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Nurturing Finance
Financial Literacy Glossary

Financial Literacy

Glossary Terms at Nurturing Finance

Some of the terms you will see regularly here

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A

Adjustable-Rate Mortgage (ARM)

    • Definition: A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
Adjustable-Rate Mortgage (ARM)

Amortization

    • Definition: The process of paying off a debt over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance.
Amortization

Annual Percentage Rate (APR)

    • Definition: The annual rate charged for borrowing or earned through an investment, expressed as a single percentage that represents the actual yearly cost over the term of a loan.
Annual Percentage Rate (APR)

Annuity

    • Definition: A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.
Annuity

Appreciation

    • Definition: An increase in the value of an asset over time.
Appreciation

Arbitrage

    • Definition: The simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments on different markets
Arbitrage

Asset Allocation

    • Definition: An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon
Asset Allocation

Assets

  • Definition: Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.
Assets

Asset Management

  • Definition: A systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. Often referred to in the context of managing investment funds or portfolios, asset management is crucial for maximizing returns and managing risks associated with investments.
Asset Management

Audit

  • Definition: A systematic review and assessment of information or documents by a qualified professional. Audits are often used to ensure compliance with financial regulations and to ensure accurate reporting
Audit

Accounts Receivable

  • Definition: Money owed to a company by its debtors. Accounts receivable are listed as assets on the company's balance sheet.
Accounts Receivable

Accrued Interest

  • Definition: Interest that has been incurred but not yet paid.
Accrued Interest

B

Balance Sheet

    • Definition: A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.
Balance Sheet

Bankruptcy

    • Definition: A legal proceeding involving a person or business that is unable to repay their outstanding debts. The bankruptcy process begins with a petition filed by the debtor or on behalf of creditors.
Bankruptcy

Bear Market

    • Definition: A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. It is generally when prices decline by 20% or more.
Bear Market

Beneficiary

    • Definition: A person or entity entitled to receive benefits or funds under a will, trust, insurance policy, or other contract.
Beneficiary

Bid Price

    • Definition: The price a buyer is willing to pay for a security. It is typically lower than the ask (or sell) price.
Bid Price

Blue Chip Stocks

    • Definition: Shares of large, well-established, and financially stable companies that have operated for many years. They generally offer a stable dividend.
Blue Chip Stocks

Bond

    • Definition: A fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate.
Bond

Book Value

    • Definition: The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
Book Value

Broker

    • Definition: An individual or firm that acts as an intermediary between an investor and a securities exchange. A broker can also refer to the role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.
Broker

Bull Market

    • Definition: A financial market of a group of securities in which prices are rising or are expected to rise. The term is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, currencies, and commodities.
Bull Market

Business Cycle

    • Definition: The fluctuation of economic activity that an economy experiences over a period of time. It consists of periods of economic expansion, peak, contraction, and trough.
Business Cycle

Buyout

    • Definition: The purchase of a controlling percentage of a company's stock to take over its assets and operations.
Buyout

C

Capital

    • Definition: Wealth in the form of money or other assets owned by a person or organization or available for purposes such as starting a company or investing.
Capital

Capital Gain

    • Definition: An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.
Capital Gain

Cash Flow

    • Definition: The total amount of money being transferred into and out of a business, especially affecting liquidity.
Cash Flow

Certificate of Deposit (CD)

    • Definition: A savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination aside from minimum investment requirements.
Certificate of Deposit (CD)

Collateral

    • Definition: An asset that a borrower offers to a lender to secure a loan. If the borrower fails to pay back the loan, the lender has the right to seize the collateral.
Collateral

Commission

    • Definition: A service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security.
Commission

Commodities

    • Definition: Basic goods used in commerce that are interchangeable with other goods of the same type. Examples include grains, gold, beef, oil, and natural gas.
Commodities

Compound Interest

    • Definition: Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
Compound Interest

Consumer Price Index (CPI)

    • Definition: Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
Consumer Price Index (CPI)

Credit

    • Definition: The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
Credit

Credit Rating

    • Definition: An evaluation of the credit risk of a prospective debtor predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting.
Credit Rating

Credit Score

    • Definition: A statistical number that evaluates a consumer's creditworthiness and is based on credit history. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.
Credit Score

Cryptocurrency

    • Definition: A digital or virtual currency that uses cryptography for security. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Cryptocurrency

