Financial Markets and Instruments

Stocks represent equity or ownership in a corporation. When you own stock, you are a partial owner and may receive a portion of the profits, usually in the form of dividends.

Mutual funds pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. This allows individual investors to access professional management and diversification.

A Certificate of Deposit (CD) is a savings product that locks your money for a specific term at a fixed interest rate. Withdrawing before the maturity date usually incurs a penalty.

A money market account is a type of savings account that typically offers higher interest rates than a standard savings account, but requires a higher minimum balance to maintain.

Diversification is the strategy of spreading investments across various assets to reduce the risk of any single investment performing poorly. It is a key principle of risk management.

A portfolio is the collection of all financial assets owned by an individual or entity. A well-balanced portfolio is typically diversified to manage risk.

Liquidity refers to how quickly an asset can be converted into cash without significantly affecting its market price. Cash is the most liquid asset.

Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment by comparing the gain or loss relative to the cost.

Risk in finance is the possibility that an investment's actual return will differ from the expected return, including the possibility of losing some or all of the original investment.

To accrue means to accumulate or increase over time, often used in the context of interest or savings growing in an account.

Compound interest is calculated on the initial principal and also on the accumulated interest from previous periods. Simple interest only applies to the principal, making it the primary distractor.

Interest is the cost paid by a borrower to a lender for the use of assets. It represents the price of borrowing money.

Investing involves allocating resources, usually money, with the expectation of generating an income or profit. Unlike saving, it typically involves risk and a longer time horizon.

Quasi equity debt security posses the characteristics of both equity and debt. It is particularly useful for enterprises that are legally structured as non profits and therefore cannot obtain equity capital.

As a social enterprise find it difficult for funding their business. They need to pool funds from diversified investors for financing their business. They are faced with different risks and have to offer different returns to different kinds of investors for accessing to their capital needs.