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Terms: consumer debt, hedging, managing risk, mutual fund, net asset value, prime rate, thrifts.
- Consumer debt: Money owed by individuals for personal or household purchases, such as credit cards, car loans, or mortgages.
- Hedging: A risk management strategy using investments (e.g., options) to offset potential losses from price fluctuations.
- Managing risk: The process of identifying, assessing, and reducing uncertainty in financial decisions to limit potential losses.
- Mutual fund: An investment vehicle that pools money from many investors to buy a diversified portfolio of stocks or bonds.
- Net asset value (NAV): The per-share value of a mutual fund, calculated daily as total assets minus liabilities divided by shares.
- Prime rate: The interest rate banks charge their most creditworthy corporate customers, serving as a benchmark for other loans.
- Thrifts: Savings banks or savings and loan associations that primarily accept savings deposits and make home mortgage loans.
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