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 10-K The 10-K is an annual report that publicly traded companies must file with the U.S. Securities and Exchange… Financial Statements & Accounting 401(k) A 401(k) is a tax-advantaged retirement savings plan sponsored by an employer. It allows employees to save and… Retirement Planning

A

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Asset allocation Asset allocation is the investment strategy of dividing a portfolio among different asset classes, such as stocks, bonds,… Investing Fundamentals Amortization Amortization is an accounting and finance concept that refers to the process of spreading out the cost of… Financial Statements & Accounting Above-the-line deduction An above-the-line deduction is a type of tax deduction that you can subtract directly from your gross income… Taxation

B

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Beige Book The Beige Book, formally known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District,… Monetary & Fiscal Policy 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 Bond A bond is a fixed-income financial instrument that represents a loan made by an investor to a borrower,… Bonds & Fixed Income

C

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Capital gain A capital gain is the increase in value of a capital asset—such as stocks, bonds, real estate, or… Investing Fundamentals Current ratio The current ratio is a financial metric used to measure a company’s ability to pay its short-term obligations… Financial Ratios & Analysis Conventional loan A conventional loan is a type of mortgage that is not insured or guaranteed by a government agency… Real Estate & Mortgage Finance

D

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Days sales outstanding (DSO) Days Sales Outstanding (DSO) is a financial ratio that measures the average number of days it takes a… Financial Ratios & Analysis Debit card A debit card is a payment card issued by a bank or credit union that allows you to… Banking & Depository Institutions Down payment A down payment is an upfront, partial payment made by a buyer when purchasing a high-value asset, most… Credit, Debt & Lending Real Estate & Mortgage Finance

E

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EBIT EBIT, an acronym for Earnings Before Interest and Taxes, is a key profitability metric that measures a company’s… Financial Ratios & Analysis Financial Statements & Accounting Expansion Expansion is a phase of the business cycle where the economy grows for two or more consecutive quarters.… Economics for Finance 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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Financial Industry Regulatory Authority (FINRA) The Financial Industry Regulatory Authority (FINRA) is a private, non-profit organization that acts as a self-regulatory organization (SRO)… Financial Regulation 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 Forward guidance Forward guidance is a communication tool used by central banks, such as the Federal Reserve, to inform the… Monetary & Fiscal Policy

G

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Growth stock A growth stock is a share in a company that is expected to grow at an above-average rate… Stocks & Equity Markets 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

H

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High-yield (junk) bond A high-yield bond, commonly known as a junk bond, is a type of bond that offers a higher… Bonds & Fixed Income 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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Investment Company Act of 1940 The Investment Company Act of 1940 is a landmark piece of U.S. federal legislation that created a comprehensive… Financial Regulation Investment Advisers Act of 1940 The Investment Advisers Act of 1940 is a landmark piece of federal legislation that established the legal framework… Financial Regulation Interest rate An interest rate is the cost of borrowing money or the return earned on savings, expressed as a…

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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Leverage Leverage is the strategic use of borrowed capital (debt) to increase the potential return on an investment. In… Corporate Finance Long-term capital gains Long-term capital gains are the profits you earn from selling an asset that you have held for more… Taxation Loan-to-value (LTV) Loan-to-Value (LTV) is a critical financial ratio used by mortgage lenders to evaluate the risk of a loan.… Real Estate & Mortgage Finance

M

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Mortgage A mortgage is a type of secured loan used to finance the purchase of real estate, such as… Real Estate & Mortgage Finance Maturity In the world of bonds, maturity is the predetermined date on which the issuer must repay the bond’s… Bonds & Fixed Income Micro-cap A micro-cap (or micro-cap stock) refers to the equity of a publicly traded company with a relatively small… Stocks & Equity Markets

N

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Nonfarm payrolls Nonfarm payrolls are a monthly economic indicator released by the U.S. Bureau of Labor Statistics (BLS) that measures… Economics for Finance 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 Nominal return Nominal return is the percentage gain or loss on an investment before adjusting for the effects of inflation.… Investing Fundamentals

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 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 Online bank An online bank is a financial institution that operates entirely or primarily through digital channels, such as a… Banking & Depository Institutions

P

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Policy limit A policy limit is the maximum amount an insurance company will pay for a covered loss under an… Insurance & Risk Protection Pay-yourself-first Pay-yourself-first is a foundational principle in financial literacy and personal money management that flips traditional budgeting on its… Personal Finance & Money Management Passive investing Passive investing is a long-term investment strategy that aims to match the performance of a broad market index,… Investing Fundamentals

Q

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Quick (acid-test) ratio The quick ratio, also known as the acid-test ratio, is a stringent measure of a company’s short-term liquidity.… Financial Ratios & Analysis 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 GDP Real GDP (Gross Domestic Product adjusted for inflation) is a critical economic measure that reflects the total value… Economics for Finance Reserve requirement The reserve requirement is a central banking regulation that sets the minimum fraction of customer deposits and liabilities… Monetary & Fiscal Policy Return on invested capital (ROIC) Return on Invested Capital (ROIC) is a key financial metric that shows how well a company turns the… Financial Ratios & Analysis

S

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Supply and demand Supply and demand is a fundamental economic model that explains how prices are determined in a market economy.… Economics for Finance Stagflation Stagflation is an unusual and troubling economic condition where the economy experiences both stagnant growth (or a recession)… Economics for Finance 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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TransUnion TransUnion is one of the three major consumer credit reporting agencies in the United States, alongside Equifax and… Credit, Debt & Lending Terminal value Terminal value is a crucial concept in corporate finance that represents the estimated value of a business or… Corporate Finance Tax-exempt Tax-exempt means that certain income, transactions, or entities are not subject to federal or state income taxes. This… Taxation

U

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Unemployment rate The unemployment rate is a key economic indicator that measures the percentage of the labor force that is… Economics for Finance Underwater mortgage An underwater mortgage, also known as being in a state of negative equity, occurs when the outstanding balance… Real Estate & Mortgage Finance Umbrella policy An umbrella policy, also known as personal umbrella insurance, is an extra layer of liability insurance that goes… Insurance & Risk Protection

V

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Variable expenses Variable expenses are costs that change from month to month based on your consumption, choices, or needs. Unlike… Personal Finance & Money Management Vesting Vesting is a legal and financial term that refers to the process by which an employee earns the… Retirement Planning VantageScore VantageScore is a credit scoring model developed by the three major credit bureaus: Equifax, Experian, and TransUnion. It… Credit, Debt & Lending

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 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 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 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 Yield Yield is a financial term that measures the income generated by an investment, typically expressed as a percentage… Investing Fundamentals

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