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STOCK MARKET > Vocabulary > Flashcards

Vocabulary Flashcards

(104 cards)

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1
Q

Appreciate

A

increase in the value of an asset over time.

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2
Q

Arbitrage

A

when someone buys something at a low price in one place and sells it at a higher price in another place to make a profit. It’s all about taking advantage of the price difference between two markets.

Example: The investor engaged in arbitrage by buying stocks in one market and selling them in another for a profit.

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3
Q

Asset-backed security

A

financial product made by combining several types of loans, like car loans or credit card debt, into one bundle. Investors can then buy parts of this bundle.

Example: The asset-backed security was created by bundling various mortgage loans together.

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4
Q

Asset

A

anything valuable that a person, company, or government owns, such as money, property or investments; which can help you make more money or provide future benefits.

Example: Real estate is considered a valuable asset for long-term investment.

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5
Q

Bank secrecy act

A

law in the U.S. that requires banks to report large transactions and to watch for suspicious activity in order to prevent financial crimes such as money laundering, fraud…

Example: The bank secrecy act mandates banks to report any transactions over $10,000 to the authorities.

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6
Q

Banker

A

a person employed by a bank.

Example: The banker assisted the customer in opening a new savings account.

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7
Q

Be in debt

A

means you have a financial obligation to repay what you borrowed.

Example: After taking out a loan for the car, she found herself in debt.

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8
Q

Bear

A

refers to a market condition where prices are falling or expected to fall.

Example: The bear market resulted in a decline of stock prices by 15%.

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9
Q

Bear market

A

period in which the prices of securities, such as stocks, are falling or are expected to fall. It is generally defined as a decline of 20% or more in stock prices over a sustained period, often accompanied by widespread pessimism and negative investor sentiment.

Example: The bear market lasted for over a year, causing investors to lose confidence in the stock market.

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10
Q

Broker

A

person or firm that acts as an intermediary between buyers and sellers in financial markets.

Example: The broker facilitated the purchase of shares on behalf of the investor.

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11
Q

Building societies

A

financial institutions that help people save money and get loans to buy homes. They offer good interest rates on savings accounts and provide mortgages to help members purchase houses.

Example: The building society approved the mortgage application for the new home.

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12
Q

Bull

A

refers to a market condition where prices are rising or expected to rise.

Example: The bull market led to an increase in stock prices by 25%.

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13
Q

Bull market

A

period in which the prices of securities, like stocks, are rising or are expected to rise. It is generally defined as a rise of 20% or more in stock prices from recent lows and often lasts for several months or even years. (when stock prices are going up, and investors feel confident and optimistic about future growth, leading to more buying in the market.)

Example: The bull market resulted in a surge of new investments in the tech sector.

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14
Q

Buoyant market

A

refers to a market condition where prices are rising or are stable, and there is a strong demand for goods, services, or assets. It often indicates a healthy and optimistic economic environment.

Example: The buoyant market led to increased consumer spending and business investments.

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15
Q

Call (option)

A

contract that allows you to buy a stock at a set price within a certain time. You pay a fee for this right, and it’s a way to profit if you think the stock price will go up.

Example: The investor purchased a call option to buy the stock at the current price.

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16
Q

Capital markets

A

financial markets where long-term debt and equity securities, like stocks and bonds, are bought and sold.

Example: The capital markets experienced high trading volumes in government bonds.

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17
Q

Capitalization rate

A

real estate metric used to estimate how much return you can expect on a property based on its income and value. A higher capitalization rate generally means a better return on investment.

Example: The capitalization rate for the commercial property was calculated at 8%.

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18
Q

Clearing

A

refers to the payment or benefits that an employee receives in exchange for their work or services. It can include wages, salaries, bonuses, and other perks like health insurance or retirement contributions.

Example: The company provided additional clearing for meeting sales targets.

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19
Q

Closing price

A

last price at which a stock or asset was bought or sold before the market closed for the day.

Example: The closing price of the stock was $50 per share.

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20
Q

Collapse

A

when the value of stocks, markets, or an economy falls very quickly and dramatically, often causing financial trouble for investors and businesses.

Example: The market collapse led to widespread panic among investors.

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21
Q

Collateralised debt obligation

A

bundle of different loans sold to investors. Some parts of the bundle are safer, while others are riskier, and investors earn money as people repay the loans. However, if too many loans go unpaid, CDOs can lose value, which is what happened during the 2008 financial crisis.

Example: The collateralised debt obligation included a mix of mortgage loans with varying risk levels.

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22
Q

Commercial bank

A

financial institution that provides a wide range of services to individuals and businesses, such as accepting deposits, giving loans, and offering checking and savings accounts.

Example: The commercial bank approved the loan application for the new business venture.