D

Day Trading

    • Definition: The practice of buying and selling financial instruments within the same trading day such that all positions are closed before the market closes for the trading day.
Day Trading

Debit

    • Definition: An entry recording an amount owed, listed on the left-hand side or column of an account.
Debit

Debt

    • Definition: An amount of money borrowed by one party from another, often for making large purchases that they could not afford under normal circumstances.
Debt

Debt-to-Equity Ratio (D/E)

    • Definition: A measure used to assess a company's financial leverage, calculated by dividing a company’s total liabilities by its shareholder equity.
Debt-to-Equity Ratio (D/E)

Default

    • Definition: Failure to fulfill an obligation, especially to repay a loan or appear in a court of law
Default

Deficit

    • Definition: The amount by which something, especially a sum of money, is too small. In government finance, it refers to the difference when expenditures exceed revenue.
Deficit

Depreciation

    • Definition: An accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.
Depreciation

Derivative

    • Definition: A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—a benchmark.
Derivative

Diversification

    • Definition: A risk management strategy that mixes a wide variety of investments within a portfolio.
Diversification

Dividend

    • Definition: A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Dividend

Dow Jones Industrial Average (DJIA)

    • Definition: A stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.
Dow Jones Industrial Average (DJIA)

Due Diligence

    • Definition: An investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material.
Due Diligence

E

Earnings

    • Definition: The amount of profit that a company produces during a specific period, which is usually defined as income net of expenses.
Earnings

Earnings Per Share (EPS)

    • Definition: A company's profit divided by its number of common outstanding shares. It indicates the profitability of a company and is often used by investors to assess financial health.
Earnings Per Share (EPS)

Economic Growth

    • Definition: An increase in the production of economic goods and services, compared from one period of time to another, usually measured as the rate of increase in real gross domestic product (GDP).
Economic Growth

Economic Indicator

    • Definition: A statistic about the economy that allows analysis of economic performance and predictions of future performance. Examples include unemployment rates, GDP growth rates, and inflation rates.
Economic Indicator

Elasticity

    • Definition: A measure of how much buyers and sellers respond to changes in market conditions. It is most commonly used to assess the change in consumer demand as a result of price changes.
Elasticity

Equity

    • Definition: The value of an asset minus the value of all liabilities on that asset. In terms of investment, it represents the amount of money that would be returned to shareholders if all the assets were liquidated and all the company's debt was paid off.
Equity

Escrow

    • Definition: Financial instruments (like funds or assets) held by a third party on behalf of the other two parties in a transaction until the transaction is completed.
Escrow

Euro

    • Definition: The official currency of 19 of the 27 member states of the European Union, which collectively make up the Eurozone.
Euro

Exchange Rate

    • Definition: The value of one currency for the purpose of conversion to another. It's used to determine how much of one currency you can trade for another.
Exchange Rate

Expense Ratio

    • Definition: A measure of what it costs an investment company to operate a mutual fund, expressed as a percentage of the fund’s average assets.
Expense Ratio

Extrinsic Value

    • Definition: The portion of the worth that has been assigned to an option, which reflects the likelihood of the currency reaching the intrinsic value before the expiration date. The extrinsic value is also commonly known as the "time value."
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Extrinsic Value

F

Face Value

    • Definition: The nominal value or dollar value of a security stated by the issuer. For bonds, it is the amount paid to the holder at maturity, commonly known as "par value."
Face Value

Fiduciary

    • Definition: A person or organization that acts on behalf of another person or persons, putting their clients' interest ahead of their own, with a duty to preserve good faith and trust.
Fiduciary

Fin-Lit Reflex

    • Definition: A deeply ingrained, almost instinctual ability to make informed and effective financial decisions. This ability is cultivated from a young age through consistent exposure to financial education, much like how one develops a reflex to physical stimuli. The goal is to make financial literacy a natural and automatic part of thinking and decision-making processes, enabling individuals to handle financial matters confidently and competently throughout their lives.
Fin-Lit Reflex

Fiscal Policy

    • Definition: Government policy that attempts to influence the direction of the economy through changes in government spending or taxes.
Fiscal Policy

Fixed Income

    • Definition: A type of investment security that pays investors fixed interest payments until its maturity date. At maturity, investors are repaid the principal amount they had invested.
Fixed Income

