Dictionary &

financial terms

AF Account

AF in Swedish stands for Aktie- och Fond-konto (Shares and Funds account).  It is a capital gains taxed account (25% for unlisted and 30% för listed shares) from Strivo – which is provided for free to Polynom shareholders.

Angel Investor

Business angels are individuals who typically enter at a very early stage to support a company with both expertise and capital. They usually invest smaller amounts compared to venture capitalists and often serve as a complement to them. Entrepreneurs can gain access to capital, expertise, and valuable contacts through a business angel. A business angel often has personal experience in running a business. They also have the time, strong commitment, and capital to invest in new, promising business ideas in rapidly growing industries. At the same time, the business angel aims for a good return on their investment and is therefore willing to contribute through their own efforts to the development of the company.

Ankle Biter

Another Wall Street term that stands for a company with a small market capitalization (in the US, under $500 million). This term was coined back in the 1950s, and it comes from the idea that small crawling children or dogs can only bite at an adult’s ankles. As an investment, ankle biters tend to be quite volatile and are often thinly traded. On the plus side, ankle biters often have greater growth potential than larger stocks and typically encompass new technology.


An initial public offering, or IPO, is just as it sounds – when a company goes public on the stock exchange. When a company goes public, its shares become available for trading on a regulated marketplace, such as the Stockholm Stock Exchange. It’s worth noting that shares in unlisted companies can also be traded, but they naturally have lower liquidity.

Dead Cat Bounce

“Dead cat bounce” is a term in the world of finance, originating from New York and Wall Street. It refers to a minor recovery of a stock after a significant decline in its price. The term comes from the notion that “even a dead cat will bounce if it falls from a great height,” such as a skyscraper, and suggests that the stock is not likely to continue rising.

Due Diligence

Due diligence is a process in which a thorough and systematic examination of a company or a business is conducted to assess its financial, legal, and operational status. The purpose is to gather relevant information and analyze it in order to mitigate risks and make well-informed decisions. During the due diligence process, the company’s financial documents, legal agreements, ownership structure, operational processes, environmental impact, and other relevant factors are examined. The results of due diligence are typically used to evaluate whether a business or investment is profitable and if there are any potential risks or obstacles that need to be addressed. Read more in our article HERE.

Share Issue

An issuance or new share offering, known as an “emission” in Swedish, occurs when a company needs to raise new capital by issuing new shares through a public offering. The company makes an offer which investors subscribe to and pay for. The company then sends out documents such as payment receipts (certificates of who has paid) and registration documents to the Swedish Companies Registration Office (Bolagsverket), which then issues the shares. An issuing agent then registers the shares in the custody of a depositary institution.


A so-called “emissionsinstitut” is a fund manager or a bank. An emissionsinstitut is engaged by companies for the planning, management, and execution of issuances. In the latest issuance, Polynom has engaged Nordic Issuing.


EV/EBIT and EV/EBITDA are multiples that complement or expand upon the more traditional P/E ratio. Both multiples take into account the company’s debt, which P/E does not. The latter, EV/EBITDA, also considers depreciation and goodwill impairments, which can significantly impact the result in certain companies.

– EV = Enterprise Value (Market value of the company’s equity + net debt).
– EBIT = Earnings Before Interest & Taxes (Operating profit or profit before interest and taxes).
– EBITDA = Earnings before interest, tax, depreciation and amortization (similar to EBIT but before Depreciation and Goodwill impairments).

Interest coverage ratio

Interest coverage ratio shows a company’s ability to cover its financial costs, i.e., interest expenses, with its annual earnings. This ratio is usually expressed in decimal form, but it can also be presented as a percentage. A number below 1.0 indicates that the profit is lower than the company’s financial costs, which is not favorable!

Directed share issue

A directed share issue is exactly what it sounds like – an issue targeted towards a selected group of investors. For instance, investors who already own shares in the company. A directed share issue can also refer to an issue directed at external investors.

Venture capital or risk capital

Venture capital, also known as risk capital, is a form of financing directed towards early or growth-stage companies with high potential. It is provided by specialized investors, venture capitalists, who are willing to take higher risks in exchange for the potential for high returns on their investment. These investors become stakeholders in the company and can offer financial support, guidance, and business networks to help the companies grow and develop. Venture capital plays a crucial role in driving innovation and growth, particularly in the technology sector and for startups that need capital to develop their products, expand their operations, and reach the market.

