Aggregate Demand
Measures total amount of demand for all finished goods and services produced in an economy

Annual Percentage Rate (APR)
Yearly rate charged for a loan or earned by an investment and includes interest and fees

Annual Percentage Yield (APY)
Actual rate of return that will be earned in one year if the interest is compounded

Annuity
A contract that's issued and distributed by an insurance company and bought by individuals. The insurance company pays a fixed or variable income stream (guaranteed) to the purchaser

Asset
A resource with value that an individual, a company, or a country owns or controls with the expectation that it will provide a future benefit

Asset Class
A grouping of comparable financial securities. Equities (i.e. stocks), fixed income (i.e. bonds), cash and cash equivalents, real estate, commodities, and currencies) are common examples.

Assets Under Management (AUM)
Total market value of the investments that a person or company manages on behalf of clients

Automated Clearing House (ACH)
An electronic funds-transfer system that allows customers to receive direct deposits and pay bills in a timely manner

Balance Sheet
A financial statement that provides a snapshot of what a company owns (assets) and owes (liabilities), as well as the amount invested by shareholders (equity)

Bankruptcy
A legal proceeding carried out to free individuals or businesses from their debt

Bear Market
A negative or pessimistic outlook on a stock market’s performance; stock prices either have or are expected to decrease

Bernie Madoff
An American financier who executed the largest Ponzi scheme in history, defrauding thousands of investors out of an estimated $65 billion over the course of at least 17 years

Bond
A fixed-income instrument and investment product where individuals lend money to a government or company at a certain interest rate for an amount of time

Bull Market
A positive or optimistic outlook on a stock market’s performance; stock prices either have or are expected to increase

Business Cycle
An overall expansion and subsequent contraction of an economy over a period of time

Capital (Business)
Available money to pay for day-to-day operations and to fund future growth. Four major types of capital: working capital, debt, equity, and trading capital

Capitalism
An economic system in which the means of production—factories, tools, machines, raw materials, etc.— are organized by one or more business owners, also known as capitalists. Capitalists then hire workers to operate the means of production in return for wages.

Compound Interest
Interest that applies to the initial principal of an investment or a loan and the accumulated interest from previous periods. Earning, or owing, interest on your interest.

Diversification
Risk management strategy that creates a mix of various investments within a portfolio in an attempt to limit exposure to any single asset or risk

Dividend
A percentage of a company's earnings that is paid (cash or add'al shares) to its shareholders as their share of the profits, usually paid quarterly

Dow Jones Industrial Average (DJIA); Dow 30
Tracks thirty of America's biggest and most established companies, and considered a gauge of the U.S. economy

Earnings Per Share (EPS)
The amount of money a company makes for each share of its stock. Net income subtracted by preferred dividends and then divided by the number of common shares it has outstanding

Equity
Referred to as "shareholders' equity" (or owners' equity for privately held companies), represents amount of money that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debt was paid off in the case of liquidation

Federal Deposit Insurance Corp (FDIC)
Independent Federal Agency insuring deposits in U.S. banks and thrifts in the event of bank failures. FDIC insures deposits up to $250,000 per depositor as long as the institution is a member firm

Federal Insurance Contributions Act (FICA)
A U.S. payroll tax collected to fund Social Security and Medicare Programs. Contributions are withheld from a wage earner's gross pay and employers match the FICA taxes paid by their employees

Financial Markets
A market or marketplace where financial assets are bought and sold, such as a stock exchange

Fiscal Policy
Refers to a government’s spending and how it affects the economy, particularly if spending levels change

Free Market
An economic system based on supply and demand with little or no government control

Fringe Benefits
Extra compensation companies give their employees. Examples are health insurance, tuition assistance, life insurance, childcare reimbursement, stock options, etc.

Government Shutdown
Occurs when nonessential U.S. government offices can no longer remain open due to a lack of funding. The lack of funding usually occurs when the approval of the federal budget that will finance the government for the upcoming fiscal year is delayed

Gross Domestic Product (GDP)
A measure of a nation’s economic performance and activity, usually calculated on a quarterly or annual basis

Gross Income
Individual’s total earnings before taxes or other deductions

Growth Rate
A measure of growth and how it increases over a period of time

Hedge
A strategy that seeks to limit or offset risk in an investment or a portfolio of investments

Hedge Fund
A limited partnership of private investors whose money is pooled and managed by professional fund managers. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth

Individual Retirement Account (IRA)
A long-term, tax advantaged savings account that individuals with earned income can use to save for the future. Designed primarily for self-employed people who do not have access to workplace retirement accounts such as the 401(k), which is available only through employers

Interest Rate
Basically, rent on borrowing money. Calculated by applying a percentage to the amount of the principal being borrowed

Inflation
A rise in the prices charged for goods and services. When an economy has inflation, cost of living tends to rise

Initial Public Offering (IPO) Term for the first time that a private company sells shares of its stock to the public on a stock exchange. The event means that the company has transitioned from private to public ownership, which is why it is often referred to as "going public"

Insider Trading

Buying or selling of a company's securities by individuals who possess material, nonpublic information about that company. Illegal insider trading carries severe penalties, including fines, prison time, and other penalties

Key Performance Indicators (KPIs)

Quantifiable measurements used to gauge a company’s overall long-term performance. KPIs help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector

Marginal Utility
Refers to the amount of satisfaction a consumer has by consuming a good or service

Market Share Percentage of total sales in an industry generated by a particular company. Calculated by dividing the company's sales over a certain period by the industry's total sales during the same period

Mutual Funds

Pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. For millions of Americans, these funds are the cornerstone of their retirement savings, offering professional management and built-in diversification that would be difficult to achieve on their own

Nasdaq

Global electronic marketplace for buying and selling securities --- world's first electronic exchange. Most of the world's technology giants are listed on the Nasdaq

New York Stock Exchange (NYSE)

Largest equities-based exchange in the world, based on the total market capitalization of its listed securities. First formalized stock exchange established in the U.S.; many of the oldest publicly traded U.S. companies are listed on the "Big Board," nickname for NYSE. The Intercontinental Exchange (ICE) now owns the NYSE

Opportunity Cost
Cost of missing an opportunity in order to take on a different opportunity

Ponzi Scheme

An investment scam that pays early investors with money taken from later investors to create an illusion of big profits. The scheme collapses when the flow of new money slows, making it impossible to keep up the payments of alleged profits

Volatility

Refers to the amount of uncertainty or risk related to the size of changes in a security’s value