Fixed Rate

    • Definition: An interest rate on a liability, such as a loan or mortgage, that remains fixed for the entire term of the loan or for part of the term.
Fixed Rate

Foreclosure

    • Definition: A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Foreclosure

Foreign Exchange (Forex)

    • Definition: The market in which currencies are traded. The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day.
Foreign Exchange (Forex)

Forward Contract

    • Definition: A customized contract between two parties to buy or sell an asset at a specified price on a future date. Unlike standard futures contracts, a forward contract can be customized to any commodity, amount, and delivery date.
Forward Contract

Franchise

    • Definition: A type of license that a party (franchisee) acquires to allow them access to the proprietary knowledge, processes, and trademarks of a business (franchisor) in order to allow the party to sell a product or provide a service under the business's name.
Franchise

Fraud

    • Definition: Wrongful or criminal deception intended to result in financial or personal gain.
Fraud

Fundamental Analysis

    • Definition: A method of measuring a security's intrinsic value by examining related economic and financial factors including the balance sheet, strategic initiatives, microeconomic indicators, and consumer behavior.
Fundamental Analysis

Futures Contract

    • Definition: A standardized agreement to buy or sell the underlying commodity or other financial instrument at a specific price on a future date.
Futures Contract

G

GAAP (Generally Accepted Accounting Principles)

    • Definition: A collection of commonly-followed accounting rules and standards for financial reporting. The guidelines are established by the Financial Accounting Standards Board (FASB) in the United States.
GAAP (Generally Accepted Accounting Principles)

Garnishment

    • Definition: A legal process by which a creditor can collect what a debtor owes by ordering a third party to give up the debtor's money or property that the third party holds.
Garnishment

GDP (Gross Domestic Product)

    • Definition: The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. It functions as a comprehensive scorecard of a country’s economic health.
GDP (Gross Domestic Product)

Gearing

    • Definition: A measure of a company's financial leverage, typically calculated by dividing the company’s total borrowings by its stockholder’s equity.
Gearing

Gilt

    • Definition: Bonds issued by the British government. Gilts are considered low-risk investments since they are backed by the government's ability to tax its citizens and raise funds.
Gilt

Goodwill

    • Definition: An intangible asset associated with the purchase of one company by another. Specifically, goodwill is recorded in a situation where the purchase price is higher than the sum of the fair value of all identifiable tangible and intangible assets acquired in the acquisition and the liabilities assumed in the process.
Goodwill

Gross Margin

    • Definition: A company’s total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. It measures how much a company makes for each dollar of revenue, after accounting for the cost of goods sold.
Gross Margin

Growth Investing

    • Definition: An investment strategy that focuses on stocks of companies and stock funds where earnings are expected to grow at an above-average rate compared to their industry or the overall market.
Growth Investing

Guarantee

    • Definition: A promise or assurance, especially one in writing, that attests to the quality or durability of a product or service. A guarantee can also be a promise to be responsible for another's debt or obligations.
Guarantee

Guarantor

    • Definition: A person or organization that guarantees to pay a borrower's debt in the event the borrower defaults on a loan obligation.
Guarantor

Growth Rates

    • Definition: The percentage change of a specific variable within a specific time period and given a certain context, typically conveyed as an annual rate.
Growth Rates

H

Hedge

    • Definition: An investment made to reduce the risk of adverse price movements in an asset. Typically, a hedge consists of taking an offsetting position in a related security.
Hedge

Hedge Fund

    • Definition: An alternative investment vehicle available only to sophisticated investors, such as institutions and individuals with significant assets. These funds can carry out a broader range of investment and trading activities than mutual funds, and often employ more complex strategies including short selling, leverage, derivatives, and swaps.
Hedge Fund

High-Yield Bonds

    • Definition: An alternative investment vehicle available only to sophisticated investors, such as institutions and individuals with significant assets. These funds can carry out a broader range of investment and trading activities than mutual funds, and often employ more complex strategies including short selling, leverage, derivatives, and swaps.
High-Yield Bonds

Holding Company

    • Definition: A company created to buy and possess the shares of other companies, which it then controls.
Holding Company

Home Equity Line of Credit (HELOC)

    • Definition: A line of credit secured by the equity in the borrower’s home. It works like a credit card, whereby you can draw funds up to a maximum limit as needed and pay interest only on the amount borrowed.
Home Equity Line of Credit (HELOC)

