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Inv. Fundamentals
Investing fundamentals terms and definitions
Term | Definition |
---|---|
Annual Percentage Yield (APY) | The actual interest rate an account pays per year, including compounding amounts |
Annual Report | A summary of a corporation's financial results for the year and potential for future years |
Interest | Earnings on a savings or investment account |
Compound Interest | Interest computed on the original principle plus the accumulated interest |
Risk | The chance that an investment's value will decrease |
Market Risk | Susceptibility of an investments performance to general stock market conditions |
Interest Rate Risk | The risk that the value of an investment could decline as a result of a change in interest rates |
Political Risk | The risk that government actions will have adverse effects on an investment |
Diversification | Spreading risk among many types of investments |
Certificate of Deposit | A deposit that earns a fixed interest rate for a specified length of time |
Emergency Fund | Money used to pay for short term needs with enough left over to cover unexpected expenses - Typically 3-6 months worth of expenses |
Securities | Stocks and bonds issued by corporations or governments |
Discretionary Income | Money that is left over after the bills have been paid |
Inflation | A rise in the general level of prices |
Maturity Date | The date on which an investment becomes due for payment |
Principle | Original investment amount set aside by an investor that will earn interest |
Liquidity | The ability of an asset to be converted into cash quickly without loss of value |
Money Market | An investment in which deposited money is used to purchase safe, liquid securities |