vocab 2

Discount Bond – A bond sold for less than its face value and repaid in full at maturity. It does not make periodic interest payments.

Current Yield – A quick estimate of a bond’s return, calculated by dividing its annual interest payment by its current price.

Interest-Rate Risk – The chance that changes in interest rates will reduce investment returns.

Real Interest Rate – The interest rate adjusted for inflation, showing the actual cost of borrowing.

Rate of Return – The total earnings from an investment, including interest and changes in value, relative to its purchase price.

Present Value – The worth today of a future payment, adjusted for interest rates.

Liquidity – How easily and quickly an asset can be turned into cash.

Expected Return – The predicted profit or gain from an investment over a certain period.

Market Equilibrium – A balance where the amount buyers want to buy equals the amount sellers want to sell.

Demand Curve – A graph showing how price affects the quantity of a good that people want to buy, assuming other factors stay the same.