Human Capital

    • Definition: The economic value of a worker's experience and skills, including factors like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.
Human Capital

I

Income

    • Definition: Money received, especially on a regular basis, for work or through investments.
Income

Income Statement

    • Definition: A financial statement that reports a company's financial performance over a specific accounting period. It includes revenues, expenses, gains, and losses.
Income Statement

Index Fund

    • Definition: A type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500).
Index Fund

Inflation

    • Definition: The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
Inflation

Initial Public Offering (IPO)

    • Definition: The process of offering shares of a private corporation to the public in a new stock issuance, allowing the company to raise capital from public investors.
Initial Public Offering (IPO)

Insider Trading

    • Definition: The buying or selling of a publicly-traded company's stock by someone who has non-public, material information about that stock.
Insider Trading

Installment Loan

    • Definition: A loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan.
Installment Loan

Interest

    • Definition: The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
Interest

Interest Rate

    • Definition: The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
Interest Rate

Investment

    • Definition: The action or process of investing money for profit.
Investment

IRA (Individual Retirement Account)

    • Definition: A type of savings account that is designed to help you save for retirement and offers many tax advantages.
IRA (Individual Retirement Account)

Illiquidity

    • Definition: The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value.
Illiquidity

J

Joint Account

  • Definition: A bank or brokerage account that is shared between two or more individuals. This allows all parties to contribute funds and access the account.
Joint Account

Joint Venture

  • Definition: A commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities. It often involves sharing resources, risks, and rewards.
Joint Venture

Judgment

  • Definition: A decision by a court regarding the rights and liabilities of parties in a legal action or proceeding. In financial contexts, it often refers to the final amount of money a court has ordered one party to pay another.
Judgment

Jumbo Loan

  • Definition: A type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA) and, therefore, cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. Designed to finance luxury properties and homes in highly competitive local real estate markets.
Jumbo Loan

K

Keogh Plan

    • Definition: A tax-deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined as contributions.
Keogh Plan

Key Rate

    • Definition: The specific interest rate that determines bank lending rates and the cost of credit for borrowers. The key rate is used by banks as a benchmark for pricing loans.
Key Rate

Keynesian Economics

    • Definition: An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.
Keynesian Economics

Kickback

    • Definition: A form of negotiated bribery in which a commission is paid to the bribe-taker in exchange for services rendered. Generally speaking, the remuneration (money, goods, or services handed over) is negotiated ahead of time.
Kickback

Kiting

    • Definition: A fraudulent practice of exploiting a bank float by writing checks from one account to another when insufficient funds are available in one of the accounts to cover the written amounts. The goal is to make use of non-existent funds in a checking or other bank account.
Kiting

Knock-In Option

    • Definition: A type of barrier option that only comes into existence if the underlying asset reaches a certain price. It is a form of derivative that is not active until the underlying security reaches a specified price level, which is known as the knock-in level.
Knock-In Option

L

Leverage

    • Definition: The use of various financial instruments or borrowed capital—such as margin—to increase the potential return of an investment.
Leverage

Leveraged Buyout (LBO)

    • Definition: A financial transaction in which a company is purchased primarily with borrowed money. The assets of the company being acquired are often used as collateral for the loans in addition to the assets of the acquiring company. LBOs are commonly performed by private equity firms and can lead to significant returns on equity.
Leveraged Buyout (LBO)

Liability

    • Definition: A financial obligation or amount owed by an individual or organization.
Liability

Lien

    • Definition: A legal right granted by the owner of property, by a law or otherwise acquired by a creditor. A lien serves to guarantee an underlying obligation, such as the repayment of a loan.
Lien

Limited Liability Company (LLC)

    • Definition: A corporate structure in the United States wherein the company members are not personally liable for the company's debts or liabilities.
Limited Liability Company (LLC)

Liquidity

    • Definition: The availability of liquid assets to a market or company. Liquid assets are those that can be rapidly converted to cash without significant loss of value.
Liquidity

Loan

    • Definition: A sum of money borrowed that is expected to be paid back with interest.
Loan

Loan-to-Value Ratio (LTV)

    • Definition: A lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage. It is calculated by dividing the amount of the mortgage by the appraised value of the property.
Loan-to-Value Ratio (LTV)

Lock-Up Period

    • Definition: A window of time in which shareholders, such as company executives and employees, are not allowed to sell or redeem their shares after an IPO.
Lock-Up Period

