Vocabulary

• Asset – Any resource owned by an individual or a company with economic value that can be converted into cash.
• Bankruptcy – A legal process where a person or business cannot repay their outstanding debts.
• Bond – A type of investment that involves lending money to an organization in exchange for periodic interest payments and the return of the principal at maturity.
• Budget – A financial plan that estimates income and expenditures for a set period of time.
• Capital – Wealth in the form of money or other assets used in a business for the purpose of producing profit.
• Credit – A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date.
• Debt – Money that is owed or due.
• Diversification – A risk management strategy that mixes a wide variety of investments within a portfolio.
• Dividend – A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
• Equity – The value of an asset after all liabilities or debts have been paid.
• Expense – The economic costs a business incurs through its operations to earn revenue.
• Financial Planning – The process of determining personal financial goals and creating a plan to achieve them.
• 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.
• Interest – The cost of borrowing money or the return earned on an investment.
• Investment – The act of allocating resources, usually money, with the expectation of generating an income or profit.
• Liability – A company's financial debt or obligations that arise during the course of its business operations.
• Liquidity – The ease with which an asset, or security, can be converted into ready cash without affecting its market price.
• Mutual fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• Net income – A company's total earnings or profit.
• Portfolio – A collection of investments held by an individual or an institution.
• Profit – The financial gain received when revenue exceeds expenses.
• Rate of return – The gain or loss made on an investment relative to the amount of money invested.
• Risk – The uncertainty about the outcome of an investment.
• Savings – The portion of income not spent on current expenditures.
• Stock – A type of investment that represents an ownership share in a company.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Yield – The income return on an investment.
• Capital Gain – The rise in value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
• Depreciation – A reduction in the value of an asset over time, due in particular to wear and tear.
• Insurance – A contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
• Mortgage – A loan used by individuals to buy real estate.
• Pension – A regular payment made during a person's retirement from an investment fund.
• Annuity – A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.
• ETF – A type of investment fund and exchange-traded product, with shares that are tradable on a stock exchange.
• ROI – Return on Investment, a measure used to evaluate the efficiency or profitability of an investment.
• Bear Market – A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining.
• Bull Market – A market condition in which the prices of securities are rising, and widespread optimism encourages buying.
• IPO – Initial Public Offering, the process by which a private company can go public by sale of its stocks to general public.
• 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.
• Leverage – The use of various financial instruments or borrowed capital to increase the potential return of an investment.
• Venture Capital – Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.
• Fiscal Policy – The use of government revenue collection (taxes) and expenditure (spending) to influence the economy.
• Monetary Policy – The process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
• Forex – Foreign exchange market, it's a global decentralized or over-the-counter market for the trading of currencies.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Derivatives – Financial security with a value reliant upon or derived from an underlying asset or group of assets.
• Index Fund – Type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Arbitrage – The practice of taking advantage of a price difference between two or more markets.
• Recession – A significant decline in economic activity spread across the economy, lasting more than a few months.