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Banking, Trade & Investments

218 cards · 🇺🇸 English

What finance is, how banks work, and the basics of trade and investment.

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Finance

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  1. 1Finance
    The study and discipline of money, currency, assets and liabilities, involving the planning, organizing, leading, and controlling of an organization's resources to achieve its goals
  2. 2Three main divisions of finance
    Personal finance, corporate finance, and public finance
  3. 3Personal finance
    The practice of budgeting to ensure enough funds are available to meet basic needs while maintaining only a reasonable level of risk
  4. 4Corporate finance
    Actions managers take to increase firm value to shareholders, including funding sources, capital structure, and tools to allocate financial resources
  5. 5Public finance
    Management of finances related to sovereign states, sub-national entities, and associated public agencies or bodies
  6. 6Financial instruments
    Assets bought, sold, or traded such as currencies, loans, bonds, shares, stocks, options, futures, and swaps
  7. 7Bond
    A form of borrowing used by corporations and governments where the issuer borrows funds and pays interest to bondholders
  8. 8Stock (or share)
    Equity representing ownership in a corporation, entitling the holder to a proportion of assets and earnings
  9. 9Option
    A financial derivative giving the buyer the right (but not obligation) to buy or sell an asset at a specified price within a specific timeframe
  10. 10Futures contract
    An agreement to buy or sell an asset at a predetermined future date and price
  11. 11Swap
    A derivative contract through which two parties exchange financial instruments or cash flows
  12. 12Financial intermediary
    An entity (like a bank) that channels funds from savers to borrowers, earning the difference between interest paid and received
  13. 13How do banks function as financial intermediaries?
    They accept deposits from individuals and businesses (paying interest), then lend these deposits to borrowers, facilitating transactions and enabling efficient financial coordination
  14. 14Equity financing
    Raising capital by selling shares/stock of the company to investors, as distinct from debt financing
  15. 15Debt financing
    Raising capital by borrowing money (loans or bonds) that must be repaid with interest
  16. 16Main areas of personal finance
    Income, spending, saving, investing, and protection
  17. 17Asset management
    Aiming to maximize value and minimize volatility through professional management of various securities and assets
  18. 18Investment management
    Professional asset management of securities (shares, bonds, real estate, commodities, alternative investments) to meet specified investment goals for investors
  19. 19Risk management
    The study of how to control risks and balance the possibility of gains by measuring risk and developing strategies to manage it
  20. 20Financial risk management
    Protecting corporate value against financial risks by hedging exposure using financial instruments, focusing on credit, market, and operational risk
  21. 21Credit risk
    The risk of default on a debt that may arise from a borrower failing to make required payments
  22. 22Market risk
    Risk relating to losses arising from movements in market variables such as prices and exchange rates
  23. 23Operational risk
    Risk relating to failures in internal processes, people, and systems, or to external events
  24. 24Asset allocation
    Diversifying exposure among asset classes and individual securities appropriate to the client's investment policy, risk profile, goals, and horizon
  25. 25Portfolio optimization
    The process of selecting the best portfolio given the client's objectives and constraints
  26. 26Fundamental analysis
    The approach typically applied in valuing and evaluating individual securities based on financial statements and economic factors
  27. 27Technical analysis
    Forecasting future asset prices using past price data and trading patterns
  28. 28active vs passive management
    Active management attempts to outperform the market through stock selection and timing; passive management seeks to match market returns by tracking an index
  29. 29Value investing
    An investment strategy focusing on stocks that appear underpriced relative to their intrinsic value
  30. 30Growth investing
    An investment strategy focusing on companies expected to grow at an above-average rate compared to the market

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