LEADER RESOURCE 1 Key Investment Concepts and Definitions
- Time Value of Money: An amount of money today is worth more than the same amount in the future, provided it can earn interest.
- Investment: An asset or item purchased with the hope that it will generate income or be sold at a higher price in the future.
- Investment Vehicles: A product used by investors, such as certificates of deposit, bonds, stocks, options, futures, annuities, collectibles, or mutual funds.
- Risk: The chance that an investment's actual return will be different than expected, including the possibility of losing some or all of the original investment. Different investment vehicles carry lesser or greater degrees of risk.
- Valuation: The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some subjective and others objective.
- Fundamentals: The qualitative and quantitative information that contributes to the economic well-being and the subsequent financial valuation of a company, security or currency. For businesses, information such as revenue, earnings, assets, liabilities and growth are considered some of the fundamentals.
- Efficient Markets Hypothesis: An investment theory, sometimes disputed, that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.
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