Glossary

Welcome to Fineco’s Glossary! It will help you better understand the financial terminology and master your financial skills.

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Negative interest rate

Negative interest rates were a policy move first made on a large scale by the European Central Bank in 2014 to stimulate lending and monetary circulation and loosen the hold on hordes of cash. When interest rates are negative, cash saved at a bank incurs fees instead of growing in value, and borrowers might even be paid to borrow money. This has the effect of jolting lenders into loaning money more freely, thus jump-starting economic growth through higher spending and investment. Negative interest rates are considered an unconventional and last-resort policy intended to curb deflation and recession.

Negotiation

Negotiation is a dialogue between parties regarding an issue with the aim of resolving that issue in a beneficial way. Important in business. Negotiating is used in a broad range of spheres, from politics to employment to business. A skilled negotiator seeks consensus over conflict, strives to understand the other party, and knows how to strategically offer concessions in order to persuade the other party to accept the outcome that is the first party’s best interest.

Net income

Net income is an accounting term that essentially means profits. It is calculated by subtracting a business’s expenses and taxes from its gross income (also known as revenue). Investors use this number to determine a company’s level of profitability and to calculate its earnings per share, an important ratio for comparing one business’s performance to another.

Nominal value

Also known as face value or par value, the nominal value of a stock or bond is the value stated on the certificate itself. For bonds and preferred stock, it represents the value that will be repaid to the investor once the instrument matures. For instance, an investor who buys a 20-year bond with a nominal value of $1000 is entitled to receive $1000 at the end of 20 years (along with interest payments the bond promises, called coupon payments, spaced throughout the bond’s term). Common stock certificates also have a nominal value, but it generally bears no relation to their actual price and is used for accounting purposes only.