The act of trading an asset or conducting a financial transaction with a significant risk of losing most or all of its value with the expectation of a substantial gain. The risk of loss is more than offset by the possibility of a huge gain, otherwise, there would be very little motivation to speculate. To determine if an activity qualifies as speculative or investing can depend on the nature of the asset, holding period, and the amount of leverage.
Category: Money & Wealth Page 8 of 14
The process of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares when prices are high. The cost per share over time eventually averages out. This reduces the risk of investing a large amount in a single investment at the wrong time.
The ownership of a corporation is partitioned into shares. A business may declare different types (or classes) of shares, each having distinctive ownership rules, privileges, or share values. Common stock typically has voting rights that can be exercised in corporate decisions. Preferred stock typically does not have voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Additional shares may subsequently be authorized by the existing shareholders and issued by the company. Ownership of shares may be documented by issuance of a stock certificate. A stock certificate is a legal document that specifies the number of shares owned by the shareholder, and other specifics of the shares, such as the par value if any or the class of the shares.
The (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by consumers. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation and avoid deflation, in order to keep the economy running smoothly. The real value of a unit of currency today is less than it was yesterday due to rising prices.
Income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation.
Income received on a regular basis, with little effort required to maintain it.
Some examples of passive income are:
- Earnings from a business that does not require direct involvement from the owner or merchant.
- Rent from a property.
- Royalties from publishing a book or from licensing a patent or other form of intellectual property, software, etc .
- Earnings from internet ads.
- Dividend and interest income from owning securities, such as stocks and bonds, is usually referred to as portfolio income.
- Pensions, retirement payments.
An arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their exposure. A partnership may result in issuing and holding equity or may be only governed by a contract. Partnership agreements may be formal, written or unwritten and even unspoken (tacit).
1. Coins and currency on hand and in bank account balances. Because cash is a nonearning asset, individuals and companies usually keep their cash balances to the minimum level required to sustain operations. 2. The value of assets that can be converted into cash immediately. Usually includes bank accounts and marketable securities, such as government bonds etc. Cash equivalents on balance sheets include securities that mature within 90 days.
1. Cash that comes into or goes out of a person’s or company’s bank account. Cash flow can come from any number of sources and is crucial for continued financial health. Negative cash flow means more money is going out than in. Positive cash flow is when more money comes in than out. 2. The amount of net cash generated by an investment or a business during a specific period.