Vocabulary

• Asset – Anything of value that can be converted into cash.
• Bankruptcy – A legal procedure for dealing with debt problems of individuals or businesses.
• Budget – An estimation of the revenue and expenses over a specified future period of time.
• Capital – Wealth in the form of money or property owned by a person or business.
• 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 – Money borrowed from lenders for a variety of corporate or personal purposes.
• Equity – Ownership interest in a corporation in the form of common stock or preferred stock.
• Finance – The management of large amounts of money, especially by governments or large companies.
• Gross Income – The total income from all sources before taxes and other deductions.
• 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.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Investment – The action or process of investing money for profit.
• Liability – A company's legal financial debts or obligations that arise during the course of business operations.
• Mortgage – A loan to purchase a home or other real estate.
• Net Worth – The total assets minus total outside liabilities of an individual or a company.
• Operating Expense – The cost of running the day-to-day operations of a business.
• Portfolio – A range of investments held by a person or organization.
• Recession – A significant decline in economic activity that lasts longer than a few months.
• Risk – The potential that a chosen action or activity will lead to a loss.
• Saving Account – A bank account that earns interest.
• Tax – A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.
• Unemployment Rate – The measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.
• Variable Cost – A corporate expense that changes in proportion with production output.
• Wealth – The abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.
• Yield – The income return on an investment.
• Zero-Based Budgeting – A method of budgeting in which all expenses must be justified for each new period.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a market index.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• Bonds – 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.
• Dividends – 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.
• Diversification – The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• Interest Rate – The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
• Financial Planner – A qualified investment professional who helps individuals and corporations meet their long-term financial objectives.
• Retirement Plan – A financial arrangement designed to replace employment income upon retirement.
• Insurance – A contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses.
• Annuity – A long-term investment that is issued by an insurance company and is designed to help protect you from the risk of outliving your income.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.
• Financial Independence – The status of having enough income to pay one's living expenses for the rest of one's life without having to be employed or dependent on others.
• Real Estate – Property consisting of land or buildings.
• Cash Flow – The total amount of money being transferred into and out of a business.
• Depreciation – A method of allocating the cost of a tangible asset over its useful life.
• Leverage – The use of borrowed funds to increase one's investment capacity and increase the potential returns to the investor.
• Budget Deficit – The amount by which spending exceeds revenue over a particular period of time.
• Fiscal Policy – The use of government revenue collection (taxation) 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.