Vocabulary

• Assets – Anything of value that an individual or corporation owns.
• Bankruptcy – A legal proceeding involving a person or business that's unable to repay outstanding debts.
• Bonds – A type of investment that involves lending money to an institution in exchange for periodic interest payments.
• Budget – An estimate of income and expenditure for a set period.
• Capital Gain – The increase in value of a capital asset, giving it a higher worth than the purchase price.
• Compound Interest – Interest calculated on the initial principal and also on the accumulated interest of previous periods.
• Credit Score – A numerical expression based on a person's credit files, representing their creditworthiness.
• Debt – Money borrowed from another party, often for making large purchases.
• Diversification – The strategy of investing in a variety of different assets to reduce risk.
• Dividend – A distribution of a portion of a company's earnings to its shareholders.
• Equity – The value of an asset after all liabilities or debts have been subtracted.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Financial Planner – A professional who helps individuals and corporations meet their long-term financial objectives.
• Fiscal Policy – Government policy relating to taxes, spending, and borrowing.
• Gross Income – The total income from all sources before taxes and other deductions.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Insurance – A contract that provides compensation for specific losses in exchange for a periodic payment.
• Interest Rate – The amount charged by a lender to a borrower for the use of assets.
• Investment – The action or process of investing money for profit.
• Liability – The state of being responsible for something, especially in terms of financial or legal obligations.
• Liquidity – The availability of liquid assets to a market or company.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings.
• Net Worth – The total assets minus total outside liabilities of an individual or a company.
• Pension – A regular payment made to a person after retirement.
• Portfolio – A range of investments held by a person or organization.
• Principal – The original sum of money borrowed in a loan, or put into an investment.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment.
• Risk – The potential for uncontrolled loss of something valuable.
• Savings Account – A bank account that earns interest.
• Securities – Tradable financial assets such as stocks, bonds, and options.
• Shareholder – An individual or institution that legally owns a share of stock in a public or private corporation.
• Stocks – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Treasury Bond – A government debt security with a maturity date of more than 10 years.
• Variable Expense – A corporate expense that changes in proportion to production output.
• Yield – The income return on an investment.
• 401(k) Plan – A retirement savings plan sponsored by an employer, where an employee saves and invests part of their paycheck before taxes are taken out.
• Annuity – A fixed sum of money paid to someone each year, typically for the rest of their life.
• Capital Loss – The decrease in the value of an investment or real estate.
• Depreciation – A reduction in the value of an asset over time.
• Estate Planning – The process of arranging for the disposal of an estate during a person's life.
• Hedge Fund – A limited partnership of investors that uses high risk methods to realize large capital gains.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track a market index.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Mortgage – A loan secured by real property through the use of a mortgage note.
• Option – A contract giving the buyer the right to buy or sell an underlying asset at a specific price on or before a certain date.
• Trust – A fiduciary relationship in which a trustor gives a trustee the right to hold title to property or assets for the benefit of a third party.
• Venture Capital – A type of private equity and a form of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.