Chapter 1 Vocabulary Flashcards
Investment
A current commitment of your money in the expectation of reaping future returns.
Present Value
Current value of money.
Principal
The original amount of money borrowed or invested (generally synonymous with present value).
Interest Rate
The rate you will receive for investing at a specified compounding period for a specified period of time (generally expressed in percent per year).
Nominal Return
The return on an investment before the impacts of inflation and taxes are taken into account.
Real Return
The rate of return on an investment after the impacts of taxes and inflation are taken into account.
Compounding Periods
The frequency with which interest is applied to an investment.
Payment
A periodic amount invested or received during the life of the investment (e.g. monthly payment, annual disbursement, dividend, etc.).
Future Value
The monetary value of an investment at some point in the future.
Lump Sum
One payment at a specific time.
Purchasing Power
The value of monetary funds based on the amount of goods or services that one unit of money can buy.
Opportunity Cost
The potential loss or gain that occurs when on financial option is chosen over another.
The original amount of money borrowed or invested (generally synonymous with present value).
Principal
Trade-off
I found the perfect job! I will be making triple digits, however I will have to work long hours and travel a lot.
The return on an investment before the impacts of inflation and taxes are taken into account.
Nominal Return
