GLOSSARY Flashcards
Inflation
The rate at which the general level of prices for goods and services rises, eroding
purchasing power.
Interest Rate
The percentage charged on a loan or paid on savings, usually expressed annually.
Gross Domestic Product (GDP)
The total value of all goods and services produced within a country’s borders in a
specific period.
Liquidity
It is the ability of an entity to meet its short-term obligations, referring to how
easily assets can be converted into cash.
Solvency
It is the long-term ability of an entity to meet its financial obligations, meaning it
has more assets than liabilities.
Budget
A financial plan that estimates income and expenses over a specific period.
Credit
The ability to borrow money or access goods and services with the understanding
that payment will be made in the future.
Asset
Any good owned by an individual or corporation that is expected to provide future
economic benefits.
Liability
A financial obligation or debt that an individual or company owes to another entity.
Equity
The value of an ownership in a company, calculated as assets minus liabilities
Capital
Wealth in the form of money or other assets owned by a person or organization,
available for investment or production.
Stock
A type of security that signifies ownership in a corporation and represents a claim
on part of the corporation’s assets and earnings.
Bond
Debt securities issued by entities such as governments or corporations to raise
capital, with a promise to repay the principal along with interest.
Dividends
A portion of a company’s earnings distributed to shareholders, typically in cash or
additional shares.
Risk
The potential for loss or the variability of returns associated with an investment.
Cashflow
The net amount of cash being transferred into and out of a business.
Portfolio
A collection of investments owned by an individual or organization.
Profitability
Profitability is the ability of a company to generate profit relative to its revenue,
assets, or equity.
Leverage
The use of borrowed money to increase the potential return of an investment.
Debt
Money borrowed by one party from another, typically under the condition that it
will be paid back with interest.
Exchange Rate
The value of one currency for the purpose of conversion to another.
Monetary Policy
The process by which a central bank manages a country’s money supply and
interest rates.
Fiscal Policy
The use of government spending and taxation to influence the economy.
Financial Ratio
Financial ratios are quantitative measures used to evaluate and compare the
financial performance of a company
