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Common Financial Terms To Know

Finance is an aspect that affects a huge percentage of the tings you do in life. Whether you studied finance in college or not, the issue of finance will still affect you. In this article, you will find the various financial terms and their meanings.

When you are required to pay a fee by a mutual fund to cover some service fee, and the cost of marketing and distribution, the fee is known as the 12-b 1 fee.

The other term that you may come across is the 52-week high/low. This term simply points out the closing price that was the most and also that which was the least within a 52 week period of trading.

You will also meet the term asset allocation. This term refers to an investment strategy which aims to balance risk and reward through adjusting the ratio of each asset among various classes of assets.

You also ought to know the meaning of back-end load. If you are an investor and you sell shares in a mutual fund, you get to pay a sales charge that is the back-end load.
You should also be knowledgeable about what a balance sheet is because it is used a lot in finance. A balance sheet is a financial statement which spells out the assets, the liabilities and the owners’ equity that the company holds.

The balanced fund is another term that is frequently used in finance. The mutual fund that has both equities and bonds is what is called a balanced fund.

You also ought to know what a bear market is. A market that down trends by 20% or even more through at least a 2 months’ timespan is a bear market.

A candlestick is also the other financial term that most people do not know. candlestick usually refers to a technical indicator that traders use to know the opening and closing price of stock for a particular timeframe.

the other frequently used term in finance is cash flow. cash flow can be either cash in-flow or Cash out-flow. Cash in-flow is simply the amount of cash and cash equivalents being given into a firm and cash out-flow is the amount of cash and cash equivalents that are given out from a company.

Cost of capital is also a financial term that you will come across in your interaction with finance. The total money needed to make a capital budgeting project fruitful is what is known as the cost of capital.

You also should know what cost of equity is as it is usually common in finance. When someone talks of cost of equity, they simply mean the amount of returns they look to get from equity financing which they receive.

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