ABC for Financial Literacy
By Noah Riebold
A- Awareness
understanding how to effectively manage, save and invest your money so you can
make confident, informed decisions
B - Bonds
Debt securities issued by governments or companies to raise capital.
C - Capital
Represents the financial resources available to an organization for investment,
growth, and operations
D - Diversification
Risk management strategy that involves spreading investments across different
assets to reduce exposure to any single investment.
E - Equity
Represents the ownership interest in a company
F - Financial Literacy
the ability to understand and effectively use various financial skills to make
informed decisions about your personal finances
G - Gross Domestic Product (GDP)
Measures a country's economic output and represents the total value of all goods
and services produced within a given period.
H- Hedging
A strategy to reduce the risk of loss caused by market fluctuations to retain more
of a portfolio's value.
I - Interest Rate
Cost of borrowing or the return on investment.
J - Joint Venture
Business arrangement where two or more entities collaborate on a specific
project, sharing risks and rewards.
K - Key Performance Indicators (KPIs)
Measurable metrics that help organizations assess their performance and
progress towards goals.
L - Leverage
Usage of borrowed funds to amplify potential returns, but it also increases the risk
of losses.
M - Market Capitalization
Total value of a publicly traded company's outstanding shares of stock
N - Net Present Value (NPV)
Financial metric that assesses the profitability of an investment by calculating the
present value of expected cash flows.
O - Options
Financial derivatives that provide the right, but not the obligation, to buy or sell an
underlying asset at a predetermined price.
P - Portfolio
Collection of investments held by an individual or institution, designed to achieve
specific financial objectives.
Q - Quantitative Easing (QE)
Monetary policy tool used by central banks to stimulate the economy by
purchasing financial assets like bonds.
R - Return on Investment (ROI)
Measures the gain or loss generated on an investment relative to its cost.
S - Stock Market
Marketplace where shares of publicly traded companies are bought and sold.
T- Taxation
the compulsory process by which a governmental authority imposes levies, fees,
or charges on individuals and entities to fund public services, redistribute wealth,
and influence economic behavior.
U- Underwriting
Assess and assumes the risk associated with insuring a person or an entity.
Venture Capital (VC)
private equity funding for high-growth potential startups
Working capital
a measure of a company's short-term financial health, representing the liquid
funds available to cover day-to-day operating expenses and short-term debts,
calculated by subtracting Current Liabilities (what you owe) from Current Assets
(what you own)
X- Xenocurrency
a foreign currency or any money traded/held outside its issuing country, like US
Dollars in a German bank or Euros in Mexico, with "xeno-" meaning foreign
Y- Yield
Income generated by an investment
Z- Zero Coupon Bond
a debt security that doesn't pay periodic interest (coupons); instead, you buy it at a
deep discount to its face value and receive the full face value at maturity, with the
difference being your profit, making them great for long-term goals but sensitive to
interest rate changes and taxable annually on implied interest.
