Vocabulary

• Asset – Something valuable an individual, corporation or country owns with the expectation that it will provide future benefit.
• Liability – A company's financial debt or obligations that arise during the course of its operations.
• Equity – The portion of a company's assets that belongs to the shareholders after all debts have been paid.
• Bond – A fixed income instrument representing a loan made by an investor to a borrower.
• Dividend – A portion of a company's earnings paid out to shareholders.
• Interest Rate – The amount a lender charges for the use of assets expressed as a percentage of the principal.
• Mutual Fund – An investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities.
• Stock – A type of security that signifies ownership in a corporation and represents a claim on part of the company's assets and earnings.
• Capital – Financial assets or the financial value of assets, such as cash and goods.
• Debt – An amount of money borrowed by one party from another.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Income Statement – A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
• Balance Sheet – A financial statement that reports a company's assets, liabilities and shareholders' equity.
• Cash Flow – The net amount of cash and cash equivalents moving in and out of a business.
• Portfolio – A grouping of financial assets.
• Liquidity – The ease with which an asset, or security, can be converted into ready cash without affecting its market price.
• Hedge – An investment to reduce the risk of adverse price movements in an asset.
• Security – A fungible, negotiable financial instrument that holds some type of monetary value.
• Derivative – A financial security with a value reliant upon or derived from an underlying asset or group of assets.
• Credit – The ability of a customer to obtain goods or services before payment.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment.
• Fiscal Policy – The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
• Monetary Policy – The policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply.
• Bankruptcy – Legal proceeding involving a person or business that is unable to repay outstanding debts.
• Leverage – The use of various financial instruments or borrowed capital to increase the potential return of an investment.
• Diversification – A risk management strategy that mixes a wide variety of investments within a portfolio.
• Gross Domestic Product (GDP) – The total value of goods produced and services provided in a country during one year.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced.
• Economy – The wealth and resources of a country or region, in terms of the production and consumption of goods and services.
• Budget – An estimate of income and expenditure for a set period of time.
• Savings – The money one has saved, especially through a bank or official scheme.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Pension – A regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed during their working life.
• Mortgage – A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.
• Investment – The action or process of investing money for profit.
• Financial Market – A market in which people trade financial securities and derivatives at low transaction costs.
• Financial Institution – An establishment that conducts financial transactions such as investments, loans and deposits.
• Capital Market – A market in which individuals and institutions trade financial securities.
• Money Supply – The total amount of monetary assets available in an economy at a specific time.
• Fiscal Year – A year as reckoned for taxing or accounting purposes.
• Depreciation – A measure of how much of an asset's value has been used up.
• Amortization – The process of gradually writing off the initial cost of an asset.
• Treasury Bill – A short-dated government security, yielding no interest but issued at a discount on its redemption price.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Venture Capital – A type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential.