Financial literacy isn’t just for adults, so we’ve created two worksheets and compiled some vocabulary to help your children or students on their way to financial independence as well!
GDP: The gross domestic product that measures the value of all final goods and services produced by a country in a certain time.
Inflation Rate: The percentage increase in the price level of goods and services
Purchasing Power: The amount of goods and services that one dollar can buy.
Interest Rate: The annual price charged by a lender to a borrower for loans, usually expressed as a percentage of the total amount loaned.
Annual Percentage Rate (APR): The total cost of borrowing money expressed as a percentage of the total borrowed. APR takes into account interest, points and fees (all costs) as opposed to the “nominal” or “face” rate of a loan which does not take into account any costs other than interest.
Discount Rate: The rate at which the Federal Reserve charges on loans made to commercial banks.
London Interbank Offering Rate “Libor”: The rate banks charge each other for short-term loans, calculated from a panel of banks representing countries in each of the following currencies: Swiss franc, the euro, the pound sterling the Japanese yen, and the U.S. dollar.
Prime Rate: The rate that banks charge their best customers.
Hot Money Flows: The flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.
Currency Appreciation: The increase in the value of one currency over another.
Risk-Averse Investors: Investors who prioritize safety over return.
Risk-Tolerant Investors: Investors who prioritize return over safety.
Risk-Neutral Investors: Investors who take a balanced approach to both risk and return.
Standard Deviation: The most common metric used to measure the risk of an investment or portfolio through the variation between expected returns on the next years and average return of those years. It is an indicator of volatility.
Asset: Property owned by a person or company, regarded as having value.
Liability: Debts or obligations that must be paid.
Expense: The cost required for something.
Cash Flow: The total amount of money being transferred into and out of a business.
Bottom Line: The final total of an account, balance sheet, or other financial documents.
Financial Report (Financial Statement): Formal records of the financial activities and position of a business, person, or other entity.
Cash Flow Statement: A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
Income Statement: A financial statement used for reporting a company’s financial performance over a specific accounting period.
Balance Sheet: A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time.
Profit: A financial gain.
Loss: A decrease in net income.
Capital: Any economic resource measured in terms of money.
Accounts Receivable: Money owed to a company by its debtors.
Depreciation: A reduction in the value of an asset with the passage of time.
Valuation: An estimation of something’s worth.