Policy Rate

The policy rate, or repo rate, is the interest rate set by the central bank for short-term loans to commercial banks. It is a crucial tool in monetary policy as it affects the banks’ cost of liquidity, thereby regulating the amount of money in circulation in the economy (and can consequently influence inflation). Often, it influences the interest rate path that the central bank announces (i.e., how the central bank views the policy rate in the future), and banks are usually quick to adjust the interest rates they charge their customers (as homeowners, we can see this on our mortgages). The Swedish policy rate is called the repo rate (after “repa,” slang for the English term “repurchasing agreement”). The central bank lends money by buying repos from banks, which are then sold back after a period (this is called a reverse repo) with an interest markup, forming the “repo rate.”

What is a Corporate Finance firm?

A Corporate Finance firm is an advisor that acts as an intermediary between companies in need of capital and investors. Their main tasks are to provide companies with advice on how to address their financial challenges and to assist them in raising financing, whether it be through stock offerings, bond issuances, or derivative products. Every bank has a Corporate Finance department, but there are also specialized firms like Sedermera or Sciety.

What is an ISIN code?

The International Securities Identification Number (ISIN) is a code designed to uniquely identify a security. The ISIN code consists of an alphanumeric sequence of twelve characters. The code has three components: it begins with a two-digit country code according to the ISO 6166 standard, followed by a nine-digit alphanumeric sequence, and then a check digit calculated using the Luhn algorithm from the previous eleven characters. For example, Polynom’s B-share ISIN code is SE0015531058.

What is Dilution?

Dilution occurs when the ownership stake of existing shareholders is reduced due to the issuance of new shares. In a simple example, if you own 100% of a company with 100 shares, but the company needs to raise more money (for example, to fund operations) and issues 10 new shares, you still own 100 shares, but your ownership percentage decreases to 91% (100/110 = 0.909). Your ownership has been diluted. In most cases, this is considered negative for existing shareholders.

However, in the case of Polynom, there are a few factors to consider. First, Polynom currently does not pay dividends, so the dilution effect of having more shares to share profits with is less significant. Second, Polynom aims to provide the best possible return. For example, if you own 100 shares and the price is 1 SEK, and there are 1,000 shares in the company, your 10% stake is worth 100 SEK. In the future, if 1,000 new shares are issued, your stake is diluted to 5%, but now the stock is valued at 3 SEK, making your stake worth 300 SEK. In this scenario, dilution is not as critical. You can read more about Dilution in our article HERE.

What does Venture Capital mean?

Venture capital firms are financial or investment companies that provide funding in the relatively early stages of a company’s development, typically when the company is transitioning from a developmental phase to starting sales or further expanding. These firms are composed of professional investors, aiming to achieve a good return on investment for their shareholders and backers. They usually operate with funds provided by their investors and often take a 20% to 40% ownership stake in the companies they invest in.

What does TO stad for?

TO stands for Teckningsoption in Swedish. A teckningsoption is a security that grants the holder the right to purchase a newly issued share at a specific price during a predetermined period.


Volatility refers to the price movements of stocks and other financial assets. It is used as a measure to assess the market risk (systematic risk) associated with a financial asset. A stock with high volatility experiences significant (either negative or positive) deviations from its average value.

Zombie company

Zombie company: There is no “official” threshold, but it is commonly defined as companies that have had an interest coverage ratio of less than 1% for at least three years. This means companies that are unable to finance their operations and must take out loans to continue their business. This situation typically works when interest rates are low; however, if interest rates rise, it poses a threat of bankruptcy.

Hawk or Dove?

Hawk or Dove – are terms used to refer to monetary policymakers or assessors who differ in opinion regarding the policy interest rate – where the hawk prefers to raise it and the dove prefers to lower it. The term originally comes from the USA, where “war hawk” and “peace dove” represent the different inclinations towards entering a war or staying out and trying to solve the problem through other means.

Hurdle Rate

Hurdle Rate is the lowest internal rate of return (IRR) needed in order to make an investment or finance a project.


