January 9, 2025January 9, 2025 Key terminologies related to Finance & Economics that you must know. Here are some frequently used words in finance and economics, organized by category: Finance Terminology: Asset – Any resource or property owned by an individual or entity that has value. Liability – A financial obligation or debt that a company or individual owes. Equity – Ownership interest in a firm, typically in the form of stock. Return – The profit or gain derived from an investment. Interest Rate – The percentage charged for borrowing or earned on an investment. Capital – Financial resources or funds invested or available for investment. Dividends – A portion of a company’s earnings distributed to shareholders. Risk – The potential for loss or gain on an investment or financial decision. Liquidity – The ability to quickly convert assets into cash without affecting its price. Portfolio – A collection of investments owned by an individual or institution. Diversification – Spreading investments across various assets to reduce risk. Hedge – An investment or strategy used to offset potential losses in other investments. Market Capitalization (Market Cap) – The total value of a company’s outstanding shares. Bonds – Debt securities issued by a corporation or government to raise funds. Yield – The income earned from an investment, often expressed as a percentage of the initial investment. Economics Terminology: Supply and Demand – The fundamental concept that describes the relationship between the availability of a good or service and the desire for it. Inflation – The rate at which the general level of prices for goods and services rises. Gross Domestic Product (GDP) – The total market value of all final goods and services produced within a country in a given period. Unemployment Rate – The percentage of the workforce that is not employed but is actively seeking work. Monetary Policy – The process by which a government or central bank manages the supply of money to achieve economic goals. Fiscal Policy – The use of government spending and taxation to influence the economy. Trade Balance – The difference between a country’s exports and imports. Recession – A period of economic decline, typically defined as two consecutive quarters of negative GDP growth. Deflation – A decrease in the general price level of goods and services, the opposite of inflation. Interest Rates – The cost of borrowing money, typically set by central banks to control inflation and stimulate or slow down the economy. Consumer Price Index (CPI) – A measure of the average change in prices paid by consumers for goods and services. Monetary Base – The total supply of a country’s currency, including physical money and bank reserves. Productivity – The measure of efficiency of production, often calculated as output per labor hour. Balance of Payments – A record of all economic transactions between the residents of a country and the rest of the world. Externalities – Side effects or consequences of commercial activities that affect other parties who did not choose to incur those costs or benefits. These words are the foundation of many discussions in finance and economics, and understanding them is key to grasping these fields’ concepts. Economy Uncategorized #Asset#Economy#Finance#Markets