Basic Terms
The possibility of losing some or all of an investment, or the uncertainty regarding the return
Risk
A share in the ownership of a company, representing a claim on part of the companies assets and earnings
Stock
Spreading investments across various assets or sectors to reduce risk
Diversification
A market condition where prices are rising or expected to rise
Bull Market
The cost of borrowing money or the return earned on an investment, typically expressed as a percentage
Interest
The original amount of money invested or loaned, excluding interest or earnings
A fixed-income investment where an investor loans money to an entity for a defined period at a fixed interest rate
Bond
Dividing an investment portfolio among different asset categories, such as stocks, bonds and cash
Asset Allocation
A market condition where prices are falling or are expected to fall
Bear Market
A portion of a companies profits distributed to its shareholders, usually in cash or additional stock
Dividend
The act of committing money or capital to an asset or venture with the expectation of generating a profit or income.
Investment
A pool of money collected from many investors to invest in a diversified portfolio of stocks, bonds or other securities
Mutual Fund
A collection of financial assets such as stocks, bonds, mutual funds, and other investments owned by an individual or organization
Portfolio
The degree of variation in the price of a financial instrument over time
Market Volatility
The profit made from selling an asset for more than its purchase price
Capital Gain
How quickly and easily an asset can be converted into cash without significantly affecting its value
Liquidity
The loss incurred when an asset is sold for less than its purchase price
Capital Loss
A measure of the profitability of an investment, calculated as the gain or loss compared to the initial cost
Return on Investment (ROI)