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23
Q

Cost of debts

A

is what a company pays in interest when it borrows money.

Example: The cost of debts for the company increased due to higher interest rates.

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24
Q

Cost of debt ratio

A

shows how much a company spends on interest compared to how much money it has borrowed. A lower ratio means the company is paying less in interest relative to its debt, which is generally a positive sign for investors.

Example: The cost of debt ratio improved due to lower interest expenses.

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25
Cost of equity
return that a company must provide to its shareholders to compensate them for the risk they take by investing in the company. ## Footnote Example: The cost of equity for the company was calculated at 12%.
26
Credit
refers to the ability of a person or organization to borrow money or access goods and services with the promise to pay later. It can come in many forms, like credit cards or loans, and lenders want to know that you’re likely to pay them back before they lend you money. ## Footnote Example: The individual's credit score determined their eligibility for a loan.
27
Credit default swap (CDS)
insurance for loans or bonds. If a borrower can’t pay back what they owe, the CDS protects the investor by paying them back for their loss, while the investor pays regular fees for this protection. ## Footnote Example: The credit default swap provided insurance against default risk in the bond portfolio.
28
Credit rating agency (CRA)
company that evaluates how likely borrowers are to repay their loans and gives them a rating. These ratings help investors decide whether to lend money or invest in their debt. ## Footnote Example: The credit rating agency upgraded the company's credit rating to reflect improved financial stability.
29
Crumble
refers to a sudden and significant decline in the value of an asset, market, or financial system; often causes financial problems. ## Footnote Example: The market crumbled due to unexpected regulatory changes.
30
Current assets
assets a company owns that can quickly be turned into cash, usually within a year. This includes cash, money owed by customers, inventory for sale, and other short-term investments. They help the company manage its day-to-day expenses and operations. ## Footnote Example: The current assets of the company included cash reserves and accounts receivable.
31
Current yield
financial metric used to measure how much money you make from an investment each year compared to what you would pay for it now. It helps investors compare different investment options. ## Footnote Example: The current yield on the bond was calculated at 5%.
32
Assets a company owns that can quickly be turned into cash, usually within a year
Definition of current assets
33
Refers to money that is borrowed and must be repaid, typically with interest
Definition of debt ## Footnote Additional information: Can be incurred by individuals, companies, or governments.
34
Decrease in the value of an asset over time, typically due to wear and tear, age, or changes in market conditions
Definition of depreciate
35
Investment strategy that involves spreading investments across various assets or asset classes to reduce risk
Definition of diversification ## Footnote Additional information: Protects from losing a lot of money if one investment doesn’t do well.
36
Money that a company pays to its shareholders from its profits
Definition of dividend ## Footnote Additional information: A way for companies to share their success with investors.
37
Financial metric that indicates how much a company pays in dividends for each share of its stock
Definition of dividend per share (DPS)
38
Refers to a financial market characterized by low trading volume, minimal price movement, and lack of investor interest or activity
Definition of dull market
39
Financial metric that shows how much money a company makes for each share of its stock
Definition of earnings per share (EPS) ## Footnote Additional information: Helps investors see how profitable a company is.
40
Way to measure how much a company is really worth, taking into account its stock price, debts, and cash
Definition of enterprise value, firm value
41
Represents ownership in a company
Definition of equity (=stock)
42
How much one currency is worth compared to another
Definition of exchange rate ## Footnote Example sentence: It tells you how many euros you can get for your dollars when you travel to Europe.
43
Professional who evaluates financial data, trends, and investment opportunities to help businesses and individuals make informed financial decisions
Definition of financial analyst ## Footnote Additional information: Analyzes financial statements, market trends, etc.
44
Groups of people who work in finance, like bankers and investors, sharing information and ideas
Definition of financial circles ## Footnote Additional information: Help each other make better financial decisions.
45
Groups of people who work in finance, like bankers and investors, sharing information and ideas
Definition of financial markets ## Footnote Additional information: Help each other make better financial decisions.
46
Money that is used in a country other than your own
Definition of foreign currency
47
Agreement to buy or sell something at a set price on a future date
Definition of forward (contract) ## Footnote Example sentence: A farmer can lock in a price for their crops to avoid losses if prices drop later.
48
Helps people trade different currencies, making money from the difference in prices when you buy or sell currency
Definition of foreign-exchange broker
49
Agreement to buy or sell something at a set price on a future date, traded on exchanges
Definition of future contract ## Footnote Additional information: Used by businesses to protect themselves from price changes.
50
Taking big risks, hoping to make quick money by guessing stock price movements
Definition of gamble on the stock exchange ## Footnote Additional information: Less about careful planning and more about trying your luck.
