Asset

An asset is anything of value or a resource of value that can be converted into cash.

Liability

A liability is something a person or company owes, usually a sum of money.

Equity

Equity represents the value that would be returned to a company's shareholders if all of its assets were liquidated and all its debts were paid off.

Diversification

Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Capital Expenditure (CapEx)

Funds used by a company to acquire, upgrade, or maintain physical assets such as property, buildings, or equipment.

Compound Interest

Interest calculated on both the initial principal and the accumulated interest from previous periods.

Debt-to-Equity Ratio (D/E)

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Portfolio

A collection of financial investments like stocks, bonds, commodities, and cash equivalents held by an individual or institution.

Fixed Income

Investments that provide a regular return, such as bonds or treasury bills, offering predictable income streams.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Market Capitalization (Market Cap)

The total value of a company's outstanding shares of stock, calculated as stock price multiplied by the number of shares.

Net Present Value (NPV)

The value of an investment's expected cash flows, discounted back to their present value, minus the initial investment cost.

P/E Ratio (Price-to-Earnings)

A valuation ratio of a company's current share price compared to its earnings per share (EPS).

Risk Tolerance

The degree of variability in investment returns that an investor is willing to withstand in their financial plan.

Roth IRA

A type of individual retirement account in the U.S. where contributions are made with after-tax dollars, and qualified withdrawals are tax-free.

Securities

Tradable financial assets such as stocks, bonds, or options that represent ownership or creditor relationships with an entity.

Time Value of Money (TVM)

A financial concept that money available today is worth more than the same amount in the future due to its potential earning capacity.

Yield

The earnings generated on an investment over a specific period, expressed as a percentage of the investment's cost or market value.

Z-Score

A statistical measure that indicates the likelihood of a company defaulting, often used to assess financial health.