Untitled Flashcards Set

Cost of Credit

The price paid for borrowing money, including interest and fees associated with credit.

Repayment Terms

Specific conditions and guidelines under which a borrower agrees to repay a loan or debt.

Unsecured Source of Funds

Money not backed by collateral, relying solely on the borrower's creditworthiness.

Serial Bond

Bonds with staggered maturity dates, where each segment has a different maturity date.

Convertible Bonds

Bonds that can be converted into a predetermined number of shares of common stock at a specific price and time.

Cash Equivalent

Highly liquid assets that can be readily converted into cash within a short timeframe.

Nominal Rate

The basic interest rate that a lender advertises or a borrower pays.

Savings

Money set aside from income for future use.

Preferred Share

A type of security that combines characteristics of both common stock and bonds.

Income

Money, property, or other transfers of value received in exchange for services or products.

Common Shares

Securities that represent ownership in a corporation, claiming a portion of the company's assets and earnings.

Effective Interest Rate (EIR)

The interest rate that accounts for the effects of compounding, always higher than the nominal rate unless compounded annually.

Investment

A commitment of resources with the expectation of future benefits, involving risk.

Present Value (PV)

The current worth of a future sum of money, discounted at a specific rate of return.

Inflation Premium

Additional return demanded by investors to compensate for the risk of inflation eroding purchasing power.

Mutual Funds

Companies that invest in a variety of securities, allowing investors to buy shares that represent ownership in the fund.

Accumulation Phase

The period in which individuals actively build wealth and accumulate assets for future financial security.

Accrued Expenses

Liabilities representing expenses that have been incurred but not yet paid, providing insight into financial health.

Gifting Phase

A period focusing on minimizing estate taxes and burdens on heirs, as compared to the accumulation years.

Fixed Assets

Tangible items or property a company uses for production, classified as long-term assets on the balance sheet.