Your Financial Glossary
Understanding the language of finance is the first step to confidence. Here are 20 essential terms:
- Liquidity: How easily an asset can be converted to cash.
- Volatility: The degree of variation in an asset's price.
- Bull Market: A period of rising prices.
- Bear Market: A period of falling prices.
- Asset Allocation: How you divide investments among asset classes.
- Compound Interest: Interest earned on interest.
- P/E Ratio: Price-to-earnings, a valuation metric.
- Diversification: Spreading risk across many investments.
Bookmark this page and reference it whenever you come across unfamiliar terms.