Finance Glossary

An asset is any tangible or intangible economic resource owned by an individual or institution that produces positive cash flow or appreciates in value over time.

C-ASBA (Centralized Application Supported by Blocked Amount) is a regulatory payment mechanism that blocks your IPO application funds inside your own bank account rather than debiting them until allotment.

A bonus share is an additional free share issued by a company to its existing shareholders in proportion to their current holdings, financed by converting retained earnings into paid-up capital.

The Base Rate is the minimum benchmark interest rate determined by Nepal Rastra Bank below which commercial banks are legally prohibited from lending to borrowers.

A budget is a forward-looking financial roadmap that allocates expected income toward essential needs, lifestyle desires, savings, and investments.

The Book Closure Date is the official cutoff day when a listed company freezes its shareholder registry to determine eligibility for dividends, bonus shares, and AGM attendance.

A Bull Market is a sustained financial period of rising stock prices and investor optimism; a Bear Market is a prolonged period of declining asset prices by 20% or more.

CAGR (Compound Annual Growth Rate) represents the constant annual rate at which an investment grows over multiple years, smoothing out volatile year-to-year swings.

A capital gain is the profit realized when an asset or security is sold for a higher price than its original purchase cost; in Nepal, this profit is subject to Capital Gains Tax (CGT).

A circuit breaker is an automated regulatory mechanism that temporarily halts all stock trading on NEPSE during extreme market-wide price swings (4%, 5%, and 6%), preventing panic selling and systemic crashes.

The Citizen Investment Trust (CIT / Nagarik Lagani Kosh) is a government-backed statutory investment and retirement institution in Nepal that manages voluntary retirement funds, insurance schemes, and tax-exempt savings.

CDS and Clearing Limited (CDSC) is the central depository and clearing house of Nepal, maintaining digital records of all shares and operating MeroShare.

A CRN (C-ASBA Registration Number) is a confidential security code issued by your bank verifying your account details and authorizing balance holds for IPO applications.

A Candlestick Chart is a financial charting method displaying the Open, High, Low, and Close (OHLC) prices of an asset over a specific timeframe.

The Capital Adequacy Ratio (CAR) measures a bank's available capital as a percentage of its risk-weighted credit exposure, ensuring solvency against catastrophic losses.

ConnectIPS is Nepal's national real-time interbank payment system operated by Nepal Clearing House Limited (NCHL), enabling direct account-to-account digital fund transfers.

A dividend is the distribution of a portion of a company’s net corporate profits paid out directly to eligible shareholders, issued in Nepal as cash or bonus shares.

A Demat (Dematerialized) account is an electronic repository that holds your stocks, bonds, debentures, and mutual fund units securely in digital format under CDSC.

The Debt-Service-to-Income (DSTI) ratio measures the percentage of your gross verified monthly income that goes toward paying monthly debt obligations, capped by Nepal Rastra Bank at a maximum of 50%.

An Exchange Traded Fund (ETF) is an investment fund traded on stock exchanges like individual shares, holding a basket of assets designed to mirror the performance of a specific index.

The Expense Ratio (Total Expense Ratio / TER) is the annual percentage of a mutual fund’s total assets dedicated to paying for administrative, management, and operational costs.

An Equated Monthly Installment (EMI) is a fixed monthly payment made by a borrower to a bank on a specific date, comprising both principal repayment and interest charges to clear a loan over time.

The Employees Provident Fund (EPF / Karmachari Sanchaya Kosh) is Nepal's oldest statutory retirement institution, managing mandatory 20% payroll contributions (10% employee + 10% employer) alongside welfare benefits.

An emergency fund is a dedicated, highly liquid cash reserve equal to 3 to 6 months of basic living expenses, reserved exclusively for unexpected financial crises.

Earnings Per Share (EPS) measures the net profit generated by a company divided by its total number of outstanding common shares.

A Fixed Deposit (FD / Muddati Khata) is a secure investment offered by licensed banks where a lump sum is deposited for a predetermined tenure at a guaranteed interest rate.

Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country's geographic borders over a specific period.

Human Life Value (HLV) is the quantified economic and financial value of a person's future net earnings that their dependents rely upon for survival.

An Initial Public Offering (IPO) is the first time a private company sells newly created shares of stock to the general public, raising equity capital and listing on NEPSE.

Inflation is the general, sustained rise in the prices of goods and services over time, which reduces the purchasing power of your money.

