Everfi - Marketplaces

Actively Managed Fund

A fund where a manager or management team makes decisions about how to invest the fund's money. This is different than a passively managed fund, which refers to a fund that follows a market index and does not have a management team picking investments.

Business Cycle

The natural rise and fall in GDP in an economy. It goes through four phases: expansion, peak, contraction, and trough.

Algorithm

A self-contained set process of actions, or a defined list of steps, used to solve a particular problem used for calculation and decision making. They are used for a wide variety of applications, including robo-advisors.

Angel Investor

A person or group of people who invests in a startup, usually in the early stages. They are often friends and family of the entrepreneur.

Asset

Anything of value or a resource of value that can be converted into cash. Individuals, companies, and governments all own assets.

Asset Allocation

The process of deciding how to divide your investment portfolio among different asset categories, such as stocks, bonds, and cash equivalents.

Balanced Fund

A type of mutual fund that invests in a fixed mix of stocks and bonds. An example is a mutual fund that invests 50% in stocks and 50% in bonds.

Board of Directors

A group of individuals elected to represent shareholder interest. They are often responsible for establishing management policies, providing company oversight, and making decisions on major company issues. Every public company must have one.

Bond

A type of fixed income investment. When you buy a one, you loan money to a borrower (usually a corporation or the government) for a set amount of time in return for interest paid at fixed periods. When it becomes due, you get the full amount you loaned back.

Bootstrapping

Bootstrapping in when an entrepreneur uses their own money to start a business. Entrepreneurs will often put in just enough money to test out their business idea—even if it's not perfect yet.

Broker

An individual or business that specializes in bringing together buyers and sellers of stocks.

Calculated Risk

The risk of failure an entrepreneur takes on after carefully weighing the advantages and disadvantages of starting a new business.

Capital

Wealth in the form of money or anything else that has value. Examples include money, property, buildings, and machinery.

Cash Equivalent

Cash equivalents are short-term investments that are considered liquid, which means you can exchange them for money quickly without a big change in value.

Contractionary Policy

Used by the government and Central Bank to fight rapid inflation in the economy. This policy discourages individuals and businesses from spending in the economy.

Currency

The type of money a country uses as a medium of exchange.

Debt Financing

When a company borrows money to fund their business. When companies use debt financing, they must pay back the amount they borrowed plus interest.

Declining Economy

Characterized by falling GDP, decreasing inflation, and expected rises in the unemployment rate.

Depression

A severe and prolonged downturn in economic activity. A depression is commonly defined as an extreme recession that lasts two or more years. Depressions are usually characterized by large decreases in GDP and high rates of unemployment.

Diversification

Choosing investments that come from different categories rather than investing all of your money in one company, industry, or country.

Dividend

A distribution of a portion of a company's earnings to its shareholders.

Entrepreneur

People who start a new business and assume all the risk and rewards of the business.

Equity Financing

When a company raises money by selling shares of ownership in the company to investors. Investors who participate in equity financing hope that their investment will grow in value over time.

Equity Fund

A mutual fund that invests primarily in stocks.

Exchange-Traded Fund (ETF)

An investment that tracks an index (like an index fund) or basket of assets. ETFs trade on stock exchanges, similar to stocks.

Exit Strategy

How an investor plans to get out of an investment. An investor, such as an angel investor, may use an exit strategy to get out of a business that is not profitable in order to limit their losses. If a business is profitable, an investor may encourage the company to go through an IPO as their exit strategy.

Expansionary Policy

Used by the government and Central Bank to stimulate growth in the economy. This policy encourages individuals and businesses to spend more in the economy.

Financial Market

Where you trade different types of investments, including stocks, bonds, currencies, derivatives, and more.

Fiscal Policy

Refers to the use of government spending and tax policies to influence the economy.

Fixed Income

A type of investment whose return is usually predictable and paid on a regular schedule. An example of fixed income is a bond, which usually pays out interest twice a year.

Fixed Income Fund

A type of mutual fund that is primarily invested in fixed income investments, such as bonds.

GDP

Short for gross domestic product, is the total value of all the finished goods and services in a country over a certain period of time. You can think of these goods and services as all of the things individuals, companies, and governments buy (clothing, food, electronics, aircrafts) or do with their money.

Global Economy

All the transactions that occur in connected markets across economies of different countries.

Going Public

The process of a private company becoming a publicly traded company. When a company goes public, they must go through the initial public offering (IPO) process. Once a company becomes public on the stock market, investors anywhere are able to buy shares of the company.

Goods and Services Market

Where individuals, businesses, and governments complete transactions for different goods and services.

Growing Economy

Characterized by rising GDP, steadily increasing GDP, and an expected decline in the unemployment rate.

