My 2 cents on all things Finance - Part 3

I always believe its easier to understand through examples. Too many financial terms out there, but here are the basics:

Risk Averse - When you get all excited about bonds and shares and commodities, and you want to jump in and invest, but you dont.
Counterparty - Almost everyone whom you need to deal with.
Credit Risk - Risk that your friend will never return the Rs 100 that he owes you.
Market Risk - Risk that tomato will go upto Rs 30 a kilo suddenly due to some bad news on TV.
Counterparty Default - When your husband cheats on you.
Asset - Your house/ bike/ car
Depreciation - When your house looks "dull" compared to the new flat down the road.
Liability - The rent/ installments that you pay for your house/ bike/ car
Mortgage - When you proudly say its MY house, when the legal title is with the bank.
Capital - Your salary
Reserve - Fixed Deposit with your bank
Reserve Liquidity - Savings Deposit with your bank
IOU - Recurring Deposit with your bank
Accrued Interest - Interest from FD/ RD/ SB
Position - Current value of your house.
Unrealised profit - When your land cost shoots up and you are happy to have bought a house earlier.
Unrealised loss - When the laptop price slumps and you curse yourself for having bought a laptop last week.
Mark-to-Market - When you walk past a TV shop and see how much your TV costs currently.
Notional - Amount of bank loan that you always worry about, but never get to pay.
Know Your Client (KYC) - When you research all possible relatives and friends to see if the potential bridegroom is a "good boy" for your girl.
Guarantee - When you certify that the next door boy is "very good" when a potential father-in-law comes to check on him.
Collateral - The gold that a bride wears, that could go into a pawn shop when times go sour

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