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 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 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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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 Assets Assets are economic resources that a business or individual owns or controls, expected to produce future benefits. In… Financial Statements & Accounting Asset allocation Asset allocation is the investment strategy of dividing a portfolio among different asset classes, such as stocks, bonds,… Investing Fundamentals

B

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Balance sheet A balance sheet is one of the three core financial statements used by companies, alongside the income statement… Financial Statements & Accounting Broker A broker is an individual or firm that acts as an intermediary between buyers and sellers in financial… Financial Markets & Market Mechanics Blue chip Blue chip stocks are shares of large, well-established, and financially sound companies that have a long history of… Stocks & Equity Markets

C

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Cost basis Cost basis is the original value of an asset for tax purposes, usually the purchase price plus any… Taxation Current assets Current assets are a category of assets on a company’s balance sheet that are expected to be converted… Financial Statements & Accounting Common stock Common stock is a type of ownership in a corporation. When you buy a share of common stock,… Stocks & Equity Markets

D

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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 Dealer A dealer is a financial intermediary who buys and sells securities, such as stocks and bonds, for their… Financial Markets & Market Mechanics Discounted cash flow (DCF) Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment, company, or… Corporate Finance

E

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Estate tax The estate tax is a federal tax imposed on the transfer of a deceased person’s assets to their… 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 Experian Experian is one of the three major credit reporting agencies (along with Equifax and TransUnion) that collect and… Credit, Debt & Lending

F

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FHA loan An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA), which is part of… Real Estate & Mortgage Finance Form ADV Form ADV is the uniform registration form that investment advisers must file with the Securities and Exchange Commission… Financial Regulation 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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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 Gross income Gross income is the total amount of money you earn from all sources before any deductions or taxes… Personal Finance & Money Management

H

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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 Hawkish vs. dovish In the world of central banking and monetary policy, the terms hawkish and dovish describe the general attitude… Monetary & Fiscal Policy 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

I

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Inflation-adjusted income Inflation-adjusted income, also called real income, is a measure of how much your purchasing power has changed after… Personal Finance & Money Management 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 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

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 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 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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Minimum payment The minimum payment is the smallest amount you must pay each month on a credit card or other… Credit, Debt & Lending Modigliani-Miller theorem The Modigliani-Miller theorem is a foundational theory in corporate finance that, under a specific set of ideal market… Corporate Finance Monthly maintenance fee A monthly maintenance fee is a periodic charge assessed by a financial institution, such as a bank or… Banking & Depository Institutions

N

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Nonrefundable tax credit A nonrefundable tax credit is a type of tax credit that can reduce your tax liability to zero,… Taxation Nominal return Nominal return is the percentage gain or loss on an investment before adjusting for the effects of inflation.… Investing Fundamentals 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 Open-end fund An open-end fund is a type of mutual fund that can issue an unlimited number of shares. The… Mutual Funds, ETFs & Pooled Vehicles OCC (Office of the Comptroller of the Currency) The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of… Financial Regulation

P

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Pre-approval Pre-approval is a preliminary evaluation by a lender that indicates how much money you may be able to… Real Estate & Mortgage Finance Premium/discount to NAV Premium/discount to Net Asset Value (NAV) is a concept that applies primarily to closed-end funds and exchange-traded funds… Mutual Funds, ETFs & Pooled Vehicles Price-to-book (P/B) The Price-to-Book (P/B) ratio is a financial ratio used to compare a company’s market value to its book… 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 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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Retained earnings Retained earnings represent the cumulative portion of a company’s net income that is not distributed to shareholders as… Financial Statements & Accounting REIT (Real Estate Investment Trust) A Real Estate Investment Trust, commonly known as a REIT (pronounced “reet”), is a company that owns, operates,… Real Estate & Mortgage Finance Routing number / ABA A routing number, also known as an ABA number (American Bankers Association number), is a unique nine-digit code… Banking & Depository Institutions

S

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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 SIPC The Securities Investor Protection Corporation (SIPC) is a nonprofit, membership-funded organization created by the Securities Investor Protection Act… Financial Regulation SIMPLE IRA A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a tax-deferred retirement plan designed for small businesses… Retirement Planning

T

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Tax-loss harvesting Tax-loss harvesting is a strategy used by investors to reduce their taxable income by selling investments that have… Taxation Thrift / Savings & Loan A thrift institution, also known as a Savings and Loan Association (S&L), is a type of financial institution… Banking & Depository Institutions Treasury Inflation-Protected Securities (TIPS) TIPS stands for Treasury Inflation-Protected Securities. These are a special type of Treasury bond issued by the U.S.… Bonds & Fixed Income

U

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Underwriting Underwriting is the process by which a lender, insurer, or investment bank evaluates the risk involved in a… 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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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 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

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 Working capital Working capital is a financial metric that represents the difference between a company’s current assets and current liabilities.… Corporate Finance 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 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-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