Accounting and Financial Statements
This term refers to the total revenues earned by a company minus the total expenses incurred.
What is net income / profit?
The process of buying and selling securities within a short time frame to take advantage of short-term price movements is known by this term.
What is day-trading?
The specific interest rate that a borrower is charged on a loan is often influenced by their perceived level of this.
What is a credit score?
This type of loan is typically used to finance the purchase of real estate.
What is a mortgage?
This financial statement provides a snapshot of a company's financial position at a specific point in time.
What is the balance sheet?
The practice of investing in a wide range of assets or securities to spread risk is commonly known by this term.
What is diversification?
The practice of borrowing money to invest and potentially amplify returns is called this.
What is leverage?
This term refers to the total amount of money borrowed in a loan, not including interest or fees.
What is the principal?
The Price-to-Earnings (P/E) ratio is a widely used valuation metric that relates a company's stock price to this financial measure.
Earnings per share (EPS).
This investment strategy involves buying a diversified portfolio of securities and holding them for the long term, regardless of short-term market fluctuations.
What is a buy and hold strategy?
This term refers to the interest rate that a bank charges its most creditworthy customers.
What is the prime rate?
The interest rate on a loan that is subject to change based on a specific benchmark rate is known as this.
What is a variable or adjustable-rate loan?
This term describes the process of spreading the cost of an intangible asset over its useful life.
What is amortization?
This investment strategy involves selecting investments based on their intrinsic value, often by analyzing financial statements and market conditions.
What is value investing?
The opposite of nominal interest rate, it takes into account the effects of inflation.
What is the real interest rate?
When a borrower fails to meet the terms of a loan, it's known as this.
What is defaulting?
The Return on Equity (ROE) ratio measures a company's profitability in relation to this component of its financial structure.
Shareholders' equity.
This term refers to the measure of the sensitivity of an investment's price to changes in interest rates.
What is duration?
This term refers to the rate at which banks lend money to each other overnight.
A loan that has a higher interest rate compared to prime rate, often offered to borrowers with poor credit.
What is a subprime loan?