Vocabulary

• Asset – A resource with economic value that an individual or corporation owns or controls with the expectation that it will provide future benefit.
• Bankruptcy – The legal proceeding involving a person or business that is unable to repay their outstanding debts.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.
• 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.
• Cash Flow – The total amount of money being transferred into and out of a business, especially as affecting liquidity.
• Credit – The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
• Debt – Money that is owed or due.
• Dividend – A sum of money paid regularly by a company to its shareholders out of its profits or reserves.
• Equity – The value of an ownership interest in property, including shareholders' equity, in a business.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Financial Market – A market in which people trade financial securities, commodities, and other fungible items.
• Fiscal Policy – Government policy that attempts to influence the direction of the economy through changes in government spending or taxes.
• Gross Domestic Product (GDP) – The total value of goods produced and services provided in a country during one year.
• Hedge Fund – A limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Investment – The action or process of investing money for profit or material result.
• Liquidity – The availability of liquid assets to a market or company.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• Options – Contracts that provide the right, but not the obligation, to buy or sell an asset at a certain price before a certain date.
• Portfolio – A range of investments held by a person or organization.
• 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 or to compare the efficiency of a number of different investments.
• Securities – Tradable financial assets such as equities or fixed income instruments.
• Stock – The capital raised by a corporation through the issue and distribution of shares.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
• Treasury Bonds – Long-term, fixed-interest U.S. government debt securities.
• 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.
• Yield – The income return on an investment, such as the interest or dividends received.
• Quantitative Easing – A monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity.
• Derivative – A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets.
• Forex Market – A global online network where traders buy and sell currencies.
• Arbitrage – The simultaneous purchase and sale of an asset in order to profit from a difference in the price.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Short Selling – The sale of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller.
• Volatility – A statistical measure of the dispersion of returns for a given security or market index.
• Bull Market – A market condition in which the prices of securities are rising, or are expected to rise.
• Bear Market – A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining.
• Diversification – A risk management technique that mixes a wide variety of investments within a portfolio.
• Capital Gains – The increase in value of an asset or investment over time.
• Blue Chip Stocks – Shares in large, nationally recognized companies with a long history of stable earnings and dividends.
• IPO (Initial Public Offering) – The process by which a private company can go public by sale of its stocks to the general public.
• Commodity – A raw material or primary agricultural product that can be bought and sold.
• Annuity – A fixed sum of money paid to someone each year, typically for the rest of their life.
• Financial Statement – Formal records of the financial activities and position of a business, person or other entity.
• Real Estate – Property consisting of land or buildings.
• Depreciation – A reduction in the value of an asset over time, due in particular to wear and tear.
• Fiscal Year – A year as reckoned for taxing or accounting purposes.