LEVEL 1 GLOSSARY
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Bonds
When you buy bonds, you're basically lending money to municipalities, states, and other government entities, which they use for construction projects and other fun stuff. They then pay you back with interest. These aren’t the biggest money makers, but bonds are fairly stable for those of you who think “risk” is a dirty word.
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NASDAQ
It's known as The National Association of Securities Dealers Automated Quotation System, but suffice to say this stock exchange is one of the biggies.
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Return
Gain (or loss) from an investment. Unless you're fiscally masochistic, you're going to cross your fingers for a gain.
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Revenue
The money generated from sales. If you own a lemonade stand and charge 25 cents per cup, add up all the sales for the day and—voila!—that's the revenue (just to keep you on your toes, sometimes people just refer to this as sales).
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Stock
This is your piece of the corporate pie, and it entitles the holder to a share of assets and earnings.
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Bull Market
Like a bull charging forward, a “bull market” is typically a market on the upswing. Olé!
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Debt
It's a bad word in personal finance, but it's pretty common in the corporate world. This is the money that a company owes to a lender.
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Dow Jones Industrial Average
The grandaddy of them all when it comes to indices only because it’s the oldest and most popular—not the largest or most representative. The Dow only represents the prices of 30 largest and most widely held companies in the U.S.
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IPO
Short for Initial Public Offering, this is a private company's way of saying, "Do you want a piece of this?" This is when a company offers shares to the public to get more dough to grow the business. Also known as "going public."
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NYSE
The New York Stock Exchange, a.k.a. Wall Street, is where stocks are bought and sold.
See full glossary
In Level 1 we'll introduce you to some of the basic concepts of investing. Each concept features a brief description and a case study, so you can see how each concept works in what financial analysts call "the real world." When you've mastered a concept, click the link at the bottom of the page to add it to your Report Card and move to the next one. Master all the concepts in each level, and then take the quiz to see just how smart you are.
- What is money?
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The uses of money
- Function of a bank
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What is a company?
- Is that company any good?
- How companies make money
- Brands
- Stocks vs. bonds
- What is a stock?
- Compounding interest
- What is the market?
- LEVEL 1 QUIZ
Is that company any good?
What we'll learn:
1) What makes a company a good company?
2) Where are the people with the money?
3) Why should you care about quality?
You have some time on your hands, and you want to make some money. So you do what any red-blooded American would do: You open a lemonade stand.
But there are plenty of lemonade stands out there. What's going to separate yours from the rest? If you open your lemonade stand in your backyard, you're probably not going to do very well (which is why most kids — even when they're four or five — know to open a lemonade stand on the sidewalk).
That's where the potential customers are. You might have the best lemonade in the world, but if no one sees you, they're not going to buy from you. As they say in real estate, a successful business comes down to location, location, location. So this is one of the first questions a company should address:
Where are the customers?
A good company puts its products where the customers can find them. Now that's a good start, but here are two more questions a good company will ask.
What do the customers want?
Once you've found the customers, the next thing you want to do is make sure you're selling something people want.
If it's January and you're in Chicago, you're not going to sell a lot of lemonade because it's cold. (No, scratch that — it's FREEZING. But that's another story.)
Anyway, the point is, people don't want lemonade when it's cold. So having a product that people want is one key to having a good business.
How do you ensure customer satisfaction?
You also want to sell a quality product. If your lemonade is watered down, too tart, or — heaven forbid — likely to make people sick, then business will dry up fast.
But quality products attract people, those people tell their friends, the company makes money, the stock goes up, shareholders make money, a winning product has been created, and everyone's happy. At WeSeed, we believe that's what business is all about.
Three Facts to Wow Your Friends at a Party
1) The oldest known company in the world is Kongo Gumi, a Japanese construction company founded in 578.
2) The oldest company in the U.S. is J. E. Rhoads & Sons in Branchburg, New Jersey, a conveyor-belt supply company founded in 1702.
3) More than half of the Fortune 500 companies are incorporated in Delaware.
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