Financial Issues and the Stock Exchange

These flashcards cover key financial concepts, common financial problems, strategies for financial management, and the relationship between the stock exchange and the economy, specifically in the context of Pakistan.

Financial issues

Problems or challenges people or businesses face when managing their money, often exacerbated by miscalculations or poor budgeting.

Debt

Occurs when a person or business borrows money and is unable to repay it on time, potentially impacting credit scores.

Underemployment

An income problem occurring when a person earns less money than expected or works fewer hours than needed.

Cash flow

The money coming in and going out of a person's or business's finances.

Credit issues

Problems that occur when a person or business has trouble managing their credit score, often caused by late payments or high credit usage.

Investment risks

Potential losses resulting from drops in the stock market or falling victim to fraudulent schemes or scams.

Retirement planning issues

Challenges such as not saving early enough in a career or underestimating future costs like healthcare and inflation.

Financial fraud

A situation where someone is tricked or deceived into losing money, including identity theft, investment scams, or loan scams.

Bankruptcy

A legal financial challenge faced when an individual or business can no longer pay its debts.

Budget

A plan for spending money that tracks income source and expenses to ensure spending does not exceed earnings.

Emergency fund

Money set aside for unexpected situations, ideally covering $3$ to $6$ months of living expenses.

Credit score

A numerical rating that affects loan terms and interest rates; it can be improved by keeping balances below $30\%$ of the available credit.

Inflation

The rise in the prices of goods and services over time, which reduces the purchasing power of money.

Currency depreciation

When the value of a currency, such as the Pakistani rupee, drops compared to other currencies, making imports like food and oil more expensive.

IMF

The International Monetary Fund, an international organization that provides loans and aid to countries like Pakistan with specific donor conditions.

Stock exchange

A marketplace where buyers and sellers trade stocks, which represent pieces of ownership in companies.

Pakistan Stock Exchange (PSX)

The main stock exchange in Pakistan, formed in $2016$ through the merger of three existing stock exchanges.

Foreign investment

Investments made by individuals or organizations from other countries into local companies via the stock market.

Indicator of economic health

The use of stock market performance to show the stability of the economy; high performance suggests businesses are doing well.

Currency instability

Frequent changes in the value of the rupee that create uncertainty for investors and increase the cost of imports.