Task Analysis of financial instruments (7 points)

TASK 3. GLOSSARY (4 POINTS)
Financial decisions
Term 1: Budget
Definition: A financial plan that outlines anticipated income and expenses over a specific period of time.
Example 1: A family creates a monthly budget to track their income and expenses, including rent/mortgage, transportation costs, utilities, and food.
Example 2: A business creates an annual budget that outlines expected revenue and expenses, including salaries, marketing costs, office supplies, and equipment purchases.
Term 2: Investment
Definition: The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
Example 1: An individual invests in stocks or mutual funds to potentially earn an additional income through dividends or capital gains.
Example 2: A company invests in research and development to develop new products and services that can generate additional revenue and profit.
Term 3: Debt
Definition: Money owed to another party, typically with interest and a repayment deadline.
Example 1: An individual takes out a loan to pay for a car or a mortgage for a house, with a set monthly payment and interest rate.
Example 2: A business borrows money from a bank or investors to finance operations or expansion, with the obligation to pay back the loan with interest over a specific period of time.
Term 4: Insurance
Definition: A financial product that protects against risk or loss, typically involving premiums paid over time.
Example 1: An individual purchases health insurance that covers medical expenses in case of illness or injury, with the cost of insurance premiums and deductibles.
Example 2: A business purchases liability insurance that covers legal expenses and damages in case of accidents or lawsuits, with the cost of insurance premiums and coverage limits.