WordVale

Banking & Finance

100 words and expressions, each with a learner-friendly meaning. Tap any term for its page.

• collateralan asset pledged as security for repayment of a loan
• liquidityhow easily an asset can be converted into cash
• arbitrageprofiting from price differences of the same asset in different markets
• hedgean investment made to reduce the risk of adverse price movements
• derivativea financial contract whose value depends on an underlying asset
• equityownership value in a company or property after debts
• dividenda portion of profits paid to shareholders
• amortizationgradually paying off a debt through scheduled installments
• underwritingassessing and assuming financial risk for a fee
• solvencythe ability to meet long-term financial obligations
• leverageusing borrowed money to amplify potential returns
• escrowmoney held by a third party until conditions are met
• liena legal claim on property as security for a debt
• annuitya fixed sum paid to someone each year, typically for life
• bearishexpecting prices in a market to fall
• bullishexpecting prices in a market to rise
• portfoliothe collection of investments held by a person or institution
• yieldthe income an investment returns, as a percentage of its cost
• principalthe original amount of a loan, excluding interest
• defaultfailure to repay a loan as agreed
• foreclosurea lender seizing property after missed mortgage payments
• refinancereplacing a loan with a new one on different terms
• fiduciarya person legally bound to act in another's financial interest
• auditan official examination of financial accounts
• capital gainprofit from selling an asset for more than it cost
• compound interestinterest calculated on both principal and accumulated interest
• credit ratingan assessment of a borrower's ability to repay debt
• insolvencybeing unable to pay debts when they are due
• IPOa company's first sale of shares to the public
• bonda loan to a government or company repaid with interest
• futurescontracts to buy or sell an asset at a set future date and price
• margin calla demand to deposit more funds to cover investment losses
• mutual funda pooled investment managed on behalf of many investors
• overdraftwithdrawing more money than an account holds
• promissory notea written promise to pay a stated sum
• receivershipcourt-appointed management of a company in financial trouble
• securitiestradable financial assets such as stocks and bonds
• treasurygovernment department managing public money; also its bonds
• volatilityhow sharply and frequently a price moves
• vestingearning full rights to benefits or shares over time
• assetanything of value owned by a person or company
• balance sheeta statement of what a company owns and owes
• bankruptcylegal status of being unable to repay debts
• basis pointone hundredth of one percent
• blue chipa large, reputable, financially sound company
• capitalwealth used to produce more wealth or start a business
• cash flowmoney moving into and out of a business
• central bankthe institution managing a nation's currency and rates
• commoditya raw material traded in bulk, like oil or wheat
• creditora person or institution owed money
• debtora person or institution that owes money
• deflationa general fall in prices across an economy
• depreciationthe decline in an asset's value over time
• diversificationspreading investments to reduce risk
• endowmentdonated funds invested to support an institution
• exchange ratethe value of one currency against another
• fiscal policygovernment use of taxes and spending to steer the economy
• monetary policycentral bank control of money supply and interest rates
• hedge funda lightly regulated fund using aggressive strategies
• index funda fund that passively tracks a market index
• inflationa general rise in prices over time
• interestthe cost of borrowing money, paid to the lender
• invoicea bill listing goods or services and the amount due
• ledgerthe book or file of all financial transactions
• maturitythe date a financial obligation must be repaid
• net worthtotal assets minus total liabilities
• pensionregular income paid after retirement
• quantitative easinga central bank buying assets to inject money into the economy
• recessiona significant, prolonged decline in economic activity
• remittancemoney sent home by someone working abroad
• subprimelending to borrowers with weak credit histories
• surplusthe amount by which income exceeds spending
• deficitthe amount by which spending exceeds income
• venture capitalfunding provided to startups with high growth potential
• windfalla large, unexpected gain of money
• write-offa debt or asset officially recognized as worthless
• nest eggsavings set aside for the future
• liabilitya debt or financial obligation
• brokeran agent who buys and sells on behalf of others
• stagflationstagnant growth combined with high inflation
• collateralizeto pledge an asset as security for a loan
• disbursementthe payment of money from a fund
• remittance advicea document confirming a payment has been sent
• clearing housean institution that settles transactions between banks
• credit linea maximum amount a lender agrees to make available
• debenturea long-term loan secured only by the borrower's general credit
• hyperinflationextremely rapid and out-of-control price increases
• indexa statistical measure tracking a market's overall performance
• junk bonda high-risk, high-yield bond with a low credit rating
• liquidateto convert assets into cash, often to pay debts
• net present valuetoday's value of a future stream of cash flows
• par valuethe nominal face value of a bond or share
• quantitative tighteninga central bank reducing its holdings to withdraw money
• reserve requirementthe funds a bank must hold rather than lend
• short sellingselling borrowed assets hoping to buy them back cheaper
• sovereign debtmoney owed by a national government
• trancheone portion of a larger financial deal or security
• underlyingthe asset on which a derivative's value is based
• working capitalthe funds available for a company's day-to-day operations
• write-downreducing the recorded value of an asset