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
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 401(k) A 401(k) is a tax-advantaged retirement savings plan sponsored by an employer. It allows employees to save and… Retirement Planning 403(b) A 403(b) plan is a tax-advantaged retirement savings account designed specifically for employees of certain tax-exempt organizations, such… Retirement Planning

A

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APR APR stands for Annual Percentage Rate. It is the total yearly cost of borrowing money, expressed as a… Banking & Depository Institutions Credit, Debt & Lending Aggregate demand Aggregate demand (AD) is the total amount of goods and services that all buyers in an economy (consumers,… Economics for Finance Authorized participant An Authorized Participant (AP) is a large financial institution, such as a market maker, broker-dealer, or bank, that… Mutual Funds, ETFs & Pooled Vehicles

B

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Below-the-line deduction A below-the-line deduction is an expense that you can subtract from your adjusted gross income (AGI) to reduce… Taxation Backdoor Roth A Backdoor Roth is a legal strategy that allows high-income earners to contribute to a Roth IRA, even… Retirement Planning Bond ladder A bond ladder is an investment strategy that involves purchasing a portfolio of bonds with different maturity dates.… Bonds & Fixed Income

C

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Cosigner A cosigner is an individual who agrees to take joint responsibility for a loan or other debt obligation… Credit, Debt & Lending Cash value Cash value is a feature of permanent life insurance policies, such as whole life insurance and universal life… Insurance & Risk Protection Cost of goods sold (COGS) Cost of Goods Sold (COGS) is a key financial metric that represents the direct costs attributable to the… Financial Statements & Accounting

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 Discounted cash flow (DCF) Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment, company, or… Corporate Finance Depreciation Depreciation is a fundamental accounting concept that allocates the cost of a tangible asset over its useful life.… Financial Statements & Accounting

E

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Elasticity Elasticity is an economic concept that measures how much one economic variable changes in response to a change… Economics for Finance Ex-dividend date The ex-dividend date is a critical milestone in the dividend payment process for stocks. It is the date… Stocks & Equity Markets Equifax Equifax is one of the three major credit bureaus (along with Experian and TransUnion) that collect and maintain… Credit, Debt & Lending

F

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Fund of funds A fund of funds (FOF) is a pooled investment vehicle that invests in a portfolio of other funds… Mutual Funds, ETFs & Pooled Vehicles Federal Reserve System The Federal Reserve System (often called the Fed) is the central bank of the United States. It was… Monetary & Fiscal Policy Free cash flow yield Free cash flow yield is a financial ratio that measures how much free cash flow a company generates… Financial Ratios & Analysis

G

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Goodwill Goodwill is an intangible asset that arises when one company purchases another company for a price greater than… Financial Statements & Accounting Gross margin Gross margin is a key financial metric that shows how efficiently a company produces and sells its products.… Financial Ratios & Analysis 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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Hawkish vs. dovish In the world of central banking and monetary policy, the terms hawkish and dovish describe the general attitude… Monetary & Fiscal Policy HELOC A Home Equity Line of Credit (HELOC) is a type of revolving debt that allows you to borrow… Real Estate & Mortgage Finance Hard inquiry A hard inquiry (also called a hard pull or hard credit check) is a record of when a… Credit, Debt & Lending

I

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IRS Form 1040 IRS Form 1040, officially titled the “U.S. Individual Income Tax Return,” is the standard federal income tax form… Taxation Interest rate An interest rate is the cost of borrowing money or the return earned on savings, expressed as a… Itemized deduction An itemized deduction is a specific expense that you can subtract from your Adjusted Gross Income (AGI) to… Taxation

J

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

L

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Leverage Leverage is the strategic use of borrowed capital (debt) to increase the potential return on an investment. In… Corporate Finance Limit order A limit order is a type of order to buy or sell a security at a specific price… Financial Markets & Market Mechanics 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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Modified adjusted gross income (MAGI) Modified Adjusted Gross Income (MAGI) is a critical calculation used by the Internal Revenue Service (IRS) to determine… Taxation Money market fund A money market fund is a type of mutual fund that invests in short-term, high-quality, low-risk debt securities.… Mutual Funds, ETFs & Pooled Vehicles Market order A market order is an instruction to buy or sell a security immediately at the best available current… Financial Markets & Market Mechanics

N

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Net worth Net worth is a snapshot of your financial health at a single moment. It is calculated by subtracting… Personal Finance & Money Management Net margin Net margin, also known as net profit margin, is a key profitability ratio that measures how much of… Financial Ratios & Analysis Net asset value (NAV) Net asset value (NAV) represents the per-share market value of a mutual fund, exchange-traded fund (ETF), or other… Mutual Funds, ETFs & Pooled Vehicles

O

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Operating margin Operating margin is a profitability ratio that measures how much profit a company makes from its core business… Financial Ratios & Analysis 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 Over-the-counter (OTC) Over-the-counter (OTC) trading refers to a decentralized market where financial instruments are traded directly between two parties, without… Financial Markets & Market Mechanics

P

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Preferred stock Preferred stock is a unique type of ownership in a company that sits in between common stock and… Stocks & Equity Markets Price-to-sales (P/S) The Price-to-Sales (P/S) ratio is a valuation metric that compares a company’s stock price to its revenue per… Financial Ratios & Analysis PPI (Producer Price Index) The Producer Price Index (PPI) is a crucial economic indicator that measures the average change over time in… Economics for Finance

Q

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Quantitative tightening (QT) Quantitative tightening (QT) is a contractionary monetary policy tool used by a central bank, like the Federal Reserve,… Monetary & Fiscal Policy Qualified dividend A qualified dividend is a type of dividend payment that meets specific criteria set by the Internal Revenue… Taxation Quantitative easing (QE) Quantitative easing (QE) is an unconventional monetary policy tool used by a central bank — like the U.S.… Monetary & Fiscal Policy

R

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Recession A recession is a significant, widespread, and prolonged downturn in economic activity. While there is no single, universally… Economics for Finance Refundable tax credit A refundable tax credit is a type of tax credit that can reduce your tax liability below zero,… Taxation Risk tolerance Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand as… Investing Fundamentals

S

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Standard deviation Standard deviation is a statistical measure that quantifies the amount of variation or dispersion in a set of… Investing Fundamentals 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 Secondary offering A secondary offering, also known as a follow-on public offering (FPO), occurs when a company that is already… Stocks & Equity Markets

T

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Terminal value Terminal value is a crucial concept in corporate finance that represents the estimated value of a business or… Corporate Finance TransUnion TransUnion is one of the three major consumer credit reporting agencies in the United States, alongside Equifax and… Credit, Debt & Lending Treasury notes Treasury notes, often called T-notes, are debt securities issued by the U.S. Department of the Treasury. They are… Bonds & Fixed Income

U

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Unsecured debt Unsecured debt is a type of loan or credit that is not backed by any form of collateral.… Credit, Debt & Lending 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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VantageScore VantageScore is a credit scoring model developed by the three major credit bureaus: Equifax, Experian, and TransUnion. It… Credit, Debt & Lending 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 annuity A variable annuity is a type of insurance contract that offers a way to save for retirement by… Retirement Planning

W

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Wash-sale rule The wash-sale rule is a regulation by the Internal Revenue Service (IRS) that prevents investors from claiming a… Taxation 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 Wire transfer A wire transfer is an electronic method of transferring funds from one person or entity to another, directly… Banking & Depository Institutions

Y

3 terms
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 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

Z

2 terms
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 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