Lesson 5
asset
An item of value owned by an individual or firm.
504 loan
A long-term loan from the Small Business Administration.
bank
A type of financial institution, usually a corporation, chartered by a state or federal government, that offers many services, including making loans, investing in securities, holding depositors’ money in individual accounts, honoring demands for payment against those accounts and paying interest on them, and issuing drafts and cashier’s checks.
defined-benefit plan
An employer-funded retirement plan with payouts to the retiree based on a formula that includes length of service and salary history, such as a pension.
corporate finance
The department that determines how to structure a company’s finances for the purpose of generating capital.
fidelity bond
Insurance that pays for any dishonesty the bonded employee may commit.
angel investors
Investors who use their own money as start-up capital for a business, usually in exchange for a share of ownership.
insurance company
A firm that provides protection from the possibility of future financial harm in exchange for periodic payments. Types of insurance include fire, theft, and business interruption.
accidental death and dismemberment policy (AD&D)
An insurance policy that pays benefits to the survivor if the policyholder is killed accidentally. Partial payments are made if the covered employee loses a body part or sight because of an accident.
associate
A secondary entry-level position with a finance company, requiring some grunt work and long hours. Associates usually have a Master of Business Administration (MBA) and previous work experience as an analyst.
business interruption insurance
Insurance that pays for income lost when a business is closed because of a covered disaster.
asset-based loan
A loan secured by a company’s assets
cooperative
A kind of property ownership in which everyone who uses a facility is a part owner (for example, credit unions or some types of condominiums). A cooperative is often called a co-op.
defined-contribution plan
A retirement plan in which a certain amount or percentage of money is set aside each year by the employee or the company, or both; payouts are dependent on the amount of contributions made. A 401(k) is a type of defined-contribution plan.
analyst
An entry-level position with a finance company, usually requiring much grunt work and long hours. Analysts usually have a bachelor’s degree and remain in this position for two to three years before pursuing a graduate degree, or for three to four years before being promoted to associate.
diversification
Increasing market penetration by moving into new markets and broadening the consumer base or increasing the product line to sell a variety of products.
401(k) financing
Financing is when an entrepreneur funds a business with money from his or her own 401(k) retirement account. The 401(k) account is typically set up with an employer and used to fund retirement needs.
credit unions
Credit unions are cooperative financial institutions in which all members (depositors and borrowers) are part owners and have a vote in leadership. Credit unions generally offer the same types of consumer services as banks.
disability insurance
Insurance that pays a monthly benefit to workers who, because of injury or illness unrelated to work, cannot do their normal job or any other job.
entry level
A job that doesn’t require prior work experience, making it suitable for someone who is new to the field or has just graduated and is looking for a first job.
employee confidentiality agreement
An agreement, signed by an employee, not to disclose sensitive information about a business. Confidentiality agreements often cover trade secrets and client information. They allow the firm to sue an ex-employee in court.
CDFIs (Community Development Financial Institutions)
Financial organizations that provide services, including investment capital, credit unions, and personal loans, to underserved areas.
investment firms
Companies that specialize in selling securities (like stocks or bonds) issued by businesses.
fee-for-service (FFS)
A health care arrangement under which a health care provider charges, and the insurance company pays for, each service separately.
public finance
The way that municipalities issue bonds or impose taxes to fund projects and services. People involved in the financial aspect of these projects and services work in investment banks or in government, depending on which side of the deal they’re on.