06 Jun Finance Vocabulary

How good is your finance vocabulary?

Do you ever read the finance section of the newspaper and aren’t sure what certain words mean?

For those who work in Finance, here is a refresher of some commonly used terms – and an opportunity for the rest of us to learn some valuable new words to become “finance fluent”.

Annuity: a series of equal payments for a fixed term or life

Collateral: something provided as security, usually for a loan

Depreciation: a systematic method of apportioning wear and tear of assets

Equilibrium: the point where competing forces such as supply and demand are in balance

Equity: one of the most confusing terms in Financial Services as it has several meanings. For example, the difference between the value of your house and the value of your mortgage, is the equity you have in the property. Equity can also mean shares or other listed securities.

Execution: a service that stockbrokers or bond traders provide clients that is, the buying and selling of securities

Forensic: a microscopic-like analysis of financial accounts

Geopolitical: relating to politics, especially international relations influenced by geographical factors

Histogram: graphical display where data is grouped into ranges

Infinitesimal: extremely small

Juxtaposition: two things being seen or placed close together
with contrasting effect

Leverage: the ratio of the amount of debt compared to the underlying assets

Mode: the average that is most common, but not the mid-point

Nominal Gross Domestic Product (“GDP”): GDP excluding inflation

Real GDP: GDP after inflation

Optimal: best or most favourable

Quantitative: relating to, measuring, or measured by the quantity of something rather than its quality

Subprime: credit or loan arrangements for borrowers with a poor credit history

Tranche: a block of financial instruments, usually shares or other securities