In the world of finance, there are many terms you must understand to make informed financial decisions.
Here are a few of them:
A
i.) Assets: anything owned by an individual or company that holds value and can be used to generate income or profits.
ii) Asset Allocation: A strategy to create a diversified investment portfolio by investing in different asset classes like stocks, bonds, and commodities.
B
i.) Bonds: Debt securities issued by companies, municipalities, or governments to raise capital.
ii.) Bull and Bear Markets: A bull market is a market in which security prices are rising, while a bear market is a market in which security prices are falling.
C
Capital: Money or assets used to generate income or profits. Compound Interest: Interest that is added to the principal amount and then recalculated on a new larger amount. It leads to higher returns on investment over long periods.
D
i.) Dividend: A payment made by a company to its shareholders as a distribution of the company’s profits or earnings.
ii.) Diversification: Investing in multiple assets to reduce the risk of loss from any single asset. It is a commonly employed investment strategy that helps investors manage risk.
E
Equity: Ownership interest in a company, represented by shares of stock.
F
Financial Statements: reports that provide an overview of a company’s financial position, including balance sheets, income statements, and cash flow statements.
G
Gross Domestic Product (GDP): the total value of goods and services produced within a country’s borders.
H
Hedge Fund: An investment fund that pools capital from accredited investors or institutional investors and invests in a variety of assets, often using complex investment strategies.
I
Interest Rate: The percentage amount charged by a lender to a borrower for the use of money.
J
Junk Bonds: Low-rated bonds with high yields, often issued by companies with poor credit ratings.
K
Keynesian Economics: An economic theory that advocates for government intervention in the economy to promote economic growth and stability.
L
Leverage: The use of borrowed money or assets to increase potential returns or profits.
M
Mutual Fund: An investment fund that pools money from multiple individual investors and invests in a diversified portfolio of stocks, bonds, and other securities.
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N
NSE: The Nigerian Stock Exchange is the principal securities exchange of Nigeria
O
Options: Financial contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price at or before a specific date.
P
Portfolio: The collection of stocks, bonds, and other securities a person or entity owns.
Q
Quantitative easing: The action taken by central banks to increase the supply of money in the economy and promote economic growth.
R
Return on investment (ROI): The amount of profit or loss generated relative to the amount of money invested.
S
Stock: A share in the ownership of a company.
T
Treasury Bills (T-Bills): Short-term government securities that mature in less than one year.
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U
Underwriter: A financial firm that helps organisations sell new securities to the public.
V
Venture Capital: capital invested in a start-up or early-stage company with the potential for high returns.
W
Wall Street: A street in lower Manhattan that is home to the New York Stock Exchange and many financial institutions.
X
eXchange-Traded Fund (ETF): A type of investment fund traded on stock exchanges, created to track the performance of a specific index or sector.
Y
Yield: The amount of income generated by an investment, typically expressed as a percentage of the investment amount.
Z
Zero-Coupon Bond: A bond that pays no interest during its maturity and is sold at a discount to its face value.
The list and terms above are inexhaustive. Sign up for our mailing list to get more insights
