DECA Finance ACT Prep

Capital Expenditure

Money spent on acquiring and maintaining fixed assets such as buildings and equipment

Will

A legal document that specifies who receives a person’s assets when they die.

Healthcare Proxy

A person who is legally able to make medical decisions for you if you cannot

CARD Act of 2009

A U.S Law that notifies credit users a 45-day head up about changes in credit rates.

Executor

A person who makes sure a will is being followed

Beneficiary

The person who receives the benefits from a will or life insurance.

Derivative

A financial instrument whose value is derived from an underlying asset, mutual fund, or index.

Amortization

Process of paying off debts over time by making payments of interest or principal.

Trust

An agreement in which someone holds your assets and property for the benefit of others

Groupthink

The tendency for a group to accept the socially acceptable decision rather than using independent evaluation.

Chapter 7 Bankruptcy

A legal process by which a debtor’s nonexempt assets are liquidated to pay off creditors. Lowers your credit score but gives a financial fresh start.

Treasury Bill

A U.S Government security that matures is less than a year and is issued by the U.S Treasury.

Progressive Tax

A tax that increases as income level increases. It’s designed to make high income earners pay their fair share.

Taguichi Method

A statistical approach that minimizes variation and maximizes performance by testing factors and their interactions.

Protectionism

Policies designed to limit the number of imports coming in to avoid a trade deficit and protect domestic industry.

EBITDA

A financial metric that analyzes the operational profits of a business by analyzing core business operations before accounting for cash accounting methods such as interest or amortization.

Matrix Organizational Structure

A business structure that combines several different departments of a business to encourage flexibility and cooperation.

Dupont Analysis

A type of financial analysis by the DuPont Corporation that breaks Return on Equity into several parts to find out what truly drives business performance

Captive Insurance

An insurance entity that’s designed to help out the business and its affiliates against certain risks.

Annualized

The process of extending a figure that covers a period of less than a year into a 12-month period.

Market Price

The current price of an asset or the current price of an asset people are willing to pay.

Maturity

The date at which a note or a bond must be paid back

Maturity Distribution

Allocation of a portfolio’s assets over several maturity dates.

Market Risk

Chance an investment won’t reach it’s marketing goals

Mutual Fund

An investment fund that collects shareholder money to purchase stocks, bonds and other securities.

NASDAQ

A computerized program that provides price quotes for over the counter and many New York Stock Exchange listed securities

Entrepreneurial Process

A step-by-step process of turning a viable idea into a business

Point of Sale Fraud

A type of fraud that attempts to cheat a business out of money at the time of purchase.

Cloud Computing

On demand delivery of computer services such as databases and servers that aids in protecting and managing financial records.

Value Proposition Budgeting

A budgeting approach that assesses the value of a specific project, process, or operation to a business. It aims to eliminate unnecessary capital expenditures

Flow Through Shares

Common tax shelters used by investors and taxpayers to lessen their tax burden. They are usually issued by taxpayers in the mining industry.

Nonprice Competition

A type of competition that involves factors other than price.

Consumer Price Index

A way to measure inflation rate by analyzing the price change of a common consumer good or service.

Benford’s Law

A principle that states that in real world data sets, the first digit in a numerical value follows a predictable pattern.

Debt Market

A type of financial market that’s purpose is to buy and sell loans. Less risk and reward than the equity market.

Direct Competition

A rivalry between or among businesses that sell similar products and services.

Pure Competition

A type of competition in which there are so many businesses tapping into a specific market, that no one is able to influence the price.

“Bottom Line”

Also called net income it determines whether the business actually made a profit or not after expenses have been subtracted from revenue. It appears on the income statement.

Big Q

A strategic approach that seeks to meet or exceed customer expectations in the whole enterprise in regard to quality management.

Lending Investments

Investments that allow individuals to borrow money for a certain amount of time with a special fee or interest rate. Money market accounts or certificates of deposit are good examples.