Hyperinflation

Extremely rapid or out-of-control inflation.

Index Fund

A type of mutual fund designed to match major market indexes, such as the S&P 500.

Inflation

An increase in the prices of goods and services across many markets in the economy.

Interest

The cost of using somebody else's money. Interest is calculated as a percentage of a loan balance, paid to the lender periodically for the privilege of using their money.

Investing

Putting money into something with the expectation of earning profitable returns in the future through interest or an increase in investment value.

Investment Bank

A type of financial institution that helps companies access the capital markets to raise money. They are different than a commercial bank, which refers to a financial institution that provides services such as accepting deposits, providing loans, and offering basic investment products.

Labor Market

The supply and demand for labor in which employees provide the supply and employers provide the demand.

Liquid

An investment you can quickly buy or sell in the market without a dramatic increase in price. An example would be cash equivalents.

Loan

When you borrow a sum of money with the expectation that you will pay the full amount back plus interest in the future.

Market

Used to describe all of the transactions for the same thing. Examples of markets include the footwear, restaurant, and stock market.

Market Cap Mutual Fund

A type of mutual fund that invests in companies of a certain size. There are many types including micro, small, mid, large, and mega cap mutual funds.

Market Capitalization

The total dollar market value of a company's outstanding (or available) shares. It is calculated by multiplying a company's outstanding shares by the current market price of one share. For example, if a company has 1,000 outstanding shares and the price of one share is $1, then the company's market capitalization would be $1,000.

Market Index

A weighted average of several stocks or other investment vehicles from a section of the stock market. They are calculated from the price of the selected stocks. Meant to represent an entire stock market and track market changes over time.

Maturity Date

The date that the full amount of the loan (or bond) is repaid to the lender and interest payments stop.

Monetary Policy

Refers to policies set by the Central Bank (or Fed in the United States) to influence the amount of available money and credit in the economy. One way the Central Bank does this is by adjusting the interest rate banks charge each other for short term loans. This interest rate influences how much money individuals and businesses are willing to borrow from banks.

Money Manager

A person or financial firm that manages an investment portfolio for someone else. Mutual funds that are actively managed are run by them.

Money Market Fund

A money market fund is a type of mutual fund that invests only in high liquid cash and cash equivalent investments.

Money Market Investment

A type of short-term investment that is considered safe and easily accessible. Examples include money market funds and short-term government bonds.

Mutual Fund

A mutual fund uses money from many investors to invest in a diverse collection of stocks, bonds, and other assets.

Net Worth

What you own (your assets) minus what you owe (your liabilities).

Offering Price

The price at which stocks are listed at when they first become available on the stock market. Usually set by an investment bank.

Passively Managed Fund

A fund that follows a market index and does not have a management team making investment decisions. This is different than an actively management fund, which refers to a fund where a manager or a management team makes decisions about how to invest the fund's money.

Private Company

A business who does not have stocks available on a public exchange.

Profit

The amount somebody (usually a company) makes. This is found by subtracting how much money they have spent (expenses) from how much money they have brought in (revenue).

Prospectus

A formal legal document that is required to be filed with the Securities and Exchange Commission when a company goes public. It provides details about the investment offering sale to the public.

Public Company

A company that has stock available on the stock market for investors to trade.

Registration Statement

A registration statement is a document filed with the Securities and Exchange Commission by a privately held company. This document declares the company's intent to offer shares of its stock to the general public on a public exchange.

Return

The profit or loss on an investment.

Risk Tolerance

The amount of market ups and downs an investor can tolerate.

Robo-Advisor

An online software that uses algorithms, or sophisticated math formulas, to manage investments for their clients.

Savings Account

A place where you can store cash securely while you earn interest on your money.

Securities and Exchange Commission (SEC)

A government agency that protects investors and ensure the capital markets are fair.

Stock

A piece of ownership in a company. When you purchase, you become a part owner of the company.

Stock Market

The market where investors can trade stocks.

Ticker Symbol

A set of letters assigned to a company trading on the stock market. Investment banks and companies usually work together to come up with a them. Examples may be SNAP for Snapchat or FB for Facebook.

Time Horizon

The length of time you plan on holding on to your investments.

Time Value of Money

The principle that money now is worth more than the same amount of money in the future due to its potential to grow through interest or capital appreciation.

Transaction

An exchange between people. Can occur in the goods and service, labor, and financial market.

Unemployment Rate

The percentage of people who currently don't have jobs but are looking for work.

Venture Capital

A form of equity financing that investors provide to to startup companies and small businesses that are believed to have long-term growth potential. Often comes from investors, investment banks, and other financial institutions.