Financial Definitions, from A-Z.

• This happens when two assets perform similarly. This means that they are correlated with each other and have a correlation of a number under +1.0 ◦ ex) Uber (UBER) and Lyft Inc (LYFT) are both similar ride sharing companies whose stock performance is positively correlated over the year

Helpful ratio to determine if your stocks are being undervalued or overvalued

In the context of borrowing, principal is the initial size of the loan - the amount of money you borrow

Original amount contributed for an investment, loan, or deposit

independent legal organizations that are often funded by individuals, families, or corporations

• This happens when two assets have no effect on each other and their correlation is quantitively closer to 0 ◦ ex) The correlation between Tesla (TSLA) and SPDR Gold shares (GLD)

This is the total amount that is owed from the previous billing cycle. Since the billing cycle is monthly, each statement is generated on a particular date of the month. For example, from Aug 10th → Sep 10th, my remaining balance might be $500. This $500 is an accumulation based on my spending and what I previously paid off.

The potential degree of financial loss in an investment

• The account to stash away your moolah • Higher compound interest • Limit on how often you can withdraw your money

Backed by an asset like your house or car that will be at risk if you don't pay back your loans Typically lower interest rates

Debt that is backed by an asset such as your car or your house. So if you don't repay it back, you are at risk of losing your assets. Ex) auto loans and mortgages

• Financial assets such as stocks or bonds that can be bought, sold or traded

Goal within the next 5 years

set dollar amount that you deduct from your income. Boom. you're done

When you put money towards stocks, you are purchasing a small part of ownership of companies. If the company does really well, your share of stock will be worth more. Say it doesn't, your stock might be worth less

When the government offers you a reduction in your taxes

Reduces the amount of tax you owe the government dollar for dollar

Expenses that can be deducted when calculating your taxable income

Expenses that can be subtracted from the overall amount income taxes owed

If a transaction, entity, or income has a "tax-exempt" status, this means that some or all of it is free from federal, state or local taxes

The overall expected amount of time that you will be investing in order to reach your financial goals

This is the entire amount you owe through your credit card based on your credit spending limit.

Not backed by an asset

Debt that is not backed by an asset. So if you don't repay it back, it could lead to wage garnishment. Read more here Ex) credit cards

In VC, money is invested into startup companies or small businesses in exchange for equity or ownership in the company