Reference

Glossary Terms

Browse our comprehensive glossary of terms. Search, filter by topic, or navigate alphabetically.

463 Total Terms
18 Topics

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8 terms
457 plan A 457 plan is a type of tax-advantaged retirement savings account offered to employees of state and local… Retirement Planning 50/30/20 rule The 50/30/20 rule is a simple and popular budgeting framework that helps individuals manage their after-tax income by… Personal Finance & Money Management 1099 A 1099 form is a series of tax documents issued by the Internal Revenue Service (IRS) and used… Taxation

A

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Asset class An asset class is a group of investments that share similar characteristics, behave similarly in the marketplace, and… Investing Fundamentals APR vs. APY APR (Annual Percentage Rate) and APY (Annual Percentage Yield) are two critical measures used in finance to represent… Credit, Debt & Lending Asset allocation Asset allocation is the investment strategy of dividing a portfolio among different asset classes, such as stocks, bonds,… Investing Fundamentals

B

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Beneficiary A beneficiary is a person, organization, trust, or estate that is legally designated to receive assets or benefits… Insurance & Risk Protection Bond ladder A bond ladder is an investment strategy that involves purchasing a portfolio of bonds with different maturity dates.… Bonds & Fixed Income Broker A broker is an individual or firm that acts as an intermediary between buyers and sellers in financial… Financial Markets & Market Mechanics

C

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Coinsurance Coinsurance is a cost-sharing mechanism commonly found in health insurance policies, where the insured individual and the insurance… Insurance & Risk Protection Collections Collections refers to the process that debt lenders and creditors use to recover overdue payments from borrowers who… Credit, Debt & Lending Cash flow Cash flow is the movement of money into and out of a person’s or business’s accounts over a… Personal Finance & Money Management

D

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Dollar-cost averaging Dollar-cost averaging (DCA) is an investment strategy where a fixed dollar amount of a particular asset—such as shares… Investing Fundamentals Discount rate The discount rate is the interest rate that the Federal Reserve System charges commercial banks and other depository… Monetary & Fiscal Policy Debt-to-income (DTI) ratio The Debt-to-Income (DTI) ratio is a personal finance metric that compares your total monthly debt payments to your… Credit, Debt & Lending

E

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EPS (earnings per share) EPS (earnings per share) is a financial metric that shows how much profit a company earns for each… Stocks & Equity Markets Emergency fund An emergency fund is a dedicated savings account specifically set aside to cover unexpected financial surprises or life… Personal Finance & Money Management Equity financing Equity financing is a method of raising capital for a company by selling ownership shares, known as equity,… Corporate Finance

F

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Fair Credit Reporting Act (FCRA) The Fair Credit Reporting Act (FCRA) is a federal law enacted in 1970 that promotes the accuracy, fairness,… Credit, Debt & Lending FICA / payroll tax FICA, which stands for the Federal Insurance Contributions Act, is a United States federal law that requires a… Taxation FSA (Flexible Spending Account) A Flexible Spending Account (FSA) is a type of savings account offered by employers that allows you to… Insurance & Risk Protection

G

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Glass-Steagall Act The Glass-Steagall Act (officially the Banking Act of 1933) was a landmark piece of U.S. legislation that created… Financial Regulation Gross profit Gross profit is the profit a company makes after deducting the costs directly tied to producing and selling… Financial Statements & Accounting Gross Domestic Product (GDP) Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a… Economics for Finance

H

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Hard inquiry A hard inquiry (also called a hard pull or hard credit check) is a record of when a… Credit, Debt & Lending Household cash flow Household cash flow is the total amount of money moving into and out of a household over a… Personal Finance & Money Management HSA (Health Savings Account) An HSA, or Health Savings Account, is a tax-advantaged savings account that you can use to pay for… Insurance & Risk Protection

I

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Index fund An index fund is a type of exchange-traded fund or mutual fund designed to track the performance of… Mutual Funds, ETFs & Pooled Vehicles Inventory turnover Inventory turnover is a key financial ratio that measures how many times a company sells and replaces its… Financial Ratios & Analysis Investment horizon An investment horizon is the total length of time an investor expects to hold a security or a… Investing Fundamentals

J

2 terms
Jumbo loan A jumbo loan is a type of mortgage used to finance properties that are too expensive for a… Real Estate & Mortgage Finance JOBS Act The JOBS Act, officially the Jumpstart Our Business Startups Act, is a landmark piece of U.S. legislation signed… Financial Regulation

L

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Long-term disability insurance Long-term disability insurance (LTD) is a type of insurance policy that provides income replacement if you become unable… Insurance & Risk Protection Liabilities Liabilities are financial obligations or debts that a company or individual owes to others. They represent claims against… Financial Statements & Accounting Long-term capital gains Long-term capital gains are the profits you earn from selling an asset that you have held for more… Taxation

