GE 4

• Compound Interest is interest calculated on the total of the principal and previously calculated interests
• Compounding Period is the time interval it takes for money to earn interest in a year
• Nominal Rate is the annual interest rate that does not take into account the compounding period
• Dividend is a share in a company's profit
• Cash Dividend is money given to shareholders based on the number of shares they own during the dividend declaration for the year, and it is the most common type of dividend
• Stock Dividend is given in the form of more shares, and some investors prefer this dividend over cash dividends because it is tax-free
• Common Stock represents ownership in a company and may include dividends on a portion of profits
• In common stock, investors get one vote for every share to elect board members who oversee management
• Maturity Value refers to the sum of the principal and interest, sometimes called the future value of the principal amount
• Simple Interest is interest computed on the original principal during the whole borrowing period
• Interest Rate is the charged amount for using money over a certain period, commonly expressed in percent but converted to decimal
• Time of Interest refers to the period from when the money (principal) is borrowed until its due date
• Maturity Date is the due date of the payment of the principal
• Interest is the amount that a person receives or pays on top of the original investment or loan
• Lender or creditor is the party lending money or extending credit
• Borrower or debtor is the party using the money or credit
• Principal is the amount of money extended for credit or deposited in a bank for safekeeping
• Periodic Rate is the interest rate per compounding period, equal to the nominal rate divided by the number of compounding periods in a year
• Stockbroker: a professional who transacts on behalf of clients in executing buy and sell orders for stocks and other securities, usually associated with a brokerage firm
• Par Value or Face Value: the amount payable on the maturity date of a bond
• Fair price of a bond: the present value of all cash inflows of the bondholder
• Tenor or term of a bond: the fixed period of time in years after which the bond is redeemable as stated in the bond certificate
• Coupon: the interest payment received by the bondholder under a periodic system during the time between the purchase date and maturity date of the bond
• Bond Market: a financial market where issuance and trading of debt securities take place, also known as the debt market
• Stock Appreciation: the increase in the value of a stock from its first purchased value
• Stock Market: a marketplace where publicly listed companies issue and trade shares of stock through exchanges or brokers
• Zero-coupon Bond: a bond that makes no coupon payments but is issued at a considerable discount to par value
• Corporate Bond: a bond issued by businesses to help them pay expenses
• Government Bond: a bond issued by governments to fund programs, deliver payrolls, and pay bills
• Bond: a debt financing instrument; an interest-bearing security that promises to pay a certain amount of money on a specified maturity date as stated in the bond certificate
• Preferred Stock: a type of stock that represents ownership in a company but does not usually come with voting rights
• Stockholder: a person who has shares in a company
• Stock: represents ownership of the company