Financial Planning Unit 5

Inflation

This is the increase in prices for goods and services over time, which reduces the value of money. Can cause higher GDP even though the production stayed the same last year.

Inflation Rate

This is the rate at which the price of goods and service increase over time.

Deflation

This is the decline in prices for good and service. This occurs when the inflation rate falls below 0%.

Consumer Price Index

This involves buying or selling of securities based on non-public information. This doesn’t show market integrity because it exploits confidential data.

Standard of Living

This is the level of wealth and comfort that is available to people in a certain area. This is typically measured by income, GDP per capita, and consumption.

Targeting Inflation Rate

The target inflation rate is 2% to ensure price stability and prevent deflation, allowing room for monetary policy adjustments.

Price Stability

This is a stable and predictable rate of inflation where the prices for goods and service remains relatively the same. This is a factor that measures the condition of economy.

Financial Market

This is any place that allows buyers and sellers trade financial stuff like bonds, equities, and currencies.

Compliance

This is the process of obeying mandatory laws, regulations, and ethical standards.

Noncompliance

This is the failure to follow mandatory legal, regulatory, or internal policies, which can lead to certain consequences.

Risk Management

This is the process of assessing and mitigating threats that could negatively impact an organization’s capital or earnings.

Quality Management

This ensures products and services meet customer expectations and certain standards.

Quality Improvement

This is a way to enhance processes and reduce variations of a product. This helps improve the outcomes within organizations

Six Sigma

This is a data driven process that focuses on reducing product variation and eliminating defects to make a better product.

Internal Controls

These are policies and produces made by a company to protect its assets, ensure accurate financial reporting, and encourage compliance with laws

Corporate Governance

This is the system of rules that guides a company and holds them accountable. As a result, it ensures corporate transparency and fairness.

Chief Compliance Officer

This is an executive responsible for overseeing an organization’s obedience to legal standards and requirements.

Internal Auditor

These are people who evaluate and improve an organization’s risk management and governance processes. As a result, they ensure financial accuracy.

Virtual Auditor

This is a software system that conducts audits remotely.

Reasoning Process

This combines decision-making and problem solving to transform information and data into accurate, evidence-based conclusions.

Buy (Bid) Price

This is the highest price a buyer is willing pay for an asset. This price reflects the current market demand

Ask (Sell) Price

This is the lowest price a seller is willing to accept for an asset. In other words, it is the price people pay to buy/bid for something.

Volatility

This how much and how fast the price or value of something changes.

Bull Market

This is a period when financial investments like stocks are rising in value. It signifies investor optimism and a strong economy.

Bear Market

This is a prolonged period where stock prices fall 20% or more from recent highs, signaling widespread investor pessimism.

Real GDP

Total value of all goods and services produced in a country that is adjusted for inflation.

Day order

This is a type of order restriction that lets a broker know the order will expire at the end of the trading day.

Political issues effect on currency

The currency typically loses value during times of political instability

Cred

Root: trust

Pac/plac

Root: calm

Term

Root: end

Vol

Root: Will

Circum

Prefix: Around

Ir

Prefix: not

Mal

Prefix: bad or wrongful

Super

Prefix: Above or excess

Cide

Suffix: to kill

Ist

Suffix: A person related to something

Ous

Suffix: Full of

Equivocal

• Easy definition: Ambiguous, vague, or open to multiple interpretations; undecided.

• Sentence: The politician gave an _____ answer to avoid taking a clear side on the controversial issue.

Lidicit

• Easy definition: Clear, easy to understand, or bright.

• Sentence: The math textbook was praised for its lucid explanations of complex algebraic formulas.

Pragmatic

• Easy definition: Practical and realistic rather than theoretical.

• Sentence: Instead of dreaming about an expensive vacation, they took a _____ approach and camped nearby.

Anomaly

• Easy definition: Something that is unusual, strange, or abnormal.

• Sentence: The scientists were confused by the temperature spike, which was a complete anomaly in their winter data.

Reverence

• Easy definition: Deep respect or awe for someone or something.

• Sentence: The tourists walked through the ancient temple with quiet reverence.

Specialist

These people have responsibility for all the trades made on a particular stock.

GDP

This is calculated consumption, investment, government, investment (business spending on capital), net exports. This is the total value of all finished good and services produced within a country’s borders during specific period.

Factors that caused Globalization

• fixed exchange rates to floating exchange rates

Insurance underwriter

This is a financial professional who decides whether an insurance company will accept your application of risk by assessing your level of risk and calculating the price you should pay.

Falling interest rates effect