Financial Markets Flashcards
Securities
Tradable financial assets, including stocks and bonds
Equities (Shares)
Ownership interests in companies, also known as stocks
Stocks
Unit of ownership in a company, giving shareholders voting rights and dividents
Bonds
Fixed-income investments reresenting the loan from investor to borrower
Money Market Instruments
Short-term financial assets with high liquidity, such as Treasury bills and commercial paper.
Capital Growth
Increase in the value of an investment over time.
Fixed rate
An interest rate that remains constant for a specified period of time.
Junk Bonds
High-yield, high-risk bonds typically issued by companies with lower credit ratings
Risk Management
Strategies to minimize financial losses due to market fluctuations.
S&P 500
A stock market index tracking the performance of 500 large U.S. companies.
Nasdaq
A global electronic marketplace for buying and selling securities.
Dow Jones (Dow)
A stock index measuring the performance of 30 large U.S. companies.
DAX
A stock index representing 40 major companies listed on the Frankfurt Stock Exchange.
CAC 40
A benchmark stock market index in France, covering 40 major companies.
FTSE 100
A stock index measuring the 100 largest companies on the London Stock Exchange.
Growth Investing
A strategy focused on increasing an investment’s value over time.
Income Investing
A strategy focused on generating regular earnings, such as dividends or interest.
Income + Growth
A combination investment strategy balancing income generation and capital appreciation.
Investment Bank
A financial institution that provides advisory services and facilitates large financial transactions.
Pension Fund
A pool of funds set aside for employees’ retirement benefits.
Mutual Fund
A professionally managed investment fund pooling money from multiple investors.
Insurance Company
A business that provides risk coverage in exchange for premium payments.
Endowment
A financial fund donated to an institution, typically used for long-term investment.
Liquidity
The ease with which an asset can be converted into cash without affecting its market price.
Market Capitalization
The total value of a company’s outstanding shares, calculated as share price × total shares.
Dividend
A portion of a company’s earnings distributed to shareholders.
Blue-Chip Stocks
Shares of well-established, financially stable companies with a history of reliable performance.
Bear Market
A market condition where prices are falling, often leading to pessimism.
Bull Market
A market condition where prices are rising, leading to optimism among investors.
Initial Public Offering (IPO)
The first time a company’s shares are offered to the public for investment.
Yield
The income generated by an investment, often expressed as a percentage.
Inflation
The rate at which the general level of prices for goods and services rises, reducing purchasing power.
Interest Rate
The percentage charged on borrowed money or earned on savings.
Exchange-Traded Fund (ETF)
A marketable security that tracks an index, commodity, or asset basket, trading like a stock.
Hedge Fund
An investment fund using high-risk strategies to achieve high returns.
Derivatives
Financial contracts whose value is derived from an underlying asset, like futures or options.
Short Selling
A strategy where an investor borrows shares, sells them, and buys them back later at a lower price.
