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 12b-1 fee A 12b-1 fee is an annual fee charged by some mutual funds to cover the costs of marketing,… Mutual Funds, ETFs & Pooled Vehicles

A

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Accrued interest Accrued interest is the interest that has accumulated on a bond or other fixed-income security since the last… Bonds & Fixed Income Auto liability coverage Auto liability coverage is a fundamental type of auto insurance that pays for injuries and property damage you… Insurance & Risk Protection Adjusted gross income (AGI) Adjusted Gross Income (AGI) is a key number used in the United States tax system. It represents your… Taxation

B

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Bull market A bull market is a prolonged period in financial markets when prices of assets, most commonly stocks, rise… Stocks & Equity Markets Bond fund A bond fund is a type of pooled investment vehicle—typically a mutual fund or an exchange-traded fund (ETF)—that… Mutual Funds, ETFs & Pooled Vehicles Benchmark A benchmark is a standard or point of reference against which the performance of an investment, portfolio, or… Investing Fundamentals

C

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Cash accounting Cash accounting is a straightforward method of recording financial transactions in which revenues and expenses are recognized only… Financial Statements & Accounting 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 Coinsurance Coinsurance is a cost-sharing mechanism commonly found in health insurance policies, where the insured individual and the insurance… Insurance & Risk Protection

D

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Duration Duration is a fundamental concept in bond investing. It measures how sensitive a bond’s price is to changes… Bonds & Fixed Income Dot plot The dot plot is a visual chart published by the Federal Open Market Committee (FOMC) that shows individual… Monetary & Fiscal Policy Dividend policy Dividend policy refers to the set of guidelines and strategies that a company’s management uses to decide how… Corporate Finance

E

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Exchange rate An exchange rate is the price of one country’s currency expressed in terms of another country’s currency. It… Economics for Finance Effective tax rate The effective tax rate is the average rate at which an individual or a corporation is taxed on… Taxation Exchange-traded fund (ETF) An exchange-traded fund (ETF) is a type of pooled investment vehicle that combines the diversification of a mutual… Mutual Funds, ETFs & Pooled Vehicles

F

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Free cash flow (FCF) Free cash flow (FCF) is the cash a company generates after spending the money required to maintain or… Corporate Finance Federal funds rate The federal funds rate is the interest rate at which depository institutions (such as banks and credit unions)… Monetary & Fiscal Policy Financial literacy Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting,… Personal Finance & Money Management

G

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Gross profit Gross profit is the profit a company makes after deducting the costs directly tied to producing and selling… Financial Statements & Accounting 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 Gross margin Gross margin is a key financial metric that shows how efficiently a company produces and sells its products.… Financial Ratios & Analysis

H

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Home equity loan A home equity loan is a type of second mortgage that allows homeowners to borrow money using the… Real Estate & Mortgage Finance 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 Hawkish vs. dovish In the world of central banking and monetary policy, the terms hawkish and dovish describe the general attitude… Monetary & Fiscal Policy

I

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Inventory turnover Inventory turnover is a key financial ratio that measures how many times a company sells and replaces its… Financial Ratios & Analysis Inflation Inflation is the rate at which the general level of prices for goods and services rises over a… Economics for Finance 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

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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Liabilities Liabilities are financial obligations or debts that a company or individual owes to others. They represent claims against… Financial Statements & Accounting 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 Liquidity Liquidity is a financial concept that describes how quickly and easily an asset can be bought or sold… Financial Markets & Market Mechanics

M

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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 Money supply – M1 Money supply – M1 is a measure of the most liquid forms of money in an economy. It… Monetary & Fiscal Policy Money supply – M2 Money supply M2 is a broad measure of the total amount of money in an economy. It includes… Monetary & Fiscal Policy

N

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No-load fund A no-load fund is a type of mutual fund in which shares are sold directly to investors without… Mutual Funds, ETFs & Pooled Vehicles Net income Net income is the bottom line of a company’s income statement. It represents the total profit a business… Financial Statements & Accounting Nasdaq The Nasdaq (originally an acronym for the National Association of Securities Dealers Automated Quotations) is a global electronic… Stocks & Equity Markets

O

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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 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 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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Pro forma financial statements Pro forma financial statements are forward-looking financial reports that project a company’s future financial performance based on hypothetical… Corporate Finance PCAOB The PCAOB (Public Company Accounting Oversight Board) is a nonprofit corporation established by the Sarbanes-Oxley Act of 2002.… Financial Regulation Pecking order theory The pecking order theory is a corporate finance concept that explains how companies prioritize their sources of financing.… Corporate Finance

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 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 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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Revenue Revenue (also called sales, turnover, or the top line) is the total amount of money a company earns… Financial Statements & Accounting Refinancing Refinancing is the process of replacing an existing loan (usually a mortgage) with a new loan that has… Real Estate & Mortgage Finance Renters insurance Renters insurance is a type of policy designed specifically for people who rent their home or apartment. It… Insurance & Risk Protection

S

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Secondary market The secondary market is a financial marketplace where investors buy and sell previously issued securities, such as stocks,… Financial Markets & Market Mechanics Step-up in basis A step-up in basis is a tax rule that adjusts the cost basis of an inherited asset —… Taxation Statement of stockholders’ equity The Statement of Stockholders’ Equity is a financial report that explains how a company’s equity changes over a… Financial Statements & Accounting

T

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Tax-deferred Tax-deferred refers to a type of investment or savings account where you do not pay taxes on the… Taxation Total return Total return is a comprehensive measure of an investment’s performance that captures all sources of value change over… Investing Fundamentals 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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Umbrella policy An umbrella policy, also known as personal umbrella insurance, is an extra layer of liability insurance that goes… Insurance & Risk Protection Universal life insurance Universal life insurance is a type of permanent life insurance that offers flexible premiums, adjustable death benefits, and… 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 expenses Variable expenses are costs that change from month to month based on your consumption, choices, or needs. Unlike… Personal Finance & Money Management 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 curve The yield curve is a graphical representation that shows the relationship between interest rates (yields) and the time… 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 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