Vocabulary 2 - Financial Terms

Below is a list of words that are basic to the financial world. Click on the audio to hear how each word is pronounced. After that, read about Mr. Adams, Mr. Henry and Ms. Lee. Try to guess the meanings of the terms used in the paragraphs. Study the definitions and reread the paragraphs. After you study the words, listen to the audio to hear the pronunciation of the words again. Can you remember the meanings?

Audio

Mr. Adams

Mr. Adams had made many investments. Not only did he have bonds in his portfolio, but he had equities in IBM, Coca-Cola and Proctor and Gamble. He also had equity of about $80,000 in his house he had purchased four years ago.

   investment - buying things that will increase in value, like   stocks, bonds, or real estate
   bonds - similar to shares of ownership, only they represent   money or debt that a corporation or a government owes
   equity - ownership of a stock in a company or real estate
   portfolio - the stocks, bonds, and other investments owned   by a person or financial organizations like bank

Mr. Henry's business has a net worth of around $950,000. His business assets include an office building and a computer system. He also has few liabilities. Mr. Henry would like to sell his business and live on the interest and dividends he would receive from investing the money in stocks and bonds. How much of a return do you think he could he get on his investment?

   assets - something owned that has value
   liabilities - money or other things that are owed
   net worth - the money value after liabilities are subtracted from assets
   dividend -the money taken out of the profits of a company and given to people who own stock
   return - the money made on an investment

Because she wanted to increase her income, Ms. Lee wanted to invest in a particular company whose stock had a very high yield. She had read the company's annual report and had studied the company's balance sheet. Today, she was going to call her broker and buy securities in the company.

   income - money that you earn and is paid to you on a    regular basis
   yield - a percentage (%) rate that shows how much an investment is paying by dividing the current interest or dividend by the price you paid
   annual report - a yearly report that a company sends to its shareholders describing the company's assets, liabilities, earnings, plans and challenges
   balance sheet - a record at a particular time that shows assets, liabilities and net worth of a business.
   broker - a person who buys and ssells stock at an investment company
   securities - shares in stocks or bonds