Personal Finance Vocabulary

The net gain or loss of an investment over a specified time period, expressed as a percentage of the investment's initial cost.

• Balance Sheet

• Rate of Return

• Dividend

• Liquidity

Summarizes the amount of cash and cash equivalents entering and leaving a company.

• Certificate of Deposit

• Standard of living

• Consumer Price Index

• Cash-flow statement

The value of all of your assets, minus the total of all of your liabilities.

• Net worth

• Buying power

• Opportunity cost

• Diversification

A formula that is popularly used to estimate the number of years required to double the invested money at a given annual interest rate.

• Redlining

• Interest rate

• Rule of 72

• Return on investment

An approximate measure of an investment's profitability.

• Cost of attendance

• Exchange rate

• Dividend

• Return on Investment

A consumer's desire to purchase goods and services and willingness to pay a specific price for them.

• Demand

• Supply

• Deductible

• Premium

An optional coverage that protects against damage to your vehicle caused by non-collision events that are outside of your control.

• Liability only

• Cost-effective

• Comprehensive

• Policyholder

The amount of money the owner of an asset would be paid after selling it and any debts associated with the asset were paid off.

• Equity

• Capital loss

• Estate

• Overdraft

The process of offering shares of a private corporation to the public in a new stock issuance for the first time.

• Dividend

• Initial Public Offering

• Liability

• Return on Investment

The person or entity you name in a life insurance policy to receive the death benefit.

• Principal

• Policyholder

• Beneficiary

• Borrower