Financial Literacy Unit 12: Investment Avenues in Equity and Debt Instruments

Vocabulary flashcards covering the main terms and concepts from Unit 12: Investment Avenues in Equity and Debt Instruments.

Portfolio

A collection of investment tools and financial assets (shares, bonds, mutual funds, etc.) held by an individual or institution.

Portfolio Management

The art and process of managing an individual’s investments to meet long-term financial goals while balancing risk tolerance and liquidity needs.

Active Portfolio Management

An approach where managers frequently buy and sell assets using qualitative and quantitative analysis to outperform the market.

Passive Portfolio Management

An approach that builds a fixed portfolio—often mirroring an index (e.g., ETFs)—with minimal trading to match, not beat, market returns.

Share Market

A platform where traders and investors buy or sell shares of listed companies during specific trading hours.

National Stock Exchange (NSE)

One of India’s two main stock exchanges, providing an electronic marketplace for share trading.

Bombay Stock Exchange (BSE)

India’s oldest stock exchange and home of the Sensex index of 30 leading companies.

Primary Share Market

The market in which companies issue shares to the public for the first time via an Initial Public Offering (IPO).

Secondary Share Market

The market where already-issued shares are bought and sold among investors at market prices.

Equity Market

Segment of the share market where whole shares are traded at prices negotiated between buyers (bid) and sellers (ask).

Derivative Market

Market where futures and options contracts—often in large lots—are traded based on underlying assets like stocks.

Bid Price

The price a buyer is willing to pay for a security in the equity market.

Ask Price

The negotiated price a seller agrees to accept for a security; also called the offer price.

Debt Market

A platform where debt securities such as bonds and treasury bills are issued and traded between borrowers and lenders.

Government Securities Market (G-sec Market)

Sub-market where sovereign securities issued by India’s central and state governments are traded; considered low-risk and highly liquid.

Corporate Bond Market

Segment of the debt market where private companies issue bonds, debentures, and PSU bonds to raise capital.

Sensex

The Stock Exchange Sensitive Index—an index of 30 financially strong, highly traded companies listed on the BSE.

Mutual Funds

Money-managing institutions that pool public money and invest it in capital markets; investors receive units proportional to their contribution.

Asset Management Company (AMC)

The organization that sponsors and manages mutual fund schemes on behalf of investors.

Net Asset Value (NAV)

Per-unit value of a mutual fund, calculated as (Fund Assets – Liabilities) ÷ Outstanding Units.

Systematic Investment Plan (SIP)

A disciplined mode of investing fixed amounts at regular intervals into a chosen mutual fund scheme.

SIP Calculator

An online tool that estimates potential returns, wealth gain, and maturity value for a planned SIP investment.

Diversification

An investment strategy that mixes a wide range of assets within a portfolio to reduce overall risk.

Debt Security

A financial asset created when one party lends money to another, such as a bond or debenture.

Corporate Bond

A debt security issued by a private company obligating it to pay contractual interest and repay principal at maturity.

Liquid Instrument

An asset that can be converted into cash quickly and with minimal price impact.

Risk Minimization

The portfolio-management objective of reducing exposure to unfavorable market movements while pursuing returns.

Tax Planning

Using investments (e.g., provident funds) within a portfolio to legally reduce an investor’s tax burden.