Vocabulary

• Asset – Anything of value that can be converted into cash.
• Bankruptcy – Legal process for dealing with debt problems of individuals or businesses.
• Bull Market – A market characterized by rising prices.
• Bear Market – A market characterized by falling prices.
• Bond – A debt investment in which an investor loans money to an entity.
• Budget – An estimate of income and expenditure for a set period of time.
• Credit – The ability of a customer to obtain goods or services before payment.
• Compound Interest – Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
• Capital Gain – The increase in the value of an investment or real estate that gives it a higher worth than the purchase price.
• Depreciation – The decrease in the value of an asset over time.
• Dividend – A sum of money paid regularly by a company to its shareholders out of its profits.
• Equity – The ownership interest of investors in a company.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Fiscal Policy – Government policy that attempts to manage the economy by controlling taxing and spending.
• 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 in hopes of realizing large capital gains.
• Income Statement – A financial statement that gives operating results for a specific period.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• IPO (Initial Public Offering) – The first sale of stock by a private company to the public.
• Liability – A company's legal financial debts or obligations that arise during the course of business operations.
• Mutual Fund – An investment vehicle that is made up of a pool of funds collected from many investors.
• Net Worth – The amount by which assets exceed liabilities.
• Options – Contracts that give the holder the right to buy or sell an asset at a certain price before a certain date.
• Portfolio – A collection of investments owned by an individual or organization.
• Profit Margin – Net income divided by revenue; a measure of a company's profitability.
• Recession – A significant decline in economic activity spread across the economy, lasting more than a few months.
• Risk Tolerance – The degree of variability in investment returns that an investor is willing to withstand.
• 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 Deduction – A reduction in tax obligation from a taxpayer's gross income.
• Yield – The income return on an investment, such as the interest or dividends received from holding a particular security.
• Volatility – The degree of variation of a trading price series over time.
• Venture Capital – Capital invested in a project in which there is a substantial element of risk.
• Underwriting – The process by which investment bankers raise investment capital from investors on behalf of corporations and governments.
• Treasury Bill (T-Bill) – A short-term debt obligation backed by the U.S. government with a maturity of less than one year.
• Securities – A fungible, negotiable financial instrument that holds some type of monetary value.
• ROI (Return on Investment) – A ratio between net profit and cost of investment resulting from an investment of some resources.
• Quantitative Easing – A monetary policy whereby a central bank buys predetermined amounts of government bonds in order to directly increase the money supply.
• Premium – The amount to be paid for an insurance policy.
• Pension Fund – A type of investment established to provide retirement income for members.
• Margin – Borrowed money that is used to purchase securities.
• Leverage – The use of various financial instruments or borrowed capital to increase the potential return of an investment.
• Junk Bond – A high-yield or non-investment grade bond with a credit rating below investment grade.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower.
• Hedge – Making an investment to reduce the risk of adverse price movements in an asset.
• Futures Contract – A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.
• Franchise – The right or license granted by a company to an individual or group to market its products or services in a specific territory.
• Foreign Exchange (Forex) – The global marketplace for the trading of currencies.
• Fixed Income – A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals at reasonably predictable levels.
• Financial Planner – A qualified investment professional who helps individuals and corporations meet their long-term financial objectives.
• ETF (Exchange Traded Fund) – A type of investment fund and exchange-traded product, traded on stock exchanges.