M

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Money market account A money market account (MMA) is a type of deposit account offered by banks and credit unions that… Banking & Depository Institutions Minimum payment The minimum payment is the smallest amount you must pay each month on a credit card or other… Credit, Debt & Lending Mutual fund A mutual fund is a type of investment vehicle that pools money from many investors to purchase a… Mutual Funds, ETFs & Pooled Vehicles

N

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Non-discretionary spending Non-discretionary spending, also called essential or mandatory spending, refers to expenses that are necessary for basic living and… Personal Finance & Money Management Nominal return Nominal return is the percentage gain or loss on an investment before adjusting for the effects of inflation.… Investing Fundamentals Nonfarm payrolls Nonfarm payrolls are a monthly economic indicator released by the U.S. Bureau of Labor Statistics (BLS) that measures… Economics for Finance

O

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Out-of-pocket maximum The out-of-pocket maximum is the most money you will have to pay for covered healthcare services in a… Insurance & Risk Protection Operating income Operating income, also known as operating profit or operating earnings, measures the profit a company makes from its… Financial Statements & Accounting Order book An order book is a real-time, electronic list of buy and sell orders for a specific financial security,… Financial Markets & Market Mechanics

P

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Pension A pension is a type of retirement plan that promises to pay a regular, fixed income to employees… Retirement Planning Passive investing Passive investing is a long-term investment strategy that aims to match the performance of a broad market index,… Investing Fundamentals Policy limit A policy limit is the maximum amount an insurance company will pay for a covered loss under an… Insurance & Risk Protection

Q

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Quantitative easing (QE) Quantitative easing (QE) is an unconventional monetary policy tool used by a central bank — like the U.S.… Monetary & Fiscal Policy Qualified plan A qualified plan is a retirement savings plan that meets the requirements of the Internal Revenue Code (IRC)… Retirement Planning Qualified dividend A qualified dividend is a type of dividend payment that meets specific criteria set by the Internal Revenue… Taxation

R

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Real return Real return is a measure of investment performance that accounts for the eroding effects of inflation. While a… Investing Fundamentals Return on assets (ROA) Return on Assets (ROA) is a key profitability ratio that measures how efficiently a company uses its assets… Financial Ratios & Analysis Routing number / ABA A routing number, also known as an ABA number (American Bankers Association number), is a unique nine-digit code… Banking & Depository Institutions

S

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Sarbanes-Oxley Act The Sarbanes-Oxley Act (often called SOX) is a landmark U.S. federal law enacted in 2002 to restore public… Financial Regulation SIMPLE IRA A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a tax-deferred retirement plan designed for small businesses… Retirement Planning Securities Exchange Act of 1934 The Securities Exchange Act of 1934 is a landmark United States federal law that created the legal framework… Financial Regulation

T

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Ticker symbol A ticker symbol, also known as a stock symbol, is a unique series of letters assigned to a… Stocks & Equity Markets Tax-loss harvesting Tax-loss harvesting is a strategy used by investors to reduce their taxable income by selling investments that have… Taxation Trade deficit A trade deficit occurs when a country imports more goods and services than it exports over a given… Economics for Finance

U

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Universal life insurance Universal life insurance is a type of permanent life insurance that offers flexible premiums, adjustable death benefits, and… Insurance & Risk Protection Underwriting Underwriting is the process by which a lender, insurer, or investment bank evaluates the risk involved in a… Insurance & Risk Protection Unemployment rate The unemployment rate is a key economic indicator that measures the percentage of the labor force that is… Economics for Finance

V

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Variable annuity A variable annuity is a type of insurance contract that offers a way to save for retirement by… Retirement Planning VA loan A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans… Real Estate & Mortgage Finance Variable expenses Variable expenses are costs that change from month to month based on your consumption, choices, or needs. Unlike… Personal Finance & Money Management

W

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Working capital Working capital is a financial metric that represents the difference between a company’s current assets and current liabilities.… Corporate Finance Whole life insurance Whole life insurance is a type of permanent life insurance that provides coverage for the insured’s entire lifetime,… Insurance & Risk Protection Weighted average cost of capital (WACC) The Weighted Average Cost of Capital (WACC) is a financial metric that represents the average rate of return… Corporate Finance

Y

3 terms
Yield Yield is a financial term that measures the income generated by an investment, typically expressed as a percentage… Investing Fundamentals Yield curve The yield curve is a graphical representation that shows the relationship between interest rates (yields) and the time… Bonds & Fixed Income Yield to maturity (YTM) Yield to Maturity (YTM) is the total return anticipated on a bond if it is held until it… Bonds & Fixed Income

Z

2 terms
Zero-based budgeting Zero-based budgeting (ZBB) is a method of budgeting where every expense must be justified for each new period,… Personal Finance & Money Management Zero-coupon bond A zero-coupon bond is a type of bond that does not pay periodic interest payments (coupons) to its… Bonds & Fixed Income