Vocabulary

• Asset – Anything valuable owned by an individual or corporation, particularly that which can be converted into cash.
• Bankruptcy – Legal state of a person or organization that cannot repay the debts it owes to creditors.
• Bonds – A fixed income instrument representing a loan made by an investor to a borrower.
• Budget – An estimation of revenue and expenses over a specified future period of time.
• Capital – Wealth in the form of money or other assets owned by a person or organization.
• Credit – A contractual agreement where a borrower receives something of value now and agrees to repay the lender at a later date.
• Debt – Money borrowed from lenders for various purposes.
• Dividend – A distribution of a portion of a company's earnings to its shareholders.
• Equity – Ownership interest in a corporation in the form of stock.
• Financial Planning – The process of defining financial goals and creating a plan of action for achieving them.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Interest – The charge for the privilege of borrowing money.
• Investment – The action or process of investing money for profit.
• Liability – A company's financial debt or obligations.
• Loan – A sum of money that is borrowed, often from a bank, and has to be paid back.
• Mortgage – A loan secured by real property, typically a residential property.
• Mutual Fund – An investment vehicle made up of a pool of money collected from many investors.
• Portfolio – A range of investments held by a person or organization.
• Profit – A financial gain, the difference between the amount earned and the amount spent.
• Rate of Return – The gain or loss made on an investment.
• Savings – The money one has saved, especially through a bank or official scheme.
• Stock – A type of security that signifies ownership in a corporation.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income.
• Yield – The income return on an investment.
• Capital Gain – A profit from the sale of property or an investment.
• Depreciation – A reduction in the value of an asset over time.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Fiscal Policy – Government policy relating to setting and adjusting spending levels and tax rates to monitor and influence a nation's economy.
• Gross Domestic Product (GDP) – The total value of goods produced and services provided in a country during one year.
• Hedging – Making an investment to reduce the risk of adverse price movements in an asset.
• Liquidity – The degree to which an asset or security can be quickly bought or sold.
• Net Worth – The value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities.
• Option – A financial derivative that represents a contract sold by one party to another.
• Pension – A regular payment made by the state to people of or above the official retirement age.
• Risk – The potential of losing something of value, measured as a function of threat and vulnerability.
• Securities – Financial instruments, like stocks and bonds, that represent an ownership position in a publicly-traded corporation.
• Treasury Bill (T-Bill) – A short-term debt obligation backed by the US government.
• Venture Capital – Financing that investors provide to startup companies and small businesses.
• Bear Market – A market condition in which the prices of securities are falling.
• Bull Market – A market condition in which the prices of securities are rising.
• Day Trading – The practice of buying and selling within the same trading day.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Margin – Borrowing money from a broker to purchase stock.
• Short Selling – The practice of selling securities that the seller does not yet own.
• Futures Contract – A legal agreement to buy or sell a commodity at a predetermined price at a specified time in the future.
• Index Fund – A type of mutual fund or exchange-traded fund with a portfolio constructed to match or track the components of a market index.
• Arbitrage – Buying a security in one market and simultaneously selling it in another market at a higher price.
• Diversification – The strategy of investing in a variety of securities in order to reduce risk.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation and goals.
• The Art of Frugal Living – The practice of acquiring goods and services in a restrained manner, and resourcefully using already owned economic goods and services, to achieve a longer term goal.