51
Low-risk investment offered by banks and financial institutions, with a guaranteed return
Definition of guaranteed investment certificates (GIC)
52
Taking actions to reduce or protect against potential losses from other investments
Definition of hedge ## Footnote Additional information: Involves using strategies to minimize risk.
53
Investment fund that uses advanced techniques to try to make big profits, riskier than regular investments
Definition of hedge fund ## Footnote Additional information: Often available to rich people or large organizations.
54
International organization that works to promote global economic stability and reduce poverty
Definition of International Monetary Fund (IMF) ## Footnote Additional information: Provides financial assistance, policy advice, and technical expertise.
55
When prices go up over time, making it more expensive to buy things
Definition of inflation ## Footnote Example sentence: If a loaf of bread costs $2 today but $2.50 next year, that's inflation.
56
International monetary fund (IMF)
International organization that works to promote global economic stability, facilitate international trade, and reduce poverty around the world. It provides financial assistance, policy advice, and technical expertise to its member countries, especially in times of economic crisis. ## Footnote Example: The IMF provided financial assistance to the country during the economic downturn.
57
Inflation
When prices go up over time, making it more expensive to buy things. This means your money doesn't go as far as it used to. ## Footnote Example: If a loaf of bread costs $2 today but $2.50 next year, that's inflation.
58
Internal rate of return (IRR)
Financial metric used to evaluate how much profit, on average, you can expect to make from an investment each year.
59
Invest
To put money into something, such as a business, property, or financial asset, with the expectation of earning a return or profit over time. The goal is to grow your money by generating income or increasing the value of the asset over time.
60
Investment fund
Way for people to pool their money together, so a professional manager can invest it in a variety of assets, like stocks and bonds.
61
Legal tender
Official money that people must accept when paying debts. It includes coins and banknotes issued by the government.
62
Leverage
Refers to using borrowed money to make bigger investments. It can help you earn more money if things go well, but it can also lead to bigger losses if things go wrong.
63
Limit order
Instruction given to a broker to buy or sell a stock (or other asset) at a specific price or better. It ensures that you don’t pay more than a certain price when buying, or sell for less than a certain price when selling.
64
Liquidity ratio
Financial metric that shows whether a company has enough cash or assets that can be quickly turned into cash to pay off its short-term debts. Higher ratios mean the company is more likely to cover its bills easily.
65
Load
Refers to a sales charge or commission applied when buying or selling certain types of investment funds, particularly mutual funds.
66
Loan
Sum of money that one party (the lender) gives to another party (the borrower) with the agreement that it will be paid back, usually with interest, over a specified period of time.
67
Market capitalisation
Shows how much a company is worth on the stock market.
68
Market risk premium
Refers to the extra money investors expect to make from investing in stocks, which are riskier, compared to a safer investment like government bonds. It’s the reward for taking on that extra risk.
69
Money laundering
The process of concealing the origins of illegally obtained money, to make it appear as if the money comes from a lawful source so they can use it without getting caught.
70
Mutual fund company
Financial institution that collects money from many investors and invests it in a range of assets like stocks or bonds. Professional managers make the investment decisions.
71
Net present value (NPV)
Financial metric used to determine the value of an investment or project by calculating the present value of all future cash flows and subtracting the initial investment cost.
72
No load mutual fund
Mutual fund that does not charge any sales fees or commissions when you buy or sell shares. This means that all the money you invest goes directly into the fund, without any portion being deducted for fees.
73
Opening price
The price at which a stock or asset starts trading when the market opens for the day. It’s influenced by what happened before the market opened, like news or events that affect the stock's value.
74
Over the counter (OTC), off exchange trading
Over-the-counter trading happens directly between two parties without using a big stock exchange. It can offer more flexibility but may come with higher risks and less transparency than trading on traditional exchanges.
75
P/e ratio (price per earning)
Financial metric used to evaluate how expensive or cheap a company's stock is compared to its earnings.
76
Parity
Refers to the situation where two assets, prices, or values are equal or equivalent.
77
Payout ratio
Financial metric that shows what percentage of a company’s profits are being paid out as dividends to shareholders.
78
Put (option)
Financial contract that gives the buyer the right, but not the obligation, to sell an underlying asset at a specified price within a certain period of time.
79
Quotation
Refers to the current price at which an asset, such as a stock, bond, or commodity, is being bought or sold in the market.
80
Reach maturity
It means the investment or loan has come to its end date, and the money originally invested must be paid back to the investor or lender.
81
Recover
To regain or restore lost value, assets, or financial health after experiencing a setback, such as an economic crisis.
82
Restricted funds
Money or financial resources that can only be used for a specific purpose as outlined by the organization.
83
Price
how much buyers are willing to pay or sellers are asking for it. ## Footnote Example sentence: The price of the stock rose sharply today.
