Economics & Personal Finance Lecture Flashcards

Vocabulary flashcards covering core economics concepts, stock market terms, valuation math, and personal finance strategies discussed in the lecture transcript.

Market Capitalization

The total market value of a company at a specific moment in time, calculated by multiplying the number of shares outstanding by the current stock price ($\text{Shares Outstanding} \times \text{Stock Price}$).

S&P 500

A mutual fund comprising stock ownership across the 500 most valuable and prominent companies in the United States.

Initial Public Offering (IPO)

An event in which a private company first offers shares of ownership to the general public on the open market.

Rule of 72

A quick formula used to estimate how many years it takes for an investment to double by dividing 72 by the annual interest or growth rate ($\frac{72}{\text{Growth Rate}}$).

Dividend

A share of a company's profits paid out directly to its stock owners on a regular basis.

Equity Position

An ownership stake in a corporation established by holding shares of its stock.

Growth Stock

A share in a company that continually reinvests its profits back into expanded infrastructure, new technology, and future business operations rather than distributing most profits as dividends.

Value Stock

A share in a mature, predictable company that is no longer aggressively expanding and instead distributes a significant portion of its profits (e.g., $60\%$) to shareholders as dividends.

Bank Interest Spread

The profit margin a bank generates by charging borrowers a higher interest rate on loans (e.g., $7\%$ to $11\%$) than the interest rate it pays to depositors on savings accounts (e.g., $2\%$).

Opportunity Cost of Cash

The lost potential interest or investment return given up when pulling cash out of an interest-bearing savings account or market investment to make an outright purchase.

Delayed Gratification

The financial practice of delaying immediate spending or consumption in order to allow money to compound and grow into significantly greater wealth over time.