{
 "source": "https://peabody.kids/flashcards/tp-finance-investing",
 "id": "tp-finance-investing",
 "title": "Finance and Investing Vocabulary",
 "category": "test-prep",
 "subject": "Finance",
 "levels": [
  "9-12",
  "college",
  "adult"
 ],
 "description": "Terms used in personal finance and markets. Education only, not investment advice.",
 "tags": [
  "finance",
  "investing",
  "money"
 ],
 "frontLabel": "Term",
 "backLabel": "Meaning",
 "cards": [
  [
   "Interest",
   "The cost of borrowing money, or the reward for lending it"
  ],
  [
   "Principal",
   "The original amount borrowed or invested"
  ],
  [
   "Simple interest",
   "Interest calculated only on the principal"
  ],
  [
   "Compound interest",
   "Interest calculated on principal plus past interest"
  ],
  [
   "APR",
   "Annual percentage rate; yearly cost of borrowing"
  ],
  [
   "APY",
   "Annual percentage yield; yearly return including compounding"
  ],
  [
   "Rule of 72",
   "Divide 72 by the interest rate to estimate years to double"
  ],
  [
   "Inflation",
   "A general rise in prices over time"
  ],
  [
   "Time value of money",
   "Money now is worth more than the same amount later"
  ],
  [
   "Present value",
   "What a future sum is worth today"
  ],
  [
   "Future value",
   "What money today will be worth later at a given rate"
  ],
  [
   "Credit score",
   "A number summarizing creditworthiness"
  ],
  [
   "Credit report",
   "Record of a person's borrowing history"
  ],
  [
   "Credit limit",
   "The maximum amount a lender lets you borrow on a card"
  ],
  [
   "Credit utilization",
   "The share of available credit being used"
  ],
  [
   "Mortgage",
   "A loan to buy real estate, secured by the property"
  ],
  [
   "Down payment",
   "The up-front part of a purchase price paid in cash"
  ],
  [
   "Amortization",
   "Paying off a loan through scheduled payments"
  ],
  [
   "Collateral",
   "An asset pledged to secure a loan"
  ],
  [
   "Default",
   "Failing to repay a loan as agreed"
  ],
  [
   "Net worth",
   "Assets minus liabilities"
  ],
  [
   "Asset",
   "Something owned with value"
  ],
  [
   "Liability",
   "A debt or obligation"
  ],
  [
   "Budget",
   "A plan for income and spending"
  ],
  [
   "Emergency fund",
   "Savings set aside for unexpected costs"
  ],
  [
   "Checking account",
   "Account for everyday spending"
  ],
  [
   "Savings account",
   "Account that earns interest on deposits"
  ],
  [
   "Certificate of deposit",
   "Bank deposit with a fixed term and rate"
  ],
  [
   "FDIC insurance",
   "US program insuring bank deposits up to a limit"
  ],
  [
   "Gross income",
   "Income before taxes and deductions"
  ],
  [
   "Net income",
   "Income after taxes and deductions"
  ],
  [
   "Tax bracket",
   "Income range taxed at a specific rate"
  ],
  [
   "Marginal tax rate",
   "The rate paid on the next dollar earned"
  ],
  [
   "Deduction",
   "An amount subtracted from taxable income"
  ],
  [
   "Tax credit",
   "An amount subtracted directly from taxes owed"
  ],
  [
   "401(k)",
   "US employer retirement plan"
  ],
  [
   "IRA",
   "Individual retirement account"
  ],
  [
   "Roth account",
   "Retirement account funded with after-tax money"
  ],
  [
   "Pension",
   "A retirement income plan from an employer"
  ],
  [
   "Social Security",
   "US government program providing retirement and other benefits"
  ],
  [
   "Stock",
   "A share of ownership in a company"
  ],
  [
   "Bond",
   "A loan to a company or government that pays interest"
  ],
  [
   "Mutual fund",
   "A pooled investment holding many securities"
  ],
  [
   "Index fund",
