Financial Planning Unit 2

Financial Market

This is a platform where buyers and sellers trade

Liquidity

A way to measure how quickly an asset can be converted to cast without affecting its market price. 

Efficiency

Achieving the maximum productivity possible with minimum wasted effort, time, or resources. 

Call markets

 A market where trading does not take place constantly, but only at designated times.

Continuous markets

Markets where trading takes place continuously, not periodically. 

Eurocurrency

Any currency deposited in a bank located outside of the country that issues it. For example, U.S. dollars deposited in a London bank or Japanese yen deposited in a Swiss bank are both eurocurrencies.

Eurobond

Any currency deposited in a bank located outside of the country that issues it. For example, U.S. dollars deposited in a London bank or Japanese yen deposited in a Swiss bank are both eurocurrencies. Example: A U.S. company issues a bond in London, but requires investors to buy it and get paid back in U.S. Dollars.

Commodity

A basic good or raw material used in commerce.

Overdraft Protection

An optional bank service that prevents transactions from being declined when your balance runs low. Instead of bouncing a payment or declining your card, the bank automatically covers the shortfall by transferring funds from a linked account = ensures that a check, ATM, wire transfer, or debit card transaction will clear if the account balance falls below zero

Automated Clearing House

A secure, electronic network that moves money between banks and credit unions across the United States. It is the invisible system that handles everyday digital money transfers.

Asset management

The process of developing and maintaining assets to maximize the value for an organization or individual, so they can grow in value. It is also the direction of a client's cash and securities by a financial services company, usually an investment bank, or an individual

Lockbox

A service that a bank provides to a company for the receipt of customers' payments, which are directed to a special post office box instead of directly to the company. As a result, it accelerates the process of cash flow and improves security.

Exporting financing

A type of funding that helps business manage the costs and risks of selling goods or services internationally.

Private placement

A way companies try to raise money by selling stocks directly to a small group of investors

Vendor lease

This is a financial partnership between a vendor and customer. In this partnership,  a vender offers leasing options directly to customers to persuade them to buy their equipment.

Savings Account

This is an account that is FDIC insured and interest bearing designed for accumulating funds. They offer higher yields than checking accounts.

Money Market Account

This is an FDIC-insured savings account that pays higher interest rates than standard saving accounts. However, it requires higher minimum balances and limit monthly transactions.

Certificate of Deposit

This is a low risk savings account with interest that holds money for a fixed period of time. They are better for guaranteed returns for specific financial goals.

Bond

This is a debt security where an investor lend money to a government or corporation for a certain period of time. It offers variable interest rates.

Lending Investment

This is when you give your money to a borrower (like a government, company, or individual) with the agreement that they will pay you back over time, plus interest. It acts like a steady, predictable stream of income

Stock

This is an equity that represents some ownership of a company. As a results, stocks allow people to become shareholders of a company.

Mutual Fund

A pool of money collected from multiple investors to buy a diversified mix of stocks, bonds, or other assets. Managed by finance professionals, it allows you to easily spread your risk and own a fraction of dozens of investments through a single purchase.

Collectibles

These are tangible assets that appreciate over time. As a result, they often act as a hedge against inflation. Example: Rare coins and sports cards

Ownership Investments

This is when you buy a piece or "equity" in a company, property, or asset. Instead of lending money to earn interest, you are taking a stake in it with the goal of making a profit from its growth or ongoing income

Securities

These are tradable financial instruments that represent ownership. They allow entities to raise capital and are investment instruments sold through markets to investors. Example: stocks and bonds.

Soft commodity

Agricultural products and livestock that are grown or raised, rather than mined or extracted. Example: cocoa beans and cor.

Financial market

A marketplace where trading of securities such as equities, bonds, currencies, and derivatives occurs.

Primary capital

A type of financial market sells new stock or bond issues to investors.

Retail bank

This is somewhere someone can put their money in a safe place and earn interest on their savings without experiencing sizable financial penalties. Whereas, a local bank is more beneficial for small business

Certified Financial Planner

Licensed professional who helps you manage your money to achieve long-term goals like retirement, buying a home, or funding education. Example: Marcus wants to invest a portion of his money in long-term securities to finance his son's college education and his own retirement. This person would be best for this.

Check payment

A written paper order you give to your bank, telling them to pay a specific amount of money to a named person or business. Proofing, encoding, capturing, and sorting are all steps in this banking process.

Line of credit

This is the type of service a bank provide to a business that needs to borrow funds for a short period of time. A bank provides a business that needs the flexibility to borrow different amounts of money at different times without having to reapply this