Financial Concepts Flashcards

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Emergency Fund

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A savings account set up specifically to be used to cover financial emergencies

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Large Purchase

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A purchase that requires a significant amount of money

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Interest Rate

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The percentage of principal charged by the lender for the use of its money

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Accrued Interest

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The amount of interest charged on a debt but not yet collected; interest accumulates from the date a loan is issued

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Compound Growth

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The average rate of growth for an investment over time; often expressed as an annual figure

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Compound Interest

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Interest paid on interest previously earned

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Principal

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The initial amount of money invested or borrowed

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Rate of Return

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The measure of an investment’s profit or loss, usually expressed as a percentage of the initial investment

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Inflation

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The persistent rise in the cost of goods and services over time

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Time Value of Money

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Concept that an amount of money is worth more today than in the future due to earning potential