Long Position

    • Definition: An investment strategy in which an investor purchases a security with the expectation that the asset will rise in value.
Long Position

Lump Sum

    • Definition: A single payment made at a particular time, as opposed to a series of smaller payments or installments.
Lump Sum

M

Margin

    • Definition: The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.
Margin

Market Capitalization

    • Definition: The total dollar market value of a company's outstanding shares of stock. It is calculated by multiplying a company's shares outstanding by the current market price of one share.
Market Capitalization

Maturity

    • Definition: The date on which the final payment is due on a loan or other financial instrument. At maturity, the principal (and usually the last interest payment) is due to be paid.
Maturity

Merger

    • Definition: A corporate strategy of combining different companies into a single company in order to enhance the financial and operational strengths of both organizations.
Merger

Money Market

    • Definition: A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.
Money Market

Money Market Fund

    • Definition: A kind of mutual fund developed in the 1970s as an option for investors to purchase a pool of securities that generally provided higher returns than interest-bearing bank accounts.
Money Market Fund

Mortgage

    • Definition: A loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest.
Mortgage

Mutual Fund

    • Definition: An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.
Mutual Fund

Municipal Bond

    • Definition: A debt security issued by a state, municipality, or county to finance its capital expenditures. These bonds are usually exempt from federal taxes and, in some cases, state and local taxes too.
Municipal Bond

Mutual Savings Bank

    • Definition: A financial institution chartered by a state to provide service and profits to its customers, who are its stockholders. The bank can lend for mortgages and consumer loans but must hold a significant portion of its loans in mortgages.
Mutual Savings Bank

N

NASDAQ

    • Definition: The National Association of Securities Dealers Automated Quotations is a global electronic marketplace for buying and selling securities, as well as the benchmark index for U.S. technology stocks.
NASDAQ

Net Income

    • Definition: The total earnings of a company after all expenses and taxes have been deducted from revenues. It is often referred to as the bottom line and is a key indicator of a company's profitability.
Net Income

Net Worth

    • Definition: The total assets minus total outside liabilities of an individual or a company. For individuals, net worth is the most common measure of personal wealth.
Net Worth

No-Load Fund

    • Definition: A mutual fund in which shares are sold without a commission or sales charge. This occurs because the funds are distributed directly by the investment company, instead of going through a secondary party.
No-Load Fund

Nominal Interest Rate

    • Definition: The interest rate before adjustments for inflation. This is the rate quoted on loans and bonds.
Nominal Interest Rate

Non-Performing Asset (NPA)

    • Definition: A classification used by financial institutions for loans and other assets that are in jeopardy of default. Typically, this is a loan on which the borrower is not making interest payments or repaying any principal.
Non-Performing Asset (NPA)

Note

    • Definition: A legal document that serves as an IOU from a borrower to a lender. A note outlines the terms under which the debt will be repaid.
Note

Notional Value

    • Definition: The total value of a leveraged position's assets. This term is commonly used in the options and futures markets, which employ leverage, such as derivatives.
Notional Value

O

Odd Lot

    • Definition: A number of shares that are less than the standard trading unit or board lot. For example, anything less than 100 shares is typically considered an odd lot in U.S. stocks.
Odd Lot

Offer

    • Definition: The price at which a seller is willing to sell a security, also known as the 'ask' price.
Offer

Open Interest

    • Definition: The total number of outstanding derivative contracts, such as options or futures that have not been settled.
Open Interest

Operating Income

    • Definition: The amount of revenue left after subtracting the operational direct and indirect costs from sales revenue.
Operating Income

Option

    • Definition: A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the option buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date.
Option

Ordinary Shares

    • Definition: Shares that represent a form of equity ownership in a company. These shares are entitled to dividends and hold voting rights at shareholder meetings.
Ordinary Shares

Outstanding Shares

    • Definition: The total number of shares of a corporation that have been authorized, issued, and purchased by investors and are held by them.
Outstanding Shares

Over-the-Counter (OTC)

    • Definition: A decentralized market, without a central physical location, where market participants trade stocks, commodities, currencies, or other instruments directly between two parties and not on a centralized exchange.
Over-the-Counter (OTC)

Overcollateralization

    • Definition: An act of posting more collateral than is needed to obtain or secure financing. This practice is often used in securitization to obtain a better credit rating and lower the risk of the securities.
Overcollateralization