KYC (Know Your Customer) is a mandatory regulatory identification and verification process enforced by Nepal Rastra Bank to prevent money laundering, fraud, and financial crimes.

MeroShare is the centralized online web and mobile portal developed by CDS and Clearing Limited (CDSC) that allows Nepali investors to apply for IPOs, calculate WACC, authorize share transfers via EDIS, and track their portfolio.

Market Capitalization is the total aggregate market value of a company's listed shares (or the entire NEPSE exchange), calculated by multiplying total shares by current price.

A Moving Average is a technical indicator that calculates average historical closing prices over a specific period, smoothing out short-term price noise to reveal trends.

Net Asset Value (NAV) represents the per-share intrinsic book value of a mutual fund scheme, calculated by subtracting total liabilities from total assets and dividing by the number of outstanding units.

The Nepal Stock Exchange (NEPSE) is the sole organized securities exchange in Nepal, facilitating electronic secondary trading, price discovery, and capital formation.

A Non-Performing Loan (NPL) is a bank loan where the borrower has failed to pay scheduled principal or interest payments for 90 days or longer.

A portfolio is a curated collection of diverse financial investments-such as stocks, bonds, mutual funds, cash, and gold-managed together to achieve target returns while minimizing risk.

A Permanent Account Number (PAN) is a unique 9-digit alphanumeric identifier issued by the Inland Revenue Department (IRD) to track tax obligations and financial transactions in Nepal.

Purchasing power is the quantity of goods or services that a single unit of currency can buy at any given moment.

The Price-to-Earnings (P/E) ratio compares a company's current market share price to its annual Earnings Per Share, showing how much investors pay per rupee of profit.

The Price-to-Book (P/B) ratio compares a company's market trading price to its Book Value Per Share (net worth per share), reflecting asset-backing safety.

QR Payment is a contactless digital payment method that allows instant, real-time fund transfers between consumers and merchants by scanning a two-dimensional barcode using mobile banking apps or digital wallets.

A rights share is an invitation to existing shareholders to purchase additional new shares of a company directly at par value (usually NPR 100), in proportion to their existing shareholdings.

The Repo Rate is the benchmark policy interest rate at which Nepal Rastra Bank lends short-term funds to commercial banks against government securities.

Return on Equity (ROE) measures how efficiently a company’s management utilizes shareholder capital to generate net profits.

The Relative Strength Index (RSI) is a momentum oscillator measuring the speed and change of price movements on a scale of 0 to 100 to identify overbought and oversold conditions.

A Reducing-Balance Interest Rate calculates interest solely on the remaining outstanding principal debt each month, shrinking interest charges as you repay.

A Systematic Investment Plan (SIP) is an investment vehicle that allows an investor to contribute a fixed sum of money at regular intervals into a mutual fund scheme, harnessing rupee-cost averaging and compounding.

The Social Security Fund (SSF) is a statutory contribution-based social safety net in Nepal where formal employers and employees collectively deposit 31% of basic salary monthly to fund health, disability, and pension benefits.

The Securities Board of Nepal (SEBON) is the apex regulatory body governing the capital market, protecting investor interests and supervising stock market participants.

Support is a price level where buying demand halts a downward trend; Resistance is a price ceiling where selling pressure halts an upward advance.

A Stop-Loss is an advance risk-management order or decision that automatically sells an asset if its price declines to a predetermined threshold, capping potential loss.

The Interest Rate Spread is the mathematical difference between the average weighted interest rate a bank charges on loans and the average rate it pays on customer deposits.

NEPSE TMS (Trade Management System) is the official online trading portal provided by licensed Nepali stockbrokers that allows investors to place real-time buy and sell orders on the secondary stock exchange.

Tax Deducted at Source (TDS) is a withholding tax mechanism under the Nepal Income Tax Act where the payer deducts tax directly from payments (salary, rent, interest, dividends) and remits it directly to the government on behalf of the recipient.

Term life insurance is pure risk financial protection that pays a guaranteed tax-free lump sum to your family if you pass away during the policy term, with zero savings or maturity gimmick.

Value Added Tax (VAT) is a multi-stage consumption tax levied on the value added to goods and services at each stage of the production and distribution supply chain in Nepal, charged at a standard rate of 13%.

WACC is the standardized weighted average purchase cost of your shares calculated in MeroShare to determine net capital gains and applicable tax when selling on NEPSE.