A Glossary of Financial Terms for Beginners

Auditing

Checking and evaluating financial records.

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Balance Sheet

A statement of the assets, liabilities, and capital of a business or other organization.

Bookkeepers

Individuals who record transactions in purchase ledgers and sales ledgers.

Income

The money a company receives from supplying goods or services.

Expenditure

The money that a company spends.

Fee

A charge for a service performed by a bank.

Premiums

Payments for an insurance policy.

Conglomerate

A multi-industry company. It is generally formed when one company expands by acquiring other firms.

Insurance

A method of protecting a person or firm against financial loss resulting from damage to, or theft of, personal and business assets.

Capital

Money invested in a firm.

Shares

Certificates or book entries representing ownership in a corporation or similar entity.

Merger

A decision by two companies to combine all operations, officers, structure, and other functions of the business.

Pension

A retirement plan in which an employer makes contributions into an account each month.

Depositors

A person who places or has money on deposit in a bank or similar organization.

Fines

A monetary penalty for an act.

Day Trader

An investor who makes many trades throughout the trading day, buying and selling securities to profit from short-term changes in prices.

Bear Market

A situation in which prices for securities, especially stocks, fall significantly.

Collateral

Additional security pledged to support financing.

Institutional Investors

Organizations that invest, including insurance companies, depository institutions, pension investment companies, mutual funds, and endowment funds.

Raise Capital

To get money from investors.

Bear

An investor who believes a stock or the overall market will decline.

Issue

A set of securities that a company or government offers for sale.

Bull

An investor who believes that the market or a security will rise and makes investment decisions accordingly.

Bankruptcy

A legal declaration that one is unable to pay debts and thus needs to have debts forgiven or reorganized.

Breakout

A sudden increase in the price of a security or market.

Trading

The action of buying and selling securities.

Investors

People or companies who put money into financial instruments or ventures with the expectation of earning a profit.

Tariffs

A tax on a particular class of imports or exports.

Goods

Things that are sold.

Stock

Shares of a particular company.

Blue Chip Shares

Shares in large companies with a long history of stable earnings and dividends.

Growth Shares

Shares in companies that are expected to grow at an above-average rate.

Defensive Shares

Shares in companies that are relatively unaffected by economic cycles and provide a regular dividend.

Value Shares

Shares that investors believe are currently undervalued by the market.

Income Shares

Shares in companies that have a history of paying consistently high dividends.

Commercial Bank

A bank that receives customers' deposits and makes loans.

Private Bank

A bank that manages the assets of wealthy individuals.

Investment Company

A company that invests customers' money in funds and other companies.

The Money Markets

Markets in which financial institutions, companies, and government bodies can borrow and invest in the short-term.

The Currency Markets

Markets in which individuals and companies can buy and sell foreign currency.

The Stock Market

A market where the stock and shares of public companies are traded.

The Inter-bank Clearing System

A system in which financial institutions settle credits and debits among themselves.

Insurance Companies

Companies that offer financial protection against risks such as accidents and fire.

Accounting and Auditing Companies

Companies that examine companies' financial records to make sure they are accurate and in accordance with the law.

Regulatory Authorities

Organizations that ensure that financial institutions and markets comply with laws and regulations.

Deregulated

Abolished or ended rules and restrictions.

Prohibited

Made it illegal to do something.

Regulation

Control of something by rules or laws.

Repealed

Cancelled or ended.

Underwriting

Guaranteeing to buy a company's newly issued stock if no one else does.

Retail Bank

A bank that provides financial services to individuals and small businesses. Services include receiving deposits, arranging mortgages, and making loans.

Building Society

A financial institution that offers savings and mortgage products to its members.

Insurance Company

A company that provides financial protection against a variety of risks, including death, illness, and damage to property. Services include offering life insurance and providing pensions.