Economics - Investment

Portfolio

A collection of financial assets.

Financial intermediary

Institution that helps channel funds from savers to borrowers.

Assets

Money and other valuables belonging to an individual or business.

Diversification

Spreading out investments to reduce risk.

Liquidity

The ability to be used as, or directly converted to, cash.

Investment

The act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit.

Return

The money an investor receives above and beyond the sum of money initially invested.

Financial System

The system that allows the transfer of money between the savers and borrowers.

Prospectus

An investment report to potential investors.

Financial asset

Claim on the property or the income of a borrower.

Mutual fund

Funds that pool the savings of many individuals and invest this money in a variety of stocks, bonds, and other financial assets.