Finance Foundations (Honors) Unit 1 Vocabulary Guide

A comprehensive collection of vocabulary terms and definitions from the Unit 1 Finance Foundations lecture notes, covering core financial concepts, institutional roles, and monetary theories.

barter

A type of trade in which goods and/or services are exchanged for other goods and/or services. No money is involved in the trade.

credit

The act of buying something or borrowing money with the promise to repay the lender at a future date. In banking, the term also refers to money received in an account that results in increasing the account balance.

devalue

To reduce the value of something.

finance

The science of the management of money and other assets; the management of money, banking, investments, and credit.

finance manager

An individual who manages money and assets, either for an individual or for an organization.

financial analyst

An employee of a bank, a brokerage, a financial advisor, or a mutual fund company who studies companies and makes buy and sell recommendations; the analyst often specializes in a single sector or industry.

inflation

The declining value of money due to rising prices.

interest

A fee paid for the use of money over time. In other words, it's the cost of borrowing money. Interest is often expressed as a percentage of the amount borrowed.

investment

An item that is purchased with the hope that it will generate income or increase in value in the future.

lender

A person, or a public or private group, who makes funds available to another with the expectation that the funds will be repaid, plus any interest or fees.

money

A current medium of exchange in the form of coins and banknotes.

stock

A share of ownership in a company.

taxonomy

A categorized list of words related to a particular topic.

wealth

A great quantity or store of money, valuable possessions, property, or other riches.

Bank

A depository institution where one can keep and borrow money and take care of financial affairs.

Compound interest

Interest earned on both the principle amount and any interest already earned.

Credit union

A cooperative nonprofit financial institution that is privately owned and controlled by its members. It provides depository and lending services to its members.

Federal Deposit Insurance Corporation (FDIC)

An agency of the United States the promotes public confidence in the US financial system by (1) insuring deposits in banks and thrift institutions for up to $250,000$; (2) identifying, monitoring, and addressing risks to the deposit insurance funds; and (3) limiting the effect on the economy and the financial system when a bank when a thrift institution fails.

Federal Reserve

The central bank of the United States. “The Fed” incorporates 12 Federal Reserve branch and banks, all state-chartered commercial banks, and some trust companies. It helps to regulate the US monetary and banking system.

Financial advisor

A professional who provides financial planning and advice on financial matters.

Financial literacy

The ability of individuals to make appropriate decisions in managing their personal finances.

Financial services industry

Financial institutions that help consumers, businesses, and governments manage money. These institutions can be depository or not.

Future value

What an amount invested today at a particular interest rate will be worth in the future.

Insurance company

A financial institution that protects persons against the risk of financial loss.

Nation Credit Union Administration (NCUA)

An independent federal agency that serves to supervise and regulate federal credit unions. It also provides account insurance for many state-chartered credit unions through the National Credit Union Share Insurance Fund.

Present value

The value of a future case stream discounted at the appropriate market interest rate.

Risk

Degree of uncertainty of return on an asset; the possibility of loss.

Simple interest

The amount of interest based on principal amount and not on earned interest.

Time value of money

Money’s potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth.