Finance is an aspect that affects a huge percentage of the tings you do in life. You need to understand finance because whether you are an investor or not you have to come across things to do with finance. In this article, you will find the various financial terms and their meanings.
The 12b-1 fee is what you pay a mutual fund for the sake of covering costs of service, marketing and distribution.
The 52-week high/low is the other financial term which you should know. It is basically the top most closing price and the least closing price for which the stock trades through a 52-week period.
You also ought to know about asset allocation. Asset allocation is basically an investment strategy for controlling risk and return through adjusting the fraction of every single asset in the distinctive groups of assets.
You also ought to know the meaning of back-end load. This is the amount of commission which is paid by an investor for selling shares in a mutual fund.
The balance sheet is the other one of common finance terms. If you hear the term balance sheet, know that it is basically a statement which lays bare the belongings of the company as well as that which it owes outsiders and shareholders.
It is also good that you know what a balanced fund is. This simply refers to a mutual fund type that has both equities and bonds.
you should also be able to know what someone means when they talk of a bear market. This term is usually used to refer to a market that falls by twenty percent or more over at least a period of two months.
It is also possible that you do not know what a candle stick is in financial terms. A candlestick is in simple terms a technical indicator that helps traders to know the opening and closing stock price for a certain period.
You should also know what cash flow means because it is used very much in finance. Cash inflow and cash outflow is what makes up cash 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.
The other term that is frequently used in finance is the cost of capital. Cost of capital simply refers to the sum of money required to make a capital budgeting project meaningful.
Cost of equity is also another commonly used financial term. When someone talks of cost of equity, they simply mean the amount of returns they look to get from equity financing which they receive.