GLOSSARY

Question 1

Inflation

Answer 1

The rate at which the general level of prices for goods and services rises, eroding
purchasing power.

Question 2

Interest Rate

Answer 2

The percentage charged on a loan or paid on savings, usually expressed annually.

Question 3

Gross Domestic Product (GDP)

Answer 3

The total value of all goods and services produced within a country’s borders in a
specific period.

Question 4

Liquidity

Answer 4

It is the ability of an entity to meet its short-term obligations, referring to how
easily assets can be converted into cash.

Question 5

Solvency

Answer 5

It is the long-term ability of an entity to meet its financial obligations, meaning it
has more assets than liabilities.

Question 6

Budget

Answer 6

A financial plan that estimates income and expenses over a specific period.

Question 7

Credit

Answer 7

The ability to borrow money or access goods and services with the understanding
that payment will be made in the future.

Question 8

Asset

Answer 8

Any good owned by an individual or corporation that is expected to provide future
economic benefits.

Question 9

Liability

Answer 9

A financial obligation or debt that an individual or company owes to another entity.

Question 10

Equity

Answer 10

The value of an ownership in a company, calculated as assets minus liabilities

Question 11

Capital

Answer 11

Wealth in the form of money or other assets owned by a person or organization,
available for investment or production.

Question 12

Stock

Answer 12

A type of security that signifies ownership in a corporation and represents a claim
on part of the corporation’s assets and earnings.

Question 13

Bond

Answer 13

Debt securities issued by entities such as governments or corporations to raise
capital, with a promise to repay the principal along with interest.

Question 14

Dividends

Answer 14

A portion of a company’s earnings distributed to shareholders, typically in cash or
additional shares.

Question 15

Risk

Answer 15

The potential for loss or the variability of returns associated with an investment.

Question 16

Cashflow

Answer 16

The net amount of cash being transferred into and out of a business.

Question 17

Portfolio

Answer 17

A collection of investments owned by an individual or organization.

Question 18

Profitability

Answer 18

Profitability is the ability of a company to generate profit relative to its revenue,
assets, or equity.

Question 19

Leverage

Answer 19

The use of borrowed money to increase the potential return of an investment.

Question 20

Debt

Answer 20

Money borrowed by one party from another, typically under the condition that it
will be paid back with interest.

Question 21

Exchange Rate

Answer 21

The value of one currency for the purpose of conversion to another.

Question 22

Monetary Policy

Answer 22

The process by which a central bank manages a country’s money supply and
interest rates.

Question 23

Fiscal Policy

Answer 23

The use of government spending and taxation to influence the economy.

Question 24

Financial Ratio

Answer 24

Financial ratios are quantitative measures used to evaluate and compare the
financial performance of a company

Question 25

Financial Statement

Answer 25

A financial statement is a formal record of the financial activities and position of a
company, including the balance sheet, income statement, and cash flow statement.

Question 26

Depreciation

Answer 26

Depreciation is the gradual reduction in the value of an asset over time, often due
to wear and tear or obsolescence

Question 27

Amortization

Answer 27

Amortization is the process of gradually paying off a debt over time through regular
payments, which cover both interest and principal.

Question 28

EBITDA

Answer 28

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a
financial metric that measures a company’s operating performance by excluding interest, taxes,
depreciation, and amortization expenses.