Financial Literacy Vocabulary

Vocabulary Terms

  • Wealth: Accumulation of valuable resources or money.

  • Financial Plan: A strategy for managing finances to achieve specific personal or professional goals.

  • Active Income: Earnings derived from work or services performed.

  • Passive Income: Earnings from investments or activities in which one is not actively involved.

  • Net Worth: Total assets minus total liabilities, indicating an individual's financial health.

  • Bankrupt: A legal status for individuals or organizations unable to repay their debts.

  • Bond: A fixed income investment where an investor loans money to an entity for a defined period at a fixed interest rate.

  • Maturity Date: The date on which a bond or other financial obligation is due to be repaid.

  • Face Value: The nominal value of a bond or stock, as stated on the certificate.

  • Coupon Rate: The interest rate that the bond issuer will pay to bondholders.

  • Bondholder: An entity or individual that owns a bond.

  • Premium: The amount by which a bond's market price exceeds its face value.

  • Discount: The amount by which a bond's market price is less than its face value.

  • Bond Yield: The return an investor can expect to earn if the bond is held to maturity.

  • Stockholders: Individuals or entities that own shares in a corporation.

  • Stock: A financial instrument that represents ownership in a company.

  • Privately Held Company: A company owned by private individuals or groups, not traded on public markets.

  • Publicly Held Company: A company whose shares can be bought and sold by the public on stock exchanges.

  • Initial Public Offering (IPO): The first sale of stock by a private company to the public.

  • Broker: An individual or firm that acts as an intermediary between buyers and sellers.

  • Stock Exchange: A marketplace for buying and selling stocks.

  • Dividend: A portion of a company's earnings distributed to shareholders.

  • Preferred Stock: A class of stock that has a fixed dividend and priority over common stock in asset liquidation.

  • Common Stock: A type of stock that provides voting rights and dividends that can fluctuate.

  • Dividend Yield: A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

  • Diversification: An investment strategy that mixes a variety of assets to reduce risk.

  • Mutual Fund: An investment vehicle that pools money from many investors to purchase securities.

  • Fund Manager: An individual or firm responsible for implementing the investment strategy of a fund.

  • Net Asset Value (NAV): The value per share of a mutual fund or exchange-traded fund (ETF) after deducting liabilities.

  • Load: A fee charged to investors when buying or selling shares in a mutual fund.

  • No-load Fund: A mutual fund without any sales charge or commission.

  • Offer Price: The price at which an investor can purchase a security from the issuer.

  • Prospectus: A legal document that provides details about an investment offering to the public.