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 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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Assets Assets are economic resources that a business or individual owns or controls, expected to produce future benefits. In… Financial Statements & Accounting Auto collision coverage Auto collision coverage is a type of car insurance that pays to repair or replace your vehicle if… Insurance & Risk Protection Accredited investor An accredited investor is an individual or entity that meets specific financial criteria established by the Securities and… Financial Regulation

B

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Bankruptcy – Chapter 7 Bankruptcy – Chapter 7, often called liquidation bankruptcy, is a legal process in the United States that helps… Credit, Debt & Lending 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 Balance sheet A balance sheet is one of the three core financial statements used by companies, alongside the income statement… Financial Statements & Accounting

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 Core inflation Core inflation is a measure of inflation that excludes the prices of food and energy. These categories are… Economics for Finance Closed-end fund A closed-end fund is a type of investment company that raises a fixed amount of capital by selling… Mutual Funds, ETFs & Pooled Vehicles

D

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Disposable income Disposable income, also known as disposable personal income (DPI), is the amount of money an individual or household… Personal Finance & Money Management Deferred annuity A deferred annuity is a type of retirement savings contract offered by insurance companies. With a deferred annuity,… Retirement Planning 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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Equity Equity, also known as shareholder’s equity or owner’s equity, represents the residual interest in the assets of an… Financial Statements & Accounting Effective tax rate The effective tax rate is the average rate at which an individual or a corporation is taxed on… Taxation 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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Fiduciary duty Fiduciary duty is a legal obligation that requires one party, known as the fiduciary, to act solely in… Financial Regulation FICA / payroll tax FICA, which stands for the Federal Insurance Contributions Act, is a United States federal law that requires a… Taxation FDIC The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects depositors… Financial Regulation

G

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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 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 Homeowners insurance Homeowners insurance is a type of property insurance that protects an individual’s home and personal belongings against damage,… Insurance & Risk Protection Hurdle rate The hurdle rate is the minimum acceptable rate of return on an investment or project that a company… Corporate Finance

I

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Income (investment) Investment income is money you earn from your investments without having to work for it actively. Instead of… Investing Fundamentals Investment-grade bond An investment-grade bond is a bond that is considered high quality and low risk by credit rating agencies.… Bonds & Fixed Income 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

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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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 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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Modigliani-Miller theorem The Modigliani-Miller theorem is a foundational theory in corporate finance that, under a specific set of ideal market… Corporate Finance 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 balance A minimum balance is the lowest amount of money a bank or credit union requires you to keep… Banking & Depository Institutions

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 Nonfarm payrolls Nonfarm payrolls are a monthly economic indicator released by the U.S. Bureau of Labor Statistics (BLS) that measures… Economics for Finance Needs vs. wants Needs vs. wants is a fundamental concept in personal finance and budgeting that helps individuals distinguish between essential… Personal Finance & Money Management

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 Overdraft An overdraft occurs when you spend more money than you have available in your checking account. In simple… Banking & Depository Institutions Operating income Operating income, also known as operating profit or operating earnings, measures the profit a company makes from its… Financial Statements & Accounting

P

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Primary market The primary market is the financial market where new securities, such as stocks and bonds, are created and… Financial Markets & Market Mechanics Principal and interest (P&I) Principal and interest (P&I) is the core component of a mortgage payment that goes directly toward paying down… Real Estate & Mortgage Finance 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

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 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 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 Real GDP Real GDP (Gross Domestic Product adjusted for inflation) is a critical economic measure that reflects the total value… Economics for Finance

S

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Secured debt Secured debt is a type of loan or credit that is backed by an asset, known as collateral.… Credit, Debt & Lending Stop-limit order A stop-limit order is an advanced trading instruction that combines the features of a stop order and a… Financial Markets & Market Mechanics Stock split A stock split is a corporate action where a company increases the number of its outstanding shares by… Stocks & Equity Markets

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 Truth in Lending Act (TILA) The Truth in Lending Act (TILA) is a landmark federal law enacted in 1968 as part of the… Credit, Debt & Lending Ticker symbol A ticker symbol, also known as a stock symbol, is a unique series of letters assigned to a… Stocks & Equity Markets

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 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 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 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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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 Withholding Withholding is the portion of an employee’s wages that an employer sends directly to the government to cover… Taxation Wash-sale rule The wash-sale rule is a regulation by the Internal Revenue Service (IRS) that prevents investors from claiming a… Taxation

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 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

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