As Financial Literacy Month winds down, I am completing the task of defining some of the most frequently asked financial words or terms that you have emailed to me. Here is the M-Z list.
Market Timing: The (misguided) strategy that an investor can find the precise moment when an individual security or market will rise or fall. It requires not just one perfect decision, but also two: when to get out and then, when to get back in.
Net Worth: The value of everything you own (assets), minus the total of everything you owe (liabilities).
Options (aka derivatives): Financial contracts that derive their value from another instrument. Option buyers have the right, but not the obligation, to buy or sell the underlying security, at a fixed price within a specific period of time.
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