A

Active Management – An investment approach where managers actively select securities to outperform a benchmark.
Adjusted Basis – An asset’s original cost adjusted for improvements, depreciation, or other changes.
Aggressive Growth Fund – A fund seeking high returns through higher-risk growth investments.
Allocation – The distribution of investments across asset classes.
Alpha – Risk-adjusted return above a benchmark.
Amortization – Gradual repayment of debt or expensing of intangible assets.
Annual Report – A yearly summary of a company’s financial performance and operations.
Annuity – A financial product providing regular income payments, often for retirement.
Appreciation – An increase in an asset’s value over time.
Arbitrage – Profiting from price differences for the same asset in different markets.
Asset – Anything of economic value that can be owned or converted to cash.
Asset Allocation – A strategy of spreading investments to balance risk and return.

B

Balance Sheet – A snapshot of assets, liabilities, and equity at a point in time.
Basis Point – One one-hundredth of a percent (0.01%).
Bear Market – A prolonged decline in market prices.
Benchmark – A standard used to measure investment performance.
Beta – A measure of volatility relative to the overall market.
Bid-Ask Spread – The difference between buying and selling prices.
Blue-Chip Stock – Shares of a large, financially stable company.
Bond – A debt instrument paying interest and returning principal at maturity.
Book Value – A company’s net asset value on its balance sheet.
Broker – An intermediary who executes trades for investors.
Bull Market – A period of rising market prices.
Buy and Hold – A long-term investment strategy focused on holding assets.

C

Capital Gain – Profit from selling an asset above its purchase price.
Capital Loss – Loss from selling an asset below its purchase price.
Capital Market – Markets for long-term securities like stocks and bonds.
Cash Flow – Money moving into and out of a business or investment.
Certified Financial Planner (CFP) – A professional designation for qualified financial planners.
Closed-End Fund – A fund with a fixed number of shares traded on an exchange.
Commission – A fee paid for executing a trade or providing advice.
Commodities – Standardized raw materials such as oil, metals, or crops.
Compound Interest – Interest earned on principal plus accumulated interest.
Consumer Price Index (CPI) – A key measure of inflation.
Convertible Bond – A bond that can be exchanged for company shares.
Correction – A short-term market decline of about 10% or more.

D

Day Trading – Buying and selling securities within the same trading day.
Debenture – An unsecured debt instrument.
Debt-to-Equity Ratio – A measure of a company’s financial leverage.
Default – Failure to meet debt repayment obligations.
Defensive Stock – A stock that tends to be stable during downturns.
Deflation – A broad decline in prices across the economy.
Derivatives – Financial contracts based on an underlying asset.
Diversification – Reducing risk by spreading investments.
Dividend – A payment made to shareholders from profits.
Dividend Yield – Dividend income relative to stock price.
Dow Jones Industrial Average (DJIA) – An index of 30 major U.S. companies.
Duration – A bond’s sensitivity to interest rate changes.