Economizing

The process of determining how scarce resources will be used and how goods and services will be purchased and provided to obtain the most satisfaction.

Exclusions

An investment approach that excludes certain investments based on specific criteria or excludes investments based on ethical or environmental concerns

Fixed Income Security

A financial instrument that pays a fixed interest rate on a regular basis such as bonds

Fixed Income Fund

A fund that primarily invests in bonds with no fixed maturity or repayment guarantee.

Financial Materiality

Information or events that have a significant impact on a business’s financial condition, contributing to investment decisions

Federal Funds Rate

The interest rates that banks charge each other for overnight loans to meet reserve requirements. It is a key indicator of the direction of interest rates.

Expense Ratio

Annual percentage of total investment that shareholders have to pay for a mutual fund’s operating expenses and management fees.

Expense Ratio(Formula)

Total Fund Costs/ Total Assets

Exchange Privilege

The ability to transfer money from one mutual fund to another from the same fund family.

Ex-Dividend Date

The date at which a stock starts trading without the next dividend included, typically three weeks after dividends are issued to shareholders.

Earnings Per Share

Portions of a company’s profit assigned to each share of common stock, indicating it’s profitability.

Equity Fund

A fund that primarily invests in stocks, common or preferred based on investment goals.

Dow Jones Industrial Average

A key indicator of stock market performance by analyzing the stock prices of the 30 major U.S companies, adjusted for stock splits and changes in the index.

Cost of Goods Sold

Direct costs of producing goods and services sold.

COGS(Formula)

Beginning Inventory + Purchases- Ending Inventory

Capital Gain

The profit made when a security is sold for more than it’s purchasing price.

Dollar Cost Averaging

An investment strategy that invests a fixed amount of money regardless of share price, lowering the average cost of investing.

Capital Gains Ex Date

Date at which a shareholder is no longer eligible to obtain a declare capital gains distribution from a security or mutual fund.

Dividend Yield

Annual return a mutual fund makes from dividends expressed as a percentage of public offerings piece or its net asset value

Hedge Funds

A pooled investment fund that uses aggressive methods and tactics to maximize returns

Profit Margin

A measure of profitability by expressing net income as a percentage of revenue, indicating the amount of profit a company makes for every dollar of it’s sales.

Cash Flow

The amount of money flowing in and out of a business.

Bancassurance

A partnership that converges a bank and insurance company to provide a one-stop shopping environment for consumers with banking and insurance needs.

Junk Bond

Lower rated bonds that have the potential for higher returns, but come with more risk.

Large-Cap

Companies that have a market value of over $10 Billion and are often well run and stable.

Long-Term Investment Strategy

An investment strategy that focuses on long term goals, ignoring daily market ups and downs.

Loads

Fees on a mutual fund.

Commingling

Mixing company profits with an individual’s profits.

Blue Chip

High quality and low risk investments in companies that have a history of high performance.

Accounting

Process of identifying, recording, analyzing and reporting financial information.

Cash Advance

A short-term loan against a credit line or credit card that’s subjected to higher interest and fees.

Brokerage Account

An arrangement in which an investor deposits funds and places orders for several types of investments including stocks and bonds.

Prepaid Expenses

Expenses that have already been paid for and are classified as assets until incurred.

Debt Consolidation

Process of combining multiple debts into one payment or small loan to reduce the amount of interest.

Annuity

A financial product that makes payments at equal intervals, being treated as a retirement income strategy.

Leverage

Use of borrowed capital to maximize return on investment but also has the potential for higher risks.

Tax Deductible

Costs that can be subtracted from a company’s income before it is subjected to taxation, reducing the amount of taxable income.

Charge-Off

Process of a creditor declaring an uncollectible amount which is written off of financial records as a loss.

Credit Union

A member-owned financial cooperative that offers traditional banking services including savings, loans, and credit cards.

Tax Lien

Legal process of a government making a claim against a property or asset for unpaid taxes, giving the government the first right of holding said property if taxes aren’t paid.