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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Assets Assets are economic resources that a business or individual owns or controls, expected to produce future benefits. In… Financial Statements & Accounting ACH transfer An ACH transfer is an electronic transfer of money between bank accounts through the Automated Clearing House (ACH)… Banking & Depository Institutions Auto liability coverage Auto liability coverage is a fundamental type of auto insurance that pays for injuries and property damage you… Insurance & Risk Protection

B

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Backdoor Roth A Backdoor Roth is a legal strategy that allows high-income earners to contribute to a Roth IRA, even… Retirement Planning Bankruptcy – Chapter 11 Bankruptcy – Chapter 11 is a legal process for businesses (and sometimes individuals with high levels of debt)… Credit, Debt & Lending Bankruptcy – Chapter 7 Bankruptcy – Chapter 7, often called liquidation bankruptcy, is a legal process in the United States that helps… Credit, Debt & Lending

C

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Convexity Convexity is a measure of how the duration of a bond changes as interest rates change. Bonds have… Bonds & Fixed Income Collections Collections refers to the process that debt lenders and creditors use to recover overdue payments from borrowers who… Credit, Debt & Lending 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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Debt-to-equity The debt-to-equity (D/E) ratio is a key leverage ratio that compares a company’s total liabilities to its shareholder… Financial Ratios & Analysis Delinquency Delinquency is a term used in credit and lending to describe a situation where a borrower fails to… Credit, Debt & Lending Debt financing Debt financing is a method businesses use to raise money by borrowing funds from lenders, with a promise… Corporate 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 Experian Experian is one of the three major credit reporting agencies (along with Equifax and TransUnion) that collect and… Credit, Debt & Lending 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 Federal Reserve Board The Federal Reserve Board, often called the Federal Reserve Board of Governors, is the main governing body of… Financial Regulation FDIC insurance The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects depositors… Banking & Depository Institutions

G

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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 Gross margin Gross margin is a key financial metric that shows how efficiently a company produces and sells its products.… Financial Ratios & Analysis Good-til-cancelled (GTC) A Good-Til-Cancelled (GTC) order is a type of trading instruction that remains active in the market until it… Financial Markets & Market Mechanics

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 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 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

I

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Installment debt Installment debt is a type of loan that is repaid over time with a set number of scheduled… Credit, Debt & Lending Internal rate of return (IRR) The Internal Rate of Return (IRR) is a powerful financial metric used to evaluate the profitability of potential… Corporate Finance 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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Large-cap Large-cap is a term used to describe a company with a very large market capitalization, typically over $10… Stocks & Equity Markets Long-term capital gains Long-term capital gains are the profits you earn from selling an asset that you have held for more… Taxation Labor force participation rate The labor force participation rate (LFPR) is a key economic metric that measures the percentage of a country’s… Economics for Finance

M

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Minimum balance A minimum balance is the lowest amount of money a bank or credit union requires you to keep… Banking & Depository Institutions Mortgage-backed security (MBS) A mortgage-backed security (MBS) is a type of investment product that represents a claim on the cash flows… Real Estate & Mortgage Finance Municipal bond (muni) A municipal bond (muni) is a debt security issued by a state, municipality, county, or other government entity… Bonds & Fixed Income

N

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NCUA The NCUA, or National Credit Union Administration, is an independent federal agency created by the United States Congress… Financial Regulation Nominal return Nominal return is the percentage gain or loss on an investment before adjusting for the effects of inflation.… Investing Fundamentals National debt The national debt is the total amount of money that a country’s federal government has borrowed and has… Monetary & Fiscal Policy

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 Opportunity cost Opportunity cost is the value of the next best alternative that you give up when you make a… Economics for Finance Ordinary dividend An ordinary dividend is a type of payment that a corporation makes to its shareholders from its profits,… Taxation

P

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Principal Principal is the original sum of money borrowed in a loan or the original amount invested, before any… Credit, Debt & Lending Price-to-earnings (P/E) The price-to-earnings ratio, commonly known as the P/E ratio, is one of the most widely used metrics in… Financial Ratios & Analysis 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

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 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

R

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Risk tolerance Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand as… Investing Fundamentals Revolving debt Revolving debt is a type of credit arrangement that allows borrowers to draw, repay, and re-borrow funds up… Credit, Debt & Lending Regulation D Regulation D is a rule from the U.S. Securities and Exchange Commission (SEC) that allows companies to raise… Financial Regulation

S

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Standard deduction The standard deduction is a specific dollar amount that reduces the income on which you are taxed. It… Taxation Stagflation Stagflation is an unusual and troubling economic condition where the economy experiences both stagnant growth (or a recession)… Economics for Finance Share class I (institutional) Share class I (institutional) is a category of mutual fund shares designed specifically for institutional investors, such as… Mutual Funds, ETFs & Pooled Vehicles

T

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Trade-off theory The trade-off theory is a core concept in corporate finance that explains how companies decide on their mix… Corporate Finance Treasury bonds Treasury bonds (often called T-bonds) are long-term debt securities issued by the U.S. Department of the Treasury to… Bonds & Fixed Income TransUnion TransUnion is one of the three major consumer credit reporting agencies in the United States, alongside Equifax and… Credit, Debt & Lending

U

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Umbrella policy An umbrella policy, also known as personal umbrella insurance, is an extra layer of liability insurance that goes… 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 Underwater mortgage An underwater mortgage, also known as being in a state of negative equity, occurs when the outstanding balance… Real Estate & Mortgage 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 Volatility Volatility is a statistical measure of the dispersion of returns for a given security or market index. In… Investing Fundamentals 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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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 Withholding Withholding is the portion of an employee’s wages that an employer sends directly to the government to cover… Taxation W-2 A W-2 form, officially called the “Wage and Tax Statement,” is a crucial tax document that employers in… Personal Finance & Money Management

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 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 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