   "A fund designed to match a market index"
  ],
  [
   "ETF",
   "Exchange-traded fund that trades like a stock"
  ],
  [
   "Portfolio",
   "A collection of investments"
  ],
  [
   "Diversification",
   "Spreading investments to reduce risk"
  ],
  [
   "Asset allocation",
   "Dividing investments among categories like stocks and bonds"
  ],
  [
   "Risk tolerance",
   "How much loss an investor can accept"
  ],
  [
   "Volatility",
   "How much and how quickly a price moves"
  ],
  [
   "Bull market",
   "A period of rising prices"
  ],
  [
   "Bear market",
   "A period of falling prices, often 20 percent or more"
  ],
  [
   "Dividend",
   "A payment from a company to shareholders"
  ],
  [
   "Dividend yield",
   "Annual dividend divided by share price"
  ],
  [
   "Capital gain",
   "Profit from selling an asset for more than its cost"
  ],
  [
   "Capital loss",
   "A loss from selling an asset for less than its cost"
  ],
  [
   "Market capitalization",
   "Share price times number of shares"
  ],
  [
   "P/E ratio",
   "Price-to-earnings: share price divided by earnings per share"
  ],
  [
   "Earnings per share",
   "Profit divided by number of shares"
  ],
  [
   "Blue chip",
   "Shares of large, established, stable companies"
  ],
  [
   "Stock exchange",
   "A marketplace where securities are traded"
  ],
  [
   "Stock market index",
   "A measure of a group of stocks, like the S&P 500"
  ],
  [
   "Brokerage",
   "A firm that buys and sells securities for clients"
  ],
  [
   "Expense ratio",
   "Annual fund fee as a percent of assets"
  ],
  [
   "Liquidity",
   "How quickly an asset can be turned into cash"
  ],
  [
   "Yield",
   "The income return on an investment"
  ],
  [
   "Maturity",
   "The date a bond or loan is due"
  ],
  [
   "Coupon",
   "A bond's stated interest payment"
  ],
  [
   "Treasury bill",
   "A short-term US government security"
  ],
  [
   "Credit rating",
   "An evaluation of a borrower's ability to repay"
  ],
  [
   "Junk bond",
   "A higher-risk, lower-rated bond"
  ],
  [
   "Hedge",
   "An investment made to reduce risk"
  ],
  [
   "Option",
   "A contract giving the right to buy or sell at a set price"
  ],
  [
   "Short selling",
   "Selling borrowed shares hoping to buy them back cheaper"
  ],
  [
   "Margin",
   "Borrowing from a broker to invest"
  ],
  [
   "Dollar-cost averaging",
   "Investing a fixed amount at regular intervals"
  ],
  [
   "Rebalancing",
   "Adjusting a portfolio back to target allocations"
  ],
  [
   "Compound annual growth rate",
   "Smoothed yearly growth rate over a period"
  ],
  [
   "Bubble",
   "Prices far above underlying value that later fall sharply"
  ],
  [
   "Recession",
   "A significant decline in economic activity"
  ],
  [
   "Interest rate",
   "Percent charged or paid for the use of money"
  ],
  [
   "Central bank",
   "The national bank that manages money and interest rates"
  ],
  [
   "Fiduciary",
   "Someone legally required to act in a client's best interest"
  ],
  [
   "Annuity",
   "A series of regular payments"
  ],
  [
   "Insurance premium",
   "Payment made to keep an insurance policy"
  ],
  [
   "Deductible",
   "Amount you pay before insurance pays"
  ],
  [
   "Overdraft",
   "Spending more than the account holds"
  ],
  [
   "Wire transfer",
   "Electronic transfer of money between banks"
  ],
  [
   "Cryptocurrency",
   "A digital currency secured by cryptography; prices are highly volatile"
  ],
  [
   "Ponzi scheme",
   "Fraud paying early investors with money from later ones"
  ],
  [
   "Identity theft",
   "Misuse of someone's personal information to commit fraud"
  ]
 ]
}