Renaissance for LEADERS

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Tag: Debt

Asset Class

A grouping of similar types of investments which have similar financial characteristics and behave similarly in the marketplace.

There are five main classes which are:

  1. Equities (stocks): Owning a share of a company.
  2. Fixed Income (debt): Lending money to a company or government for interest.
  3. Cash or equivalents: Money in bank accounts, or in your pocket, foreign exchange.
  4. Real Estate: Owning something physical like property.
  5. Commodities: Natural resource commodities and precious metals like gold, platinum, silver, etc.

Consumption

1. The act of consuming or the state of being consumed, esp by eating, burning, etc. 2. Expenditure on goods and services for final personal use. 3. The quantity consumed. 4. A condition characterized by a wasting away of body tissues. 5. Income, liquid cash levels, product lifecycles, confidence levels, borrowing levels and availability of debt influence consumer consumption.

Credit

1. Commendation or approval, as for an act or quality: she was given credit for her work. 2. A person or thing serving as a source of good influence, repute, ability, etc: a credit to the team. 3. The quality of being believable or trustworthy: that statement had credit. 4. Influence or reputation coming from the approval or good opinion of others: he acquired credit within the community. 5. Belief in the truth, reliability, quality, etc, of someone or something: I would give credit to that philosophy. 6. A sum of money or equivalent purchasing power, as at a shop, available for a person’s use. 7. The positive balance in a person’s bank account. 8. The sum of money that a bank makes available to a client in excess of any deposit. 8. The practice of permitting a buyer to receive goods or services before payment.
9. Reputation for solvency and commercial or financial probity, inducing confidence among creditors. 10. Acknowledgment of an income, liability, or capital item by entry on the right-hand side of an account. 11. A distinction awarded to an examination candidate obtaining good marks.

Leverage

1. The process of applying a small force that multiplies into a large effect. 2. The action of a lever. 2. The mechanical advantage or power gained by using a lever. 3. Power or ability to act effectively or to influence people. 4. The use of a small initial investment to gain a relatively high return. Using a small amount of your own money to make an investment of much larger value, thus gaining significant financial power. For example, if you borrow 80% of the cost of a property, you are using the leverage to buy a much more expensive asset than you could have afforded by paying cash. If you sell the property for more than you paid for it, the profit is yours. The reverse is also true if you sell at a loss, the amount you borrowed is still due and the loss is yours. Buying stock on margin is a type of leverage, as is buying a futures or options contracts. Leveraging can be risky if the underlying asset doesn’t perform to your expectations.

Liability

1. Legal responsibility for something, especially costs or damages. 2. Anything for which somebody is responsible, especially a debt. 3. Something that holds somebody back or causes trouble. 4. Somebody who prevents a successful outcome or causes social embarrassment. 5. Likelihood or probability of something happening. 6. All debts and other financial obligations that appear on a balance sheet.

Obligation

!. A social, legal, or moral requirement, such as a duty, contract, or promise, that compels one to follow or avoid a particular course of action. 2. The constraining power of a promise, contract, law, or sense of duty: I felt no obligation to offer my advice. 3. Law A document in which a person binds himself or herself to undertake or refrain from doing a particular act. 4. A debt instrument, such as a loan, mortgage, or bond. 5. The state, fact, or feeling of being indebted to another for a special service or favor received.

Owe

1. To be indebted to the amount of: He owes me five dollars. 2. To have a moral or legal obligation to render or offer: I owe them an apology. 3. To be in debt to: We owe the plumber for services rendered. 4. To be indebted or obliged for: owed their riches to oil; owes her good health to diet and exercise. 5. To bear (a certain feeling) toward a person or persons: You seem to owe your neighbors a grudge.

Private Equity

An asset class consisting of equity securities and debt, which is invested in an operating company that is not publicly traded on a stock exchange. A private equity investment is typically made by a firm that specializes in private equity, venture capitalist or an angel investor. Each investor category has different goals, preferences and investment strategies; however, all provide working capital to nurture expansion, new product development, or restructuring of the company’s operations, management, or ownership.

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