Bank

A business whose main purpose is to receive deposits and make loans.

Assets

Anything owned to which a market value can be assigned.

Credit Card

A card authorizing the user to buy goods and  services with funds borrowed from the bank, sores, or other businesses that issued the card.

Debit Card

A card authorizing the user to access his or her own funds on deposit in a bank account.  A debit card can be used to buy goods or servcies or to withdraw money directly from an account.

Saving

Setting aside a protion of income for use in the future.

Interest

A periodic payment for the use of borrowed funds.  When calculated a s asimple percentage of the amount borrowed, this payment is also known as simple interest.

Principal

The amount of money borrowed, or the amount of money still owed on a loan, apart from the interest.

Investing

Using money with the intention of making a financial gain.

Diversification

A method of lowering risk by investing in a wide variety of financial assets.

Legal Tender

The established medium of exchange in the United States.

Purchasing Power

The quantity of goods and servcies that can be bought with a particular sum of money.

Commodity Money

A good that has value in trade, but becomes commodity money when it is used as a medium of exchange.  (gold and silver)

Loan

A transaction in which a lender gives money to a borrower, who agrees to repay the money at some point in the future.

Banknotes

Elaborate paper receipts that early banks would give to depositors for precious metals.

Commodity-Backed Money

Banknotes given in exchange for gold and silver.

Fiat Money

Paper money issues without the backing of gold or silver.

Currency

Bills and coins circulating throughout the economy.

Money Supply

The total amount of money in the economy.

Liquid Assets

These can be used as cash or can be easily converted to cash.

Check

A signed form instructing a bank to pay a specified sum of money to the person named on it.

 Traveler's Check

Checks bought by travelers, usually from a bank, and then used like cash to pay for goods and services.

Credit

It is an arrangement that allows a person to buy something now with borrowed money and pay for it later or over time.

Financial Institutions

Firms that deal mainly with money, as opposed to goods and services.

Financial Intermediary

An institution that brings together sellers and buyers in financial markets.

Liquidity

The ease with which accounts can be converted to cash.

Risk

The chance of losing money.

Commercial Loans

Loans that buy machinery, equipment, and materials or to pay labor costs.

Consumer Loans

Loans to make major puchases such as a new car or boat.

Installment Loans

Loans that are paid back in equal monthly installments, or payments.

Credit History

A history of a person's past borrowing along with his or her recourd of repaying loans ontime and in full.

Mortgage

A loan used to buy a house, an office builing, land, or other real estate.

Budget

A plan for spending and saving, based onone's income and estimated expenses.

Securities

Investments that give their holders the right to receive some form of return, or profit.

Compount Interest

Interest gain not only on the original amount deposited in the savings account, but also on all interest earned by those savings.

Rate of Return

A measure of the change in the value of an inverstment over time.

Rule of 72

This rule says to divide the number 72 by the annual rate of return on an investment.

Bond

A loan in which the borrower promises to pay the lender a fixed rate of interest over the term of the loan and then repay the principal at the end of the term, or date of maturity.

Yield

Interest rates, but they are considered rish free.

Municipal Bonds

Securities that are viewed as a bit riskier than treasury bonds

Corporate Bonds

Bonds that are riskier to invest in than government bonds.

Junk Bonds

Bonds that are lower-quality and can be classified as high-yield.

Stocks

Securities that represent ownership in a business.

Shareholders

The investors who buy company's stock.

Dividend

A portion of a firm's profits.

Bull Markets

Happy times for stock investors.

Bear Markets

Painful periods for investors.

Brokerage

A company that buys and sells stocks and bonds for investors.

Stockbrokers

People emplyed to help investors make and carry out investment decisions.

Stock Market

The actual buying and selling of stocks and bonds takes place here.

Mutual Funds

A collection of securities chosen and managed by a group of professional fund managers.