Vocabulary

• Asset – Anything of value or a resource of value that can be converted into cash.
• Bankruptcy – Legal procedure for dealing with debt problems of individuals and businesses.
• Bonds – A loan made to large organizations such as corporations, cities, and national governments.
• Budget – An estimate of income and expenditure for a set 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.
• Cash Flow – The total amount of money being transferred into and out of a business.
• Compound Interest – Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
• 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 that is owed or due.
• Diversification – Process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• Dividend – A sum of money paid regularly by a company to its shareholders out of its profits.
• Equity – The value of the shares issued by a company.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Financial Plan – A comprehensive evaluation of an individual's current and future financial state.
• Gross Income – The total income from all sources before deductions or taxes.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower.
• 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.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings.
• Net Income – A company's total earnings after all expenses have been deducted.
• Portfolio – A range of investments held by a person or organization.
• Profit – The financial gain achieved when the amount earned from a business activity exceeds the expenses, costs, and taxes.
• Retirement Plan – A financial arrangement designed to replace employment income upon retirement.
• Risk – The possibility of financial loss.
• Savings Account – A bank account that earns interest.
• Stocks – The capital raised by a corporation through the issue of shares entitling holders to an ownership interest.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Yield – The income return on an investment.
• Securities – Tradable financial assets such as equities or fixed income instruments.
• Capital Gains – The profit from the sale of property or an investment.
• Liquidity – The availability of liquid assets to a market or company.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Interest – The charge for the privilege of borrowing money.
• Depreciation – A reduction in the value of an asset over time.
• Collateral – Something pledged as security for repayment of a loan.
• Amortization – The process of reducing a debt over a period of time through regular payments.
• Revenue – The income generated from normal business operations.
• Expense – The cost required for something; the money spent on something.
• Margin – The difference between the purchase price of a product and its selling price.
• Fixed Costs – Business costs, such as rent, that are constant whatever the quantity of goods or services produced.
• Variable Costs – Costs that vary with the level of output.
• Operating Income – The profit realized from a business's operations after deducting operating expenses.
• Fiscal Policy – Government policies relating to taxes, spending, and interest rates.
• Monetary Policy – The process by which the monetary authority of a country controls the supply of money.
• Trade Deficit – The amount by which a country's imports exceeds the value of its exports.
• Trade Surplus – The amount by which a country's exports exceeds the value of its imports.
• Credit Score – A statistical number that evaluates a consumer's creditworthiness.
• Default – Failure to fulfill an obligation, especially to repay a loan.