall: Allocation order for profit distribution.

Banking & Treasury

• Basel III: Global regulatory framework for banks.
• Capital Adequacy Ratio: Minimum capital banks must hold.
• Cash Concentration: Sweeping balances to central account.
• Correspondent Bank: Bank providing services to another.
• Counterparty Risk: Risk counterparty defaults.
• Custodian Bank: Holds securities for safekeeping.
• Derivatives Clearing: Central counterparty guaranteeing trades.
• Debit Note: Adjustment increasing amount owed.
• FX Forward: Agreement to exchange currency at future date.
• FX Spot: Immediate currency exchange.
• FX Swap: Exchange of currencies with reverse exchange.
• Interbank Rate: Benchmark rate between banks.
• KYC: Know Your Customer requirements.
• Liquidity Coverage Ratio: Requirement for liquid assets.
• Money Market Instruments: Short-term debt securities.
• Prime Brokerage: Services provided to hedge funds.
• Repo: Sale of securities with agreement to repurchase.
• Risk-Weighted Assets: Assets weighted by risk category.
• Settlement Risk: Risk of failure to deliver.
• SLR: Statutory liquidity ratio.
• Stress Testing: Testing bank resilience.
• Treasury Management: Oversight of liquidity and risk.

Funds

• AIF: Alternative Investment Fund.
• ADGM QIF: Qualifying investor fund in ADGM.
• Administered Fund: Fund with external administrator.
• Cayman ELP: Exempt limited partnership fund structure.
• Closed-Ended Fund: Fund not redeemable until term end.
• Commitment: Capital pledged by investor.
• Depositary: Safeguards fund assets.
• Feeder Fund: Fund investing into master fund.
• Gate Provision: Restriction on redemptions.
• Hurdle Rate: Minimum return before carry.
• Illiquid Asset Fund: Fund investing in hard-to-sell assets.
• Investment Mandate: Strategy governing investments.
• Liquidity Terms: Withdrawal and redemption rules.
• Lock-Up Period: Period investors cannot redeem.
• Master-Feeder Structure: International pooling.
• NAV: Net asset value.
• Open-Ended Fund: Fund allowing redemptions.
• PPM: Private placement memorandum.
• Redemption Fee: Fee on withdrawals.
• Series Accounting: Equalizes investor returns.
• Side Pocket: Segregation of illiquid assets.
• Subscription Agreement: Contract to invest in a fund.
• UCITS: EU-regulated retail fund regime.

Taxation & Cross-Border Planning

• BEPS: OECD anti-avoidance initiative.
• Capital Gains Tax: Tax on asset sale profits.
• CFC Rules: Tax rules for controlled foreign companies.
• Corporate Tax Residency: Jurisdiction of corporate taxation.
• Double Tax Treaty: Agreement avoiding double taxation.
• Effective Tax Rate: Total tax paid divided by earnings.
• Exit Tax: Tax on company relocation.
• FATCA: U.S. tax reporting regime.
• GAAR: General anti-avoidance rule.
• Hybrid Mismatch Rules: Prevent double deductions.
• Indirect Tax: VAT, GST, consumption taxes.
• Permanent Establishment: Taxable nexus in jurisdiction.
• Stamp Duty: Tax on document execution.
• Substance Requirements: Local operations required.
• Tax Credit: Reduction in tax liability.
• Tax Deferral: Postponement of taxes.
• Tax Haven: Jurisdiction with low/no taxes.
• Tax Residency Certificate: Proof of fiscal residency.
• Transfer Pricing: Pricing of intra-group transactions.
• Withholding Tax: Tax on outbound payments.

Capital Markets

• Ask Price: Lowest price a seller will accept.
• Bid Price: Highest price a buyer will pay.
• Bond Laddering: Staggering maturities to manage risk.
• Circuit Breaker: Mechanism halting trading during volatility.
• Convertible Bond: Bond convertible to equity.
• Covenant: Lender-imposed borrower obligations.
• Credit Default Swap: Credit risk insurance.
• Dark Pool: Private trading venue.
• DTCC: Clearinghouse for securities transactions.
• ETF Arbitrage: Arbitrage between ETF and NAV.
• Futures Contract: Agreement to buy/sell at a future date.
• Index Provider: Designs market indices.
• IPO: Initial public offering.
• Liquidity Premium: Extra yield for illiquid assets.
• Market Capitalization: Value of outstanding equity.
• Market Maker: Provides liquidity.
• Order Book: List of buy/sell orders.
• Primary Market: New issuance market.
• Rights Issue: Offering new shares to existing holders.
• Secondary Market: Trading existing securities.
• Settlement Cycle: Time between trade and settlement.
• Short Selling: Selling borrowed securities.
• Underwriter: Guarantees security issuance.
• Zero-Coupon Bond: Bond with no periodic interest.

