Vocabulary

• Asset Allocation – A strategy that aims to balance risk and return by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.
• Balance Sheet – A financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time.
• Bonds – A fixed income instrument that represents a loan made by an investor to a borrower.
• Bull Market – A market condition in which the prices of securities are rising or are expected to rise.
• Capital Gain – The rise in value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
• Debt Consolidation – The act of combining several loans or liabilities into one loan.
• Dividends – A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
• Equity – Ownership interest in a corporation in the form of common stock or preferred stock.
• 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.
• Hedge Funds – 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 amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Liquidity – The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
• Mutual Funds – 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.
• Options Contract – A derivative representing a contract sold by one party (option writer) to another party (option holder).
• Portfolio – A grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
• Securities – A fungible, negotiable financial instrument that holds some type of monetary value.
• Stocks – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• Volatility – A statistical measure of the dispersion of returns for a given security or market index.
• Yield – The income return on an investment, such as the interest or dividends received from holding a particular security.
• Risk Tolerance – The degree of variability in investment returns that an investor is willing to withstand.
• Diversification – A risk management technique that mixes a wide variety of investments within a portfolio.
• 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.
• Financial Planner – A qualified investment professional who helps individuals and corporations meet their long-term financial objectives.
• Taxation – The means by which governments finance their expenditure by imposing charges on citizens and corporate entities.
• Revenue – The income generated from normal business operations and includes discounts and deductions for returned merchandise.
• Profit – A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity.
• Bankruptcy – A legal proceeding involving a person or business that is unable to repay outstanding debts.
• Credit Score – A statistical number that evaluates a consumer's creditworthiness and is based on credit history.
• Insurance – A contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses.
• Mortgage – A loan in which property or real estate is used as collateral.
• 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.
• Real Estate – Property consisting of land or buildings.
• Retirement – The action or fact of leaving one's job and ceasing to work.
• Savings – The money one has saved, especially through a bank or official scheme.
• 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.
• Wealth Management – A high-level professional service that combines financial and investment advice, accounting and tax services, retirement planning, and legal or estate planning.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• 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 macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate.
• Stock Market – A place where shares of pubic listed companies are traded.
• Trading – Buying and selling of goods and services.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Derivatives – Financial securities 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.
• Forex – The market in which currencies are traded.
• Private Equity – Capital that is not listed on a public exchange.
• Asset Management – The directing of a client's wealth or investment portfolio on their behalf.