Overdraft

    • Definition: An extension of credit from a lending institution that is granted when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it or not enough to cover the withdrawal.
Overdraft

Overhead

    • Definition: The ongoing business expenses not directly attributed to creating a product or service. This generally includes expenses such as rent, utilities, insurance, and salaries.
Overhead

P

Par Value

      • Definition: The face value of a bond or stock as stated by the issuer, which does not necessarily match the market value.
Par Value

Passive Income

      • Definition: Earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.
Passive Income

Patent

      • Definition: A form of intellectual property that provides its owner legal protection against others making, using, or selling the invention without authorization for a limited period of time.
Patent

Payday Loan

      • Definition: A type of short-term borrowing where a lender will extend high-interest credit based on a borrower's income and credit profile.
Payday Loan

Payout Ratio

      • Definition: A metric that shows the percentage of earnings a company pays to its shareholders in the form of dividends.
Payout Ratio

Penny Stocks

      • Definition: Stocks that trade at very low prices per share, typically under $5. They are known for their high volatility and considered high-risk.
Penny Stocks

Pension Plan

      • Definition: A type of retirement plan where an employer contributes funds to a pool set aside for a worker's future benefit. The pool's capital grows over time, allowing the worker to receive benefits upon retirement.
Pension Plan

Portfolio

      • Definition: A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.
Portfolio

Preferred Stock

      • Definition: A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shareholders generally have a priority to receive dividends.
Preferred Stock

Premium

      • Definition: The amount paid for an insurance policy, or the amount by which a bond or stock sells above its face value.
Premium

Price-to-Earnings Ratio (P/E Ratio)

      • Definition: A valuation ratio of a company's current share price compared to its per-share earnings.
Price-to-Earnings Ratio (P/E Ratio)

Principal

      • Definition: The original sum of money borrowed in a loan, or the amount of the investment that is not the interest.
Principal

Private Equity

      • Definition: Capital investment made into companies that are not publicly traded. Most private equity consists of institutional investors and accredited investors.
Private Equity

Profit Margin

      • Definition: A profitability ratio calculated as net income divided by revenue, or how much profit a company makes for every dollar it generates in sales.
Profit Margin

Prospectus

      • Definition: A legal document issued by companies that are offering securities for sale. A prospectus must contain the facts that an investor needs to make an informed decision.
Prospectus

Public Company

      • Definition: A company whose shares are traded freely on a stock exchange.
Public Company

Q

Qualified Dividend

      • Definition: A type of dividend that is subject to capital gains tax rates that are lower than the income tax rates on ordinary dividends. Qualified dividends must meet specific criteria set by the IRS
      •  
Qualified Dividend

Quantitative Easing (QE)

      • Definition: A monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy. This is intended to stimulate economic activity by lowering interest rates and increasing the money supply.
Quantitative Easing (QE)

Quarterly Earnings Report

      • Definition: A quarterly filing made by public companies to report their performance. It includes items such as net income, earnings per share, earnings from continuing operations, and net sales.
Quarterly Earnings Report

Quote

      • Definition: The latest price at which a stock, currency, or commodity traded. It is also referred to as a quotation or simply as a "quote."
Quote

R

Rate of Return

    • Definition: The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost.
Rate of Return

Real Estate Investment Trust (REIT)

    • Definition: A company that owns, operates, or finances income-producing real estate. REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.
Real Estate Investment Trust (REIT)

Recession

    • Definition: A significant decline in economic activity spread across the economy, lasting more than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade.
Recession

Refinancing

    • Definition: The process of replacing an existing loan with a new loan typically with better terms, such as a lower interest rate.
Refinancing

Return on Investment (ROI)

    • Definition: A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
Return on Investment (ROI)

Revenue

    • Definition: The total amount of income generated by the sale of goods or services related to the company's primary operations.
Revenue

Risk

    • Definition: The possibility of losing some or all of the original investment. Different types of risks include project risk, financial risk, operational risk, etc.
Risk

Risk Tolerance

    • Definition: An individual investor's capacity to endure loss within their portfolio due to changes in market conditions.
Risk Tolerance

Rollover

    • Definition: The process of moving funds from one retirement plan to another without incurring tax penalties.
Rollover

Roth IRA

    • Definition: An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after retirement are tax-free.
Roth IRA

