Principles of finance -deca

Face value

A bond when it a matures

Advisory stockbroker

A broker who gives advice on what shares or investments to buy

Trustee

A business or individual that looks after and manages the assets for the benefit of another

Portfolio

A collection of different investments that make up the total investment holding

Junk bond

A high risk bond

Basic point

A hundredth of one percent (.01%)

Blue chip

A large and creditworthy company

Term insurance

A life insurance policy set up for a certain number of years. If you survive the term policy then you do not receive any payout

Stock exchange

A main place of trading stocks , shares etc

Share

A slice of ownership in a company

Accrual

A type of accounting system that reports income when earned and expenses when incurred

Bear market

A widespread decline in security prices causes bears to believe share prices will fall. Bears sell securities, which they do not presently own hoping they can buy them at a lower price later after the price has fallen

Financial institution

An establishment that provides financial services to clients. For example : banks, insurance brokers and investment firms

Maturity

An investment that comes to an end

Corporate bond

Bonds issued by a company

Hedging

Buying one security and selling another with the goal of reducing risk

Indemnity insurance

Insurance designed to protect a mortgage lender against the risk of the borrower not being able to repay their loan

Compound interest

Interest earned on the principal amount and then accumulated over a period of time

Dividends

Money distributed to the owners of a business as profits

Collateral

Property that is offered to secure a loan or other credit and that becomes subject to seizure on default

Amortization

Repayment of a loan by monetary installments

Deferred shares

Shares that do not receive income until they have reached a certain level

Data mining

Sifting through large amounts of data to find the necessary information

Securities

Stocks and shares

Risk control

Taking precautionary measures to prevent and minimize risk. Purchasing insurance is just one example

Compliance

The act of accepting and meeting specific standards

Yield

The annual income received expressed as a percentage

Consolidation

The combining of two separate companies into one

Economies of scale

The decrease of cost per unit that is a direct result from and increase in production. This can be accomplished because as production increases, the cost of producing each additional item falls. Businesses often buy in volume to take advantage of the discounted rate due to economies of scale

Arbitrage

The process of buying securities at a low price in one market and then selling them at a higher price in another market

Nominal value

The value of security when it is first issued

Money market

Trade in short term and low risk securities resulting in dividend earnings