vocab 7 Flashcards
asset
A resource with economic value that an individual or corporation owns with the expectation that in the future it can generate or be traded for cash.
capital
Anything that has value or benefit to its owner. It is usually associated with cash being used for productive or investment purposes.
collateral
An asset that a lender, usually a bank, accepts as protection in case the borrower fails to make his/her loan payments.
compound interest
Interest paid on both the initial principal and previously earned interest. Simply stated, it is interest paid on interest.
dividend
Payout of a company’s earnings (profit) to its shareholders (owners).
down payment
A partial payment made at the time of purchase, often in cash, based on the percentage of the price of an expensive item such as a car or house.
earnings per share
A company’s profit divided by the number of shares of common stock. It is meant to represent the company’s profitability.
equity
A representation of the amount of money that a shareholder (owner) would receive if all of the assets of a company were sold after paying off all liabilities.
fiat money
Government issued currency that is not backed by a physical commodity, but rather the trust in government.
income
Money that an individual or business receives in exchange for providing labor, producing a good or service or through investing capital.
interest rate
The amount charged on top of the principal by a lender to a borrower for the use of cash (or assets)
liability
A sum of money a person or company owes to somebody else.
liquidity
The ease in which an asset can be converted into cash without affecting its value.
money
An economic unit that functions as a recognized medium of exchange.
net worth
The value of assets minus liabilities.