S

Savings Account

    • Definition: A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
Savings Account

Securities

    • Definition: Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.
Securities

Securitization

    • Definition: The process of transforming loans or other financial assets into securities.
Securitization

Short Selling

    • Definition: The sale of a security that is not owned by the seller or that the seller has borrowed in the hope that the price will go down, allowing it to be bought back at a lower price.
Short Selling

Simple Interest

    • Definition: A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
Simple Interest

Solvency

    • Definition: The ability of a company to meet its long-term debts and financial obligations. Solvency is essential to staying in business as it asserts a company’s ability to continue operations into the foreseeable future.
Solvency

Stock

    • Definition: A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
Stock

Stock Market

    • Definition: A collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place.
Stock Market

Subprime

    • Definition: Relating to or denoting credit or loan arrangements for borrowers with a poor credit history, typically having unfavorable conditions such as high interest rates.
Subprime

Supply and Demand

    • Definition: An economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded will equal the quantity supplied.
Supply and Demand

Swap

    • Definition: A derivative contract through which two parties exchange financial instruments, such as interest rates, commodities, or foreign exchange.
Swap

Syndicated Loan

    • Definition: A loan that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as arrangers.
Syndicated Loan

T

Tangible Asset

    • Definition: Physical assets that can be touched and held, such as buildings, machinery, and land.
Tangible Asset

Tax Deduction

    • Definition: A deduction that lowers a person's tax liability by lowering their taxable income. Deductions are typically expenses that the taxpayer incurs during the year that can be applied against or subtracted from their gross income to figure out how much tax is owed.
Tax Deduction

Tax Evasion

    • Definition: The illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability.
Tax Evasion

Tax Haven

    • Definition: A country or region that offers foreign individuals and businesses little or no tax liability in a politically and economically stable environment. Tax havens also provide little or no financial information to foreign tax authorities.
Tax Haven

Technical Analysis

    • Definition: A trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
Technical Analysis

Term Loan

    • Definition: A loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate.
Term Loan

Time Value of Money (TVM)

    • Definition: The concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
Time Value of Money (TVM)

Title Insurance

    • Definition: A form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property.
Title Insurance

Trade Deficit

    • Definition: An economic measure of international trade in which a country's imports exceed its exports. It represents an outflow of domestic currency to foreign markets.
Trade Deficit

Treasury Bills (T-Bills)

    • Definition: An economic measure of international trade in which a country's imports exceed its exports. It represents an outflow of domestic currency to foreign markets.
Treasury Bills (T-Bills)

Treasury Bonds

    • Definition: Long-term government debt securities with a maturity of more than ten years. Interest is paid semi-annually.
Treasury Bonds

Trust

    • Definition: A fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts are established to provide legal protection for the trustor's assets, to ensure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork, and in some cases, avoid or reduce inheritance or estate taxes.
Trust

U

Underwriter

    • Definition: A person or company that evaluates and assumes another person's risk for a fee in the form of a premium, commission, spread, or interest. In securities offerings, underwriters help determine the offering price, buy the securities from the issuer, and sell the securities to investors via their network.
Underwriter

Unearned Income

    • Definition: Any income that comes from investments and other sources unrelated to employment services. Examples include interest from savings accounts, bond interest, alimony, and dividends from stocks.
Unearned Income

Uniform Commercial Code (UCC)

    • Definition: A comprehensive set of laws governing all commercial transactions in the United States. It is intended to harmonize the law of sales and other commercial transactions across all states.
Uniform Commercial Code (UCC)

Unit Trust

    • Definition: A form of collective investment constituted under a trust deed. In the UK, a unit trust pools investors' money into a single fund, which is managed by fund managers.
Unit Trust

Usury

    • Definition: The practice of making unethical or immoral monetary loans that unfairly enrich the lender. Originally, it meant interest of any kind but now typically refers to an excessive rate of interest, in excess of a legal rate prescribed by law.
Usury

Utility

    • Definition: In economics, utility is the satisfaction or benefit derived by consuming a product; thus the marginal utility of a good or service is the change in the utility from an increase in the consumption of that good or service.
Utility

V

Valuation

    • Definition: The process of determining the current worth of an asset or a company. Various techniques are used, including looking at fundamentals, earnings potential, and the market value of assets.
Valuation

