Finance & Investing Glossary
Bull Market
TradingA financial market in which prices are rising or expected to rise.More in Detail
Bear Market
TradingA market condition in which prices are falling or expected to fall. More in Detail
Dividend
StocksA distribution of profits by a corporation to its shareholders. More in Detail
Yield
InvestmentThe income return on an investment, such as interest or dividends.
Market Capitalization
StocksThe total value of a company's shares of stock.
Liquidity
InvestmentThe degree to which an asset can be quickly bought or sold without affecting its price.
GDP
EconomicsGross Domestic Product - the total monetary value of all finished goods and services produced within a country.
Bond Yield
BondsThe return an investor realizes on a bond.
APR
BankingAnnual Percentage Rate - the yearly interest rate charged for borrowing.
Diversification
InvestmentSpreading investments across different assets to reduce risk.
P/E Ratio
StocksPrice-to-Earnings Ratio - a metric used to value a company by measuring its current share price relative to its earnings per share.
Blue Chip Stocks
StocksShares of large, well-established, and financially sound companies that have a history of reliable performance.
Common Stock
StocksA type of security that represents ownership in a corporation and gives shareholders voting rights.
Preferred Stock
StocksA class of stock that typically pays fixed dividends and has priority over common stock in dividend payments and asset claims.
Stock Split
StocksA corporate action that increases the number of shares by dividing existing shares, reducing the price per share proportionally.
Volatility
StocksA measure of how much a stock's price fluctuates over time, indicating its level of risk.
IPO
StocksInitial Public Offering - the process of offering shares of a private company to the public for the first time.
Dividend Yield
StocksThe ratio of a company's annual dividend payments relative to its stock price, expressed as a percentage.
Corporate Bond
BondsA debt security issued by a corporation to raise capital, typically paying periodic interest and returning the principal at maturity.
Treasury Bond
BondsA government debt security with a maturity of more than 10 years, backed by the full faith and credit of the U.S. government.
Municipal Bond
BondsA debt security issued by a state, city, or local government to finance public projects, often offering tax-free interest income.
Coupon Rate
BondsThe annual interest rate paid by a bond issuer relative to the bond's face value.
Duration
BondsA measure of a bond's price sensitivity to changes in interest rates.
Junk Bond
BondsA high-yield, high-risk bond with a credit rating below investment grade.
Zero-Coupon Bond
BondsA bond that doesn't pay periodic interest but is sold at a discount and redeemed at face value at maturity.
Bond Maturity
BondsThe date when a bond's principal must be repaid to the bondholder.
Asset Allocation
InvestmentThe strategic distribution of investments across different asset classes to balance risk and return.
Portfolio Rebalancing
InvestmentThe process of realigning the weightings of assets in an investment portfolio to maintain the desired level of asset allocation.
Dollar-Cost Averaging
InvestmentAn investment strategy where you invest a fixed amount of money at regular intervals, regardless of market conditions.
Risk Tolerance
InvestmentThe degree of variability in investment returns that an investor is willing to withstand.
Compound Interest
InvestmentInterest earned on both the initial principal and previously accumulated interest, leading to exponential growth over time.
ETF
InvestmentExchange-Traded Fund - a type of investment fund traded on stock exchanges, typically tracking an index or basket of assets.
Mutual Fund
InvestmentA professionally managed investment fund that pools money from multiple investors to purchase securities.
Index Fund
InvestmentA type of mutual fund or ETF designed to track the performance of a specific market index.
Capital Gains
InvestmentThe profit realized from the sale of an investment that has increased in value.
ROI
InvestmentReturn on Investment - a performance measure used to evaluate the efficiency or profitability of an investment.
FDIC Insurance
BankingFederal Deposit Insurance Corporation protection that covers depositor accounts at member banks up to $250,000 per depositor, per bank.
Overdraft
BankingWhen withdrawals from a bank account exceed the available balance, often resulting in fees and penalties.
Direct Deposit
BankingElectronic transfer of payments directly into a bank account, commonly used for payroll and government benefits.
ACH Transfer
BankingAutomated Clearing House network used for electronic funds transfer between banks, including bill payments and direct deposits.
Wire Transfer
BankingElectronic transfer of funds from one bank account to another, typically processed the same day and often used for large transactions.
Certificate of Deposit
BankingA time deposit that offers a higher interest rate in exchange for leaving money untouched for a specific period.
Money Market Account
BankingA high-yield savings account that typically requires a higher minimum balance and may offer check-writing privileges.
Credit Score
BankingA numerical rating of creditworthiness based on credit history, used by lenders to evaluate loan applications.
Mortgage
BankingA loan used to purchase real estate, typically requiring regular payments over an extended period.
HELOC
BankingHome Equity Line of Credit - a revolving credit line secured by the equity in your home.
Inflation
EconomicsA general increase in prices and fall in the purchasing value of money over time.
Deflation
EconomicsA general decrease in prices and increase in the purchasing value of money, often associated with reduced spending and economic slowdown.
Fiscal Policy
EconomicsGovernment spending and taxation decisions used to influence the economy.
Monetary Policy
EconomicsCentral bank actions to control money supply and interest rates to achieve economic goals.
Supply and Demand
EconomicsThe economic model describing how prices are determined by the interaction between buyers and sellers in a market.
Recession
EconomicsA period of temporary economic decline, generally identified by a fall in GDP in two successive quarters.
Depression
EconomicsA severe and prolonged downturn in economic activity, more severe than a recession.
Trade Deficit
EconomicsThe amount by which the cost of a country's imports exceeds the value of its exports.
Exchange Rate
EconomicsThe rate at which one currency can be exchanged for another.
Consumer Price Index (CPI)
EconomicsA measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Unemployment Rate
EconomicsThe percentage of the labor force that is actively seeking employment but unable to find work.
Economic Growth
EconomicsAn increase in the production of goods and services in an economy over time, typically measured by the rate of change in GDP.
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