Advanced Business Vocabulary with Examples (Investing)

 

SECTION ONE:

1. • Diversification: Investing in a variety of assets (stocks, bonds, real estate, etc.) to reduce risk.
   • Volatility: The degree to which the price of an asset fluctuates.
   • Liquidity: How easily an asset can be bought or sold in the market without significantly impacting its price.
   • Due Diligence: The careful investigation and evaluation of a potential investment opportunity.
   • Capital Appreciation: An increase in the value of an asset over time.
   • Yield: The income generated by an investment, often expressed as a percentage of the principal.
   • Compounding: The process of earning interest on both the principal and accumulated interest, leading to exponential growth.
   • Portfolio Allocation: The distribution of an investment portfolio among different asset classes.
   • Hedge Fund: A private investment fund that uses sophisticated investment strategies, often involving high risk.

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SECTION TWO:

Now ask each student to write an example sentence using each of the ten new words. Taking care to keep correct grammar, word form and placement and punctuation within the sentence.

SECTION THREE:

Example Paragraph:

Investing in stocks and shares can offer the potential for significant capital appreciation through compounding returns over time. ¹ However, it’s crucial to practice diversification to mitigate risk, as the stock market exhibits inherent volatility. ² Liquidity varies across different stocks, impacting how easily an investor can buy or sell their shares. ³ Conducting thorough due diligence on potential investments is essential to make informed decisions. Portfolio allocation strategies, such as investing in a mix of stocks, bonds, and other assets, can help optimize risk and return. ⁴ While hedge funds employ sophisticated strategies, they often involve higher risks.

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SECTION FOUR: Homework

Now write your own short story (paragraph) using at least four of the words in the vocabulary list and at least 100 words.

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SECTION FIVE: Study of Business History.

DOT COM FEVER

Identify the grammar used in the text.

The year was 1999. Dot-com fever was sweeping the nation, and everyone was talking about the internet. My uncle, a man who always seemed more interested in gardening than finance, was suddenly captivated. He’d been reading about a small company called Amazon, a fledgling online bookstore.

“If I had the money,  he’d mused, I’d buy some of their stock. It seems like the future.”

He didn’t have the money, of course. But the idea stuck with him. He started researching other internet companies, pouring over financial news and attending investor meetings. If he had had a bigger risk tolerance, he might have invested in more speculative ventures. However, he was a cautious man, preferring to focus on companies with solid fundamentals.

He finally decided to invest a portion of his savings in a few carefully selected companies. He bought shares in Amazon, of course, but also in companies like Google and eBay. People laughed at him. “You’re throwing your money away,” they scoffed. “Those internet companies will never amount to anything.”

But my uncle held firm. He believed in the long-term potential of the internet. If he had followed the advice of his critics, he would have missed out on an once-in-a-lifetime opportunity.

The following years were a rollercoaster ride. The dot-com bubble burst, and many of his investments plummeted in value. There were moments of panic, moments when he considered selling everything and cutting his losses. If he had panicked and sold, he would have lost a significant amount of money.

But he held on. He continued to research, to learn, and to adapt his investment strategy. As the internet continued to revolutionize the world, his investments began to soar. What had once seemed like a risky gamble turned into a life-changing success.

Today, my uncle is a comfortably wealthy man. He enjoys a comfortable retirement, travels the world, and spends his days pursuing his passions. He often reflects on those early days, the doubts, the fears, and the unwavering belief in his vision. If he hadn’t taken that leap of faith, if he hadn’t dared to invest in the unknown, his life would be very different today.

This story illustrates how even a seemingly small decision, like investing in a particular stock, can have a profound impact on one’s life. It also highlights the importance of patience, perseverance, and a long-term perspective when it comes to investing.