Value Investing

    • Definition: An investment strategy where stocks are selected that trade for less than their intrinsic values. Investors believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with a company's long-term fundamentals.
Value Investing

Variable Interest Rate

    • Definition: An interest rate that can change, based on changes in an underlying interest rate index. Unlike fixed interest rates, variable rates are typically linked to an index or benchmark and fluctuate with market conditions.
    •  
Variable Interest Rate

Variance

      • Definition: A measurement of the spread between numbers in a data set. In finance, it's used to measure volatility and risk in the returns of an investment.
    •  
Variance

Venture Capital

      • Definition: Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.
Venture Capital

Vertical Integration

      • Definition: A strategy where a company expands its business operations into different steps on the same production path, such as when a manufacturer owns its supplier and/or distributor.
Vertical Integration

Volatility

      • Definition: A statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security.
Volatility

Volume

      • Definition: The number of shares or contracts traded in a security or an entire market during a given period. It is often used as a measure of the relative worth of a market move. If the markets make a strong price movement, then the strength of that movement depends on the volume for that period.
Volume

Voting Right

      • Definition: The right of a shareholder to vote on matters of corporate policy, including decisions on the election of the board of directors, issuing new securities, and other major corporate actions.
Voting Right

Vulture Fund

      • Definition: A type of hedge fund that invests in securities in distressed investments, such as high-yield bonds in or near default, or equities that are in or near bankruptcy.
Vulture Fund

W

Wage

    • Definition: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.
Wage

Warrant

    • Definition: A financial instrument issued by a company that gives the holder the right to purchase the company's stock at a specific price and at a specific date.
Warrant

Withholding Tax

    • Definition: An income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient.
Withholding Tax

Working Capital

    • Definition: A measure of both a company's operational efficiency and its short-term financial health. The working capital is calculated as the difference between current assets and current liabilities.
Working Capital

Write-Down

    • Definition: The reduction in the book value of assets because they are overvalued compared to the market value. A write-down typically occurs on a company's financial statement when the carrying value of the asset can no longer be justified as fair value and the asset must be revalued.
Write-Down

X

X-Efficiency

    • Definition: The degree of efficiency maintained by firms under conditions of imperfect competition. This concept relates to the behavior of firms in terms of minimizing costs regardless of their market power.
X-Efficiency

X-Mark Signature

    • Definition: The degree of efficiency maintained by firms under conditions of imperfect competition. This concept relates to the behavior of firms in terms of minimizing costs regardless of their market power.
X-Mark Signature

Xenocurrency

    • Definition: A currency that is traded, circulated, or held in markets outside of its domestic boundaries. It refers to any currency that is not native to the holder's home country.
Xenocurrency

Y

Yield

    • Definition: The income return on an investment, such as the interest or dividends received from holding a particular security. It is usually expressed annually as a percentage based on the investment's cost, its current market value, or its face value.
Yield

Yield Curve

    • Definition: A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year, and thirty-year U.S. Treasury debt. This curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates.
Yield Curve

Yield Gap

    • Definition: The difference between the yield on stocks and the yield on bonds. Often used by investors to assess the relative attractiveness of the returns from different asset classes.
Yield Gap

Yield to Maturity (YTM)

    • Definition: The total return expected on a bond if the bond is held until it matures. YTM is considered a long-term bond yield expressed as an annual rate.
Yield to Maturity (YTM)

Yuan

    • Definition: The base unit of a currency used in the People's Republic of China, officially named the Renminbi, which means "the people's currency."
Yuan

Z

Zero-Coupon Bond

    • Definition: A bond that is issued at a discount and does not pay interest during its life but is redeemed at its face value at maturity. The difference between the purchase price and the face value represents the investor's return.
Zero-Coupon Bond

Z-Score

    • Definition: A statistical measurement that describes a value's relationship to the mean of a group of values, measured in terms of standard deviations from the mean. In finance, the Altman Z-score is used to predict the probability of a company going bankrupt.
Z-Score

Zeta Model

    • Definition: A model developed to estimate the probabilities of default of credit risk of a company, which is a part of credit risk management.
Zeta Model

Zero-Balance Account (ZBA)

    • Definition: A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.
Zero-Balance Account (ZBA)

Zombie Company

    • Definition: A company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal.
Zombie Company

Call

954-886-6030

email

info@nurturingfinance.com

address

8029 West McNab Road POB 1181 Tamarac, FL 33321

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