Real Estate Investment Terms

• Amortization Schedule: Payment schedule reducing principal.
• Bridge Loan: Short-term financing for property acquisition.
• Brownfield Development: Redevelopment of existing site.
• CapEx: Capital expenditures.
• Capitalization Rate: NOI divided by property value.
• Carried Interest in Real Estate: Promote for managers.
• Core Property: Stabilized, low-risk property.
• Debt Yield: NOI divided by loan amount.
• DSCR: Debt service coverage ratio.
• EMI: Regular loan installment.
• Gross Yield: Annual rent divided by value.
• Greenfield Development: Construction on undeveloped land.
• IRR: Internal rate of return for real estate.
• Leasing Commissions: Broker payments for tenant acquisition.
• Loan-to-Cost: Loan amount relative to total development cost.
• Loan-to-Value: Loan amount relative to property value.
• Mixed-Use Development: Combined residential/commercial asset.
• Net Operating Income: Revenue minus expenses.
• OpEx: Operating expenses.
• REIT: Real estate investment trust.
• Rent Roll: Listing of rent amounts.
• Sale-Leaseback: Sale with lease to seller.
• Tenant Improvement Allowance: Funds for tenant build-out.
• Vacancy Rate: Percentage of units not leased.
• Yield on Cost: NOI divided by project cost.

Risk, Compliance & Regulation

• AML: Anti-money laundering regime.
• Basel IV: Updated global banking standards.
• Compliance Risk: Regulatory breach risk.
• Cyber Risk: Exposure to hacking or data breaches.
• ESG Risk: Risks from environmental/social/governance factors.
• FATF: Global AML standards body.
• Governance Risk: Failures in oversight or processes.
• KYC: Customer identification requirements.
• Liquidity Risk: Inability to meet obligations.
• Market Risk: Loss from market fluctuations.
• Operational Risk: Failure of processes or systems.
• Reputational Risk: Damage to credibility.
• Sanctions Screening: Checking transactions against sanctioned parties.
• Systemic Risk: Risk of macro-level financial collapse.
• Three Lines of Defense: Governance model separating risk functions.
• Whistleblower Policy: Framework for reporting misconduct.
• Wire Fraud: Fraudulent electronic fund transfers.

Valuation & Modelling

• Accretive Model: Merger increasing EPS.
• Comparable Transactions: Valuation based on precedent deals.
• Contribution Margin: Revenue minus variable costs.
• Cost of Equity: Expected equity return.
• Enterprise Multiple: EV/EBITDA ratio.
• Free Cash Flow: Cash after capital expenditures.
• Goodwill: Premium paid above asset fair value.
• Impairment: Reduction in asset value.
• Levered Beta: Beta adjusted for leverage.
• Monte Carlo Simulation: Probabilistic risk modeling.
• Multiples Analysis: Relative valuation method.
• Net Debt: Total debt minus cash.
• NPV: Net present value.
• Run-Rate: Extrapolated financial performance.
• Sensitivity Analysis: Stress-testing assumptions.
• Terminal Growth Rate: Rate beyond projection period.
• Terminal Value: Ending value of discounted cash flows.
• Unlevered Beta: Beta without leverage.
• WACC: Weighted average cost of capital.

Family Office & Wealth Management

• Asset Aggregation: Consolidated reporting across assets.
• Behavioral Finance: Psychology affecting investor decisions.
• Client Segmentation: Categorization by wealth level.
• Concentrated Position: Large exposure to single asset.
• Estate Freeze: Freezing value transferred to heirs.
• Family Bank: Intra-family lending structure.
• Family Constitution: Governance charter for families.
• Family Office: Entity managing UHNW family assets.
• Financial Literacy: Understanding financial concepts.
• Generational Transfer: Movement of wealth across generations.
• Impact Investing: Investments achieving social outcomes.
• Intergenerational Wealth: Long-term family capital.
• Investment Policy Statement: Document defining strategy.
• Legacy Planning: Ensuring wealth continuity.
• Liquidity Event: Accessing large liquidity—sale, IPO, etc.
• Philanthropy Strategy: Structured charitable giving.
• Risk Profiling: Assessing investor risk preferences.
• SFO/MFO: Single vs multi-family office.
• Succession Planning: Preparing next generation.
• Wealth Transfer Planning: Strategy for asset transition.