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
401(k) A 401(k) is a tax-advantaged retirement savings plan sponsored by an employer. It allows employees to save and… Retirement Planning 1099 A 1099 form is a series of tax documents issued by the Internal Revenue Service (IRS) and used… Taxation 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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ACH transfer An ACH transfer is an electronic transfer of money between bank accounts through the Automated Clearing House (ACH)… Banking & Depository Institutions Auto collision coverage Auto collision coverage is a type of car insurance that pays to repair or replace your vehicle if… Insurance & Risk Protection Aggregate supply Aggregate supply (AS) is the total quantity of goods and services that all firms in an economy are… Economics for Finance

B

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Bankruptcy – Chapter 11 Bankruptcy – Chapter 11 is a legal process for businesses (and sometimes individuals with high levels of debt)… Credit, Debt & Lending Business cycle The business cycle—also called the economic cycle or trade cycle—refers to the natural, recurring fluctuations in economic activity… Economics for Finance Broker A broker is an individual or firm that acts as an intermediary between buyers and sellers in financial… Financial Markets & Market Mechanics

C

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Creation/redemption mechanism The creation/redemption mechanism is the unique process by which exchange-traded fund (ETF) shares are created and redeemed, ensuring… Mutual Funds, ETFs & Pooled Vehicles Claim In the world of insurance, a claim is a formal request you make to your insurance company asking… Insurance & Risk Protection Cash accounting Cash accounting is a straightforward method of recording financial transactions in which revenues and expenses are recognized only… Financial Statements & Accounting

D

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Day order A day order is a type of order to buy or sell a security that is valid only… Financial Markets & Market Mechanics Dollar-cost averaging Dollar-cost averaging (DCA) is an investment strategy where a fixed dollar amount of a particular asset—such as shares… Investing Fundamentals Discretionary spending Discretionary spending refers to the money you spend on things you want but don’t necessarily need. It is… Personal Finance & Money Management

E

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Employer match An employer match is a contribution made by an employer to an employee’s retirement savings plan, typically a… Retirement Planning EPS (earnings per share) EPS (earnings per share) is a financial metric that shows how much profit a company earns for each… Stocks & Equity Markets 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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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 Face / par value Face value, also known as par value, is the stated value of a bond as printed on the… Bonds & Fixed Income

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 income Gross income is the total amount of money you earn from all sources before any deductions or taxes… Personal Finance & Money Management Goodwill Goodwill is an intangible asset that arises when one company purchases another company for a price greater than… Financial Statements & Accounting

H

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Hurdle rate The hurdle rate is the minimum acceptable rate of return on an investment or project that a company… Corporate Finance 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 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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Interest coverage The interest coverage ratio (also known as times interest earned) is a financial metric that measures a company’s… 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 Investment horizon An investment horizon is the total length of time an investor expects to hold a security or a… Investing Fundamentals

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 Liabilities Liabilities are financial obligations or debts that a company or individual owes to others. They represent claims against… Financial Statements & Accounting Loan origination fee A loan origination fee is an upfront charge imposed by a lender to process, underwrite, and fund a… Credit, Debt & Lending

M

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Money market fund A money market fund is a type of mutual fund that invests in short-term, high-quality, low-risk debt securities.… Mutual Funds, ETFs & Pooled Vehicles Market maker A market maker is a financial firm or individual that continuously quotes both a buy (bid) and sell… Financial Markets & Market Mechanics Marginal tax rate The marginal tax rate is the percentage of tax applied to your last dollar of income. In a… Taxation

N

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Net present value (NPV) Net Present Value (NPV) is a core concept in corporate finance used to evaluate the profitability of an… Corporate Finance Nonrefundable tax credit A nonrefundable tax credit is a type of tax credit that can reduce your tax liability to zero,… Taxation NCUA The NCUA, or National Credit Union Administration, is an independent federal agency created by the United States Congress… Financial Regulation

O

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Online bank An online bank is a financial institution that operates entirely or primarily through digital channels, such as a… 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 Overdraft An overdraft occurs when you spend more money than you have available in your checking account. In simple… Banking & Depository Institutions

P

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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 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 Points (discount points) Discount points, often simply called “points,” are a form of prepaid interest you can pay to your lender… Real Estate & Mortgage Finance

Q

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Qualified dividend A qualified dividend is a type of dividend payment that meets specific criteria set by the Internal Revenue… Taxation 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

R

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Reserve requirement The reserve requirement is a central banking regulation that sets the minimum fraction of customer deposits and liabilities… Monetary & Fiscal Policy Required minimum distribution (RMD) A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from certain retirement accounts each year… Retirement Planning Retained earnings Retained earnings represent the cumulative portion of a company’s net income that is not distributed to shareholders as… Financial Statements & Accounting

S

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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 Stop order A stop order is a type of trading instruction used in financial markets that activates a market order… Financial Markets & Market Mechanics Share buyback / repurchase A share buyback, also known as a share repurchase, is a corporate action in which a company buys… Stocks & Equity Markets

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 Traditional IRA A Traditional IRA (Individual Retirement Account) is a tax-advantaged retirement savings account that allows individuals to contribute pre-tax… Retirement Planning Tax bracket A tax bracket is a range of income subject to a specific tax rate in a progressive tax… Taxation

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 Unsecured debt Unsecured debt is a type of loan or credit that is not backed by any form of collateral.… Credit, Debt & Lending Underwriting Underwriting is the process by which a lender, insurer, or investment bank evaluates the risk involved in a… Insurance & Risk Protection

V

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VantageScore VantageScore is a credit scoring model developed by the three major credit bureaus: Equifax, Experian, and TransUnion. It… Credit, Debt & Lending Vesting Vesting is a legal and financial term that refers to the process by which an employee earns the… Retirement Planning 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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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 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 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 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