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Financial Capital
Money and resources that can be used for investment or are convertible into monetary instruments.
Consumption vs. Investment
Consumption refers to using goods for personal use, while investment is purchasing assets intended to generate wealth.
Speculation
The process of buying assets with the hope that they will rise in value and can be sold for profit.
Human Capital
The skills, knowledge, and experience possessed by an individual, which can be enhanced through financial capital.
Wealth vs. Income
Wealth is the accumulation of assets owned, while income is the money earned over a specific time period.
Microfinance
Small loans or financial services provided to low-income individuals or communities lacking access to traditional banking.
Public Capital
Financial resources owned or invested by the community for public services and infrastructure.
Private Capital
Financial resources owned and controlled by individuals, families, or corporations.
Collateral
An asset that a borrower offers to a lender to secure a loan, which can be seized if the loan is not repaid.
Capital Flight
The movement of capital from one area to another, often from rural to urban settings, to seek better returns.
Economic Mobility
The ability of individuals or families to improve their economic status, which can be impacted by access to financial capital.
Inequality
The uneven distribution of income and wealth within a society, which can persist due to structural impediments.
Liquidity
The ease with which assets can be converted into cash without affecting their market price.
Equity Financing
Raising capital through the sale of shares in a company, providing investors with ownership in the company.
Junk Bonds
High-risk, high-interest securities sold at a deep discount, often associated with high default rates.
Venture Capital
Funding provided by investors to startups and small businesses with perceived long-term growth potential.
Fixed vs. Flexible Capital
Fixed capital refers to long-term investments in physical assets, while flexible capital refers to short-term, liquid assets.
Social Capital
The networks, relationships, and norms that enable members of a community to work together to achieve common goals.
Market Failures
Situations where the market does not allocate resources efficiently, often justifying the need for public intervention.
Deregulation
The reduction or elimination of government restrictions and rules in an industry, often leading to increased risk.
Predatory Lending
Unethical lending practices that exploit borrowers, often characterized by high fees and interest rates.
Financial Literacy
The ability to understand and effectively use financial skills, including personal finance management and investment.
Capital Gains
The profit earned from the sale of an asset, such as stocks or real estate, when sold at a higher price than purchased.
Community Reinvestment Act
A law designed to encourage banks to meet the credit needs of the communities in which they operate, particularly low-income areas.