Inflation is when prices of goods and services rise, which means you can buy less for the same amount of money. This means that the value of money decreases. In most countries, inflation is calculated using a “basket” of common goods and services, and in Sweden, it’s known as CPI (Consumer Price Index). If the price of this “basket” goes up by 1% in a year, it means that Sweden has an inflation rate of 1%. As you may have noticed at some point, you might feel like things are getting more and more expensive even though inflation is relatively low. This is because of the specific goods and services included in the “basket”. You can learn more than you ever wanted to know here: https://www.scb.se/hitta-statistik/sverige-i-siffror/samhallets-ekonomi/kpi/

IRR or internal rate of return

IRR, or Internal Rate of Return, corresponds to the Swedish term “Internränta” and is a measure of the average annual return an investment provides. When comparing two investments and only considering IRR, you would choose the investment with the higher IRR. IRR is often used as the Hurdle Rate, which is the minimum internal rate of return required to make an investment.

KF account

KF stands for Kapital Försäkring in Swedish. The advantage of a capital insurance policy is that you do not pay any capital gains tax and you do not need to declare your transactions. Instead, you pay a return tax at the end of each quarter (0.375% in 2022). Additionally, you pay a fee to the insurance company (Idun) and the company that validates the valuation every quarter (Kaptena).


Since 2018, all companies and other legal entities require a global identification code, known as a Legal Entity Identifier (LEI), in order to conduct a securities transaction. This requirement does not apply to private individuals. The legal entities that must possess an LEI are defined in the framework of ISO 17442, which can be briefly explained as legal entities involved in financial transactions. Furthermore, ISO 17442 establishes that legal entities involved in certain financial transactions may not require an LEI, but they can still possess one. This is because stockbrokers and other financial institutions may have internal regulations that require the legal entity to have an LEI in order to use their services.


P/E ratio comes from the English term “price to earnings” and measures a company’s current stock price in relation to its earnings. It is the most commonly used multiple, but it does not take into account factors like growth potential or debt. A high P/E ratio indicates that the stock price has risen faster than earnings, due to expected future earnings growth. However, a high P/E ratio is not necessarily negative. We would say that Storskogen is a typical example. If a company can meet the expectations implied by a high P/E value, it can be justified.


In this category, the company has decided to carry out an initial public offering (IPO) and often has a planned timeframe for when it will occur. It is common for such companies to raise some capital 6-12 months before the IPO in order to complete the final planned development of the company. This typically enhances the company’s value at the time of the listing.

Private Placement

Private Placement, also known as private investment, refers to any investments made in unlisted companies. When a company is relatively new, such investments are often referred to as seed investments or angel investments, and they typically carry extremely high risk. As the company matures, it becomes more common to talk about expansion capital, private placements, rounds C, D, and so on. Typically, as the company becomes older and more established, the risk decreases, but at the same time, the valuation tends to increase.


When a company conducts a rights issue to existing shareholders, they have the right (but not the obligation) to invest in proportion to their existing holdings. How do you calculate your pro-rata in this case? If you own 100 shares in Company A, which has a total of 100,000 shares and is issuing 50,000 new shares, your pro-rata is calculated as ((100/100,000) * 50,000) = 50 shares that you have the right to subscribe to. Usually, companies allow shareholders to subscribe for more than their pro-rata, but anything beyond the pro-rata is not guaranteed. You can read more about pro-rata in our article HERE.


All information provided by Polynom AB/Monylop AB is exclusively for informational purposes, for general dissemination, and should under no circumstances be used or regarded as advice, solicitation, or recommendation to buy or sell stocks or other financial instruments. It should be noted without doubt that the Act (2003:862) on Financial Advisory to Consumers or any similar legislation does not apply to information from Polynom AB/Monylop AB. Opinions and analyses presented by Polynom AB/Monylop AB should not solely form the basis for investment decisions. You should seek advice from licensed independent advisors and base your investment decisions on your own experience and situation. Polynom AB/Monylop AB reminds that trading in securities is associated with risks. An investment may both increase and decrease in value, and it is not certain that you will get back the entire invested capital. Historical performance is also no guarantee of future performance. Therefore, Polynom AB/Monylop AB disclaims any liability for any loss or damage of any kind that may be based on the use of analyses, documents, and other information originating from Polynom AB/Monylop AB.

Polynom/Monylop AB can never guarantee the accuracy of the information, and the information may be incomplete or abbreviated. Forward-looking analyses, etc., are based on subjective assessments of the future, which always involve uncertainty and should be used with caution.

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