84
Maturity
Reach maturity: it means the investment or loan has come to its end date, and the money originally invested must be paid back to the investor or lender. ## Footnote Example sentence: The bond reached maturity and the investor received the principal amount.
85
Recover
means to regain or restore lost value, assets, or financial health after experiencing a setback, such as a economic crisis. It can refer to both individuals and companies regaining their financial position after a difficult period. ## Footnote Example sentence: The company managed to recover from the financial losses and is now profitable again.
86
Restricted funds
money or financial resources that can only be used for a specific purpose as outlined by the donor. These funds are not available for general use and must be spent according to the specific conditions. ## Footnote Example sentence: The donation was designated as restricted funds and could only be used for educational programs.
87
Return on investment
financial metric that measures the profitability or gain of an investment relative to its cost. A higher ROI means a better return, and a lower ROI means a poorer return. ## Footnote Example sentence: The return on investment for the project was 15%.
88
Risk free rate
return you would expect from an investment that has no risk, usually government bonds. ## Footnote Example sentence: The risk-free rate is used as a benchmark for evaluating other investments.
89
Sag
refers to a decline or dip in the value or performance of something, such as a stock, market, or economic indicator. When something 'sags,' it’s losing value or performing worse than expected. ## Footnote Example sentence: The stock market experienced a sag in prices after the economic report was released.
90
Saving bank
type of financial institution that primarily focuses on accepting deposits from individuals and paying interest on those deposits. ## Footnote Example sentence: The saving bank offers competitive interest rates on savings accounts.
91
Securities
financial instruments that represent ownership or a debt obligation. They are tradable assets that investors can buy and sell, and they can be classified into different types, such as stocks, bonds, and derivatives. ## Footnote Example sentence: The company issued new securities to raise capital for expansion.
92
Securitise
refers to when a bank takes loans or debts, groups them together, and creates a product that investors can buy. This way, the bank gets cash to make more loans, and the investors get paid from the payments people make on those loans. ## Footnote Example sentence: The bank decided to securitize the mortgage loans to free up capital for new lending.
93
Setback
refers to a temporary problem or challenge that slows you down or causes a delay in reaching your goal. ## Footnote Example sentence: The project faced a setback due to unexpected regulatory changes.
94
Share, stock
refers to a unit of ownership in a company, representing a claim on a portion of the company's assets and earnings. ## Footnote Example sentence: He bought shares of the company's stock to become a partial owner.
95
Short sales
strategy where an investor borrows shares of a stock and sells them, with the intention of buying them back later at a lower price. The goal is to profit from the decline in the stock's price. ## Footnote Example sentence: The investor executed a short sale on the overvalued stock.
96
Sound investment
investment that is considered safe, stable, and likely to provide a reliable return with lower risk. It’s a safe bet for growing your money over time. ## Footnote Example sentence: Investing in blue-chip stocks is often seen as a sound investment strategy.
97
Speculator
someone who buys and sells financial assets with the hope of making a profit from short-term price movements. ## Footnote Example sentence: The speculator made a quick profit by correctly predicting the market movement.
98
Stockbroker
professional who buys and sells stocks and other securities on behalf of clients. They act as intermediaries between buyers and sellers in the financial markets, helping individuals and institutions trade investments. ## Footnote Example sentence: The stockbroker executed the trade on behalf of the client.
99
Swap
agreement where two parties exchange something of value, like payments or currencies, to reduce risk or make a profit based on changing market conditions. ## Footnote Example sentence: The companies entered into a swap agreement to hedge against currency fluctuations.
100
Tracker
type of investment fund that aims to replicate the performance of a specific market index. A tracker fund automatically mirrors the performance of the index it follows. ## Footnote Example sentence: The tracker fund is designed to match the returns of the S&P 500 index.
101
Treasury bill
very safe, short-term investment where you buy the bill for less than its value and get paid the full value later. The profit comes from the difference, making it a low-risk way to invest. ## Footnote Example sentence: The investor purchased treasury bills for a secure short-term investment.
102
Volatility
how much and how quickly the price of something, like a stock or a market, goes up and down. High volatility means big price changes, while low volatility means smaller, steadier changes. ## Footnote Example sentence: The cryptocurrency market is known for its high volatility.
103
Warrant
a warrant is like a 'coupon' that lets you buy shares of a company at a certain price in the future. If the company’s stock price goes up, you can buy at the lower price and make a profit. ## Footnote Example sentence: He exercised the warrant to purchase shares at a discounted price.
104
Yield
refers to the return or income generated from an investment, usually expressed as a percentage. It shows how much money you earn from your investment over a certain period of time. ## Footnote Example sentence: The yield on the bond was 6% per annum.

STOCK MARKET (5 decks)

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