Vocabulary

• Asset – Anything of value owned by an individual or corporation that can be converted to cash.
• Balance Sheet – A financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.
• Bond – A debt instrument issued by a government or a company to raise funds. The issuer promises to pay the bondholder a fixed interest rate over a specified period and repay the principal amount on the maturity date.
• Bull Market – A market condition characterized by rising prices and investor confidence.
• Bear Market – A market condition characterized by falling prices and lack of investor confidence.
• Capital – Wealth in the form of money or property, used in a business by a person, partnership, or corporation.
• Capital Gain – The rise in value of a capital asset (like shares or property) above its purchase price.
• Compound Interest – Interest on both the initial principal and the interest which has been added to the transformed principal.
• Credit – The provision of resources (like granting a loan) by one party to another party where that second party does not reimburse the first party immediately, thereby generating a debt.
• Debt – Money that is owed or due.
• Diversification – A risk management strategy that involves mixing a wide variety of investments within a portfolio.
• Dividend – The distribution of some of a company's earnings to a class of its shareholders, determined by the company's board of directors.
• Equity – Ownership interest in a corporation in the form of common or preferred stock.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Financial Market – A marketplace where buyers and sellers trade assets such as equities, bonds, currencies, derivatives, and commodities.
• Fiscal Policy – Government policy regarding taxation, government spending, and borrowing.
• Hedge – An investment that is made with the intention of reducing the impact of adverse price movements in an asset.
• Inflation – The rate at which the general level of prices for goods and services is rising, eroding purchasing power.
• 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 or material result.
• Liability – An obligation arising from past transactions or events, the settlement of which may result in the transfer or use of assets.
• Liquidity – The degree to which an asset or security can be bought or sold in the market without affecting the asset's price.
• Margin – The difference between a product or service's selling price and its cost of production or to the ratio between a company's revenues and expenses.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• 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 in buying, operating, or producing something.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency or profitability of an investment.
• Risk – The potential of losing something of value, weighed against the potential to gain something of value.
• Securities – A fungible, negotiable financial instrument that holds some type of monetary value.
• Shares – Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.
• Stock Exchange – A market in which securities are bought and sold.
• Tax – A compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.
• Trading – Buying and selling of financial instruments such as stocks, bonds, commodities, derivatives, or foreign exchange.
• Volatility – The statistical measure of the dispersion of returns for a given security or market index.
• Yield – The income return on an investment, such as the interest or dividends received from holding a particular security.
• Capital Loss – The decrease in the value of an investment or market share, where the selling price is lower than the purchase price.
• Derivative – A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets.
• Exchange-Traded Fund (ETF) – A type of investment fund and exchange-traded product, traded on stock exchanges.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Leverage – The strategy of using borrowed money to increase the potential return of an investment.
• Option – A financial derivative that represents a contract sold by one party to another.
• Pension Fund – A type of investment structure where an employer and employees pay into a fund to provide retirement benefits.
• Real Estate Investment Trust (REIT) – A company that owns, operates or finances income-producing real estate.
• Short Selling – An investment or trading strategy that speculates on the decline in a stock or other securities price.
• Treasury Bill – A short-term debt obligation backed by the U.S. government with a maturity of less than one year.
• Venture Capital – A form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies.
• Write-off – A reduction of the recognized value of something.
• Arbitrage – The simultaneous purchase and sale of an asset to profit from a difference in the price.
• Blue-Chip Stock – The stock of a large, well-established and financially sound company that has operated for many years.