The Basics of Finance
What is finance?
The process of managing money, including budgeting, investing, and saving.
What is gold?
The first coins in history were made of this metal in ancient Lydia.
What is the pound sterling?
The UK’s official currency.
What are shares (or stocks)?
Buying part of a company makes you a holder of these.
What is inflation?
When the prices of goods and services rise, reducing the value of money.
What is behavioral finance?
This type of finance studies how emotions and psychology affect financial decisions.
What is fractional reserve banking?
The system where banks keep only a portion of deposits and lend out the rest.
What is a mixed economy?
The type of economy where the government and private sector both influence production and prices.
What is a balance sheet?
This document shows a company’s assets, liabilities, and owner’s equity.
What is insurance?
This safety net helps protect individuals from financial loss due to accidents or disasters
What is profit?
The term for the money left after all expenses are paid — often used to measure a business’s success.
What are interest rates?
The main way banks earn money is by charging these on loans.
What is the “Chinese economic miracle”?
China’s rapid industrial growth is often described by this term symbolizing its global rise.
What is a bear market?
The type of market where prices are falling and investors are pessimistic.
What are economic shocks?
This term describes how global events—like wars or pandemics—can raise or lower prices worldwide.
What is an income statement?
A document showing a company’s revenues, expenses, and net income.
What is the Bank of England?
This central bank controls the monetary policy of the United Kingdom.
What is a tariff?
A tax placed on imported goods to protect domestic industries.
What is diversification?
“Don’t put all your eggs in one basket” refers to this key investing principle.
What is financial literacy?
The practice of managing one’s personal income, spending, and saving wisely.
What is the time value of money?
The concept that today’s money is worth more than the same amount in the future.
What is BlackRock?
The world’s largest asset manager, known for its influence over global markets.
What is the Great Depression?
This country’s economy slowed sharply during the 1930s, triggering a worldwide depression.
What is Berkshire Hathaway?
Legendary investor Warren Buffett is the CEO of this company.
What is the United States?
During this major 20th-century crisis, over 9,000 US banks failed, changing financial regulations forever.