Vocabulary

• Asset – Something valuable that an entity owns, benefits from, or has use of, in generating income.
• Bankruptcy – Legal process for dealing with debt problems of individuals and businesses.
• Budget – An estimation of the 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 or available for a purpose such as starting a company or investing.
• 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 – An amount of money borrowed by one party from another.
• Diversification – The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• 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 ownership interest in property, including shareholders' equity, in a business.
• Financial Planner – A professional who helps individuals create a comprehensive plan for their financial future.
• Inflation – The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
• Interest – The charge for the privilege of borrowing money, typically expressed as annual percentage rate.
• Investment – The action or process of investing money for profit or material result.
• Liability – The company's legal financial debts or obligations that arise during the course of business operations.
• Liquidity – The availability of liquid assets to a market or company.
• Mortgage – A loan secured by the collateral of some specified real estate property.
• Net Worth – The amount by which assets exceed liabilities.
• Portfolio – A range of investments held by a person or organization.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment.
• Risk – The chance that the return on an investment will be different than expected.
• Savings Account – A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
• Securities – A tradable financial asset.
• Stock – 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 financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.
• Treasury Bond – A government debt security yielding a fixed rate of interest, issued by the U.S. federal government and available in various denominations.
• 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.
• Bear Market – A condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining.
• Bull Market – A condition of a financial market where the prices of securities are rising or are expected to rise.
• Mutual Fund – An investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
• Compound Interest – Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
• Capital Gain – A rise in the value of a capital asset that gives it a higher worth than the purchase price.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Annuity – A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.
• Hedge Fund – An aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.
• Exchange Rate – The price of a nation's currency in terms of another currency.
• Credit Score – A statistically derived numeric expression of a person's creditworthiness that is used by lenders to assess the likelihood that a person will repay his or her debts.
• Amortization – The paying off of debt with a fixed repayment schedule in regular installments over a period of time.
• Balance Sheet – A financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time.
• Cash Flow – The net amount of cash and cash-equivalents moving into and out of a business.
• Fiscal Policy – The use of government revenue collection and expenditure to influence a country's 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.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
• Pension – A fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments.
• Leverage – The investment strategy of using borrowed money to increase the potential return of an investment.
• Derivative – A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets.
• Cryptocurrency – A digital or virtual currency that uses cryptography for security and operates independently of a central bank.
• Financial Literacy – The ability to understand and use various financial skills, including personal financial management, budgeting, and investing.
• Emergency Fund – A stash of money set aside to cover the financial surprises life throws your way.
• Exchange-Traded Fund (ETF) – A type of investment fund and exchange-traded product, with shares that are tradable on a stock exchange.