Vocabulary

• Asset – Something valuable that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower.
• Stock – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• Mutual Fund – An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities.
• Portfolio – A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, as well as their fund counterparts.
• Dividend – A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
• Capital Gain – The increase in value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
• Liquidity – The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
• Volatility – A statistical measure of the dispersion of returns for a given security or market index.
• Risk – The chance that an investment's actual return will be different than expected.
• Return – The gain or loss made on an investment.
• Rate of Return – The gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• ETF (Exchange Traded Fund) – A type of security that involves a collection of securities—such as stocks—that often tracks an underlying index.
• REIT (Real Estate Investment Trust) – A company that owns, operates, or finances income-producing real estate.
• Hedge Fund – An alternative investment using pooled funds that employs different strategies to earn active return for its investors.
• Venture Capital – Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.
• Private Equity – Capital that is not listed on a public exchange. Private equity consists of investors and funds that make investments directly into private companies.
• Derivative – A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets.
• Forex (Foreign Exchange) – The market in which currencies are traded.
• Cryptocurrency – A digital or virtual form of currency that uses cryptography for security.
• IPO (Initial Public Offering) – The process by which a private company can go public by sale of its stocks to general public.
• Blue Chip Stocks – Shares in large, nationally recognized companies with a long record of stable earnings and/or dividend growth.
• Penny Stocks – Typically a small company's stock that trades for less than $5 per share.
• Bull Market – A period of time in financial markets when the price of an asset or security rises continuously.
• Bear Market – A condition in which securities prices fall 20% or more from recent highs.
• Short Selling – An investment or trading strategy that speculates on the decline in a stock or other securities price.
• Leverage – The use of various financial instruments or borrowed capital to increase the potential return of an investment.
• Margin – Borrowed money that is used to purchase securities.
• Diversification – A risk management strategy that mixes a wide variety of investments within a portfolio.
• Asset Allocation – An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Robo-Advisor – A digital platform that provides automated, algorithm-driven financial planning services with little to no human supervision.
• Fintech (Financial Technology) – The integration of technology into offerings by financial services companies to improve their use and delivery to consumers.
• Interest Rate – The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
• Credit Score – A statistical number that evaluates a consumer's creditworthiness based on their credit history.
• Loan – A sum of money that is expected to be paid back with interest.
• Mortgage – A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
• Insurance – A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses.
• Financial Market – Any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives.
• Broker – An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.
• 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 management of the money supply and interest rates by central banks to control inflation and stabilize currency.
• Securities – A fungible, negotiable financial instrument that holds some type of monetary value.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Options – Contracts that give the bearer the right, but not the obligation, to either buy or sell an amount of some underlying asset at a pre-determined price at or before the contract expires.
• Futures – Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.
• Yield – The income return on an investment, such as the interest or dividends received.
• Capital Market – A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities in the capital markets to raise funds.