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 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

A

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Asset turnover Asset turnover is a financial ratio that measures how efficiently a company uses its assets to generate sales… Financial Ratios & Analysis Financial Statements & Accounting Amortization Amortization is an accounting and finance concept that refers to the process of spreading out the cost of… Financial Statements & Accounting Adjustable-rate mortgage (ARM) An Adjustable-Rate Mortgage (ARM) is a type of home loan where the interest rate is not fixed for… Real Estate & Mortgage Finance

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 7 Bankruptcy – Chapter 7, often called liquidation bankruptcy, is a legal process in the United States that helps… Credit, Debt & Lending Budget A budget is a detailed financial plan that estimates your income and expenses over a specific period, typically… Personal Finance & Money Management

C

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Correlation Correlation is a statistical measure that describes the degree to which two securities move in relation to each… Investing Fundamentals Capital budgeting Capital budgeting is the process that companies use to evaluate and decide which long-term investments or projects to… Corporate Finance Collateral Collateral is an asset, such as a house, car, or cash, that a borrower pledges to a lender… Credit, Debt & Lending

D

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Default Default is a financial term that describes the failure of a borrower to meet the legal obligations or… Credit, Debt & Lending Dividend A dividend is a distribution of a portion of a company’s earnings to its shareholders, typically in the… Stocks & Equity Markets Depreciation Depreciation is a fundamental accounting concept that allocates the cost of a tangible asset over its useful life.… Financial Statements & Accounting

E

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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 Equity Equity, also known as shareholder’s equity or owner’s equity, represents the residual interest in the assets of an… Financial Statements & Accounting Expansion Expansion is a phase of the business cycle where the economy grows for two or more consecutive quarters.… Economics for Finance

F

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Fixed expenses Fixed expenses are costs that remain the same amount each month and are essential for your basic living… Personal Finance & Money Management FDIC The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects depositors… Financial Regulation Federal Open Market Committee (FOMC) The Federal Open Market Committee (FOMC) is the monetary policy body of the Federal Reserve System in the… Monetary & Fiscal Policy

G

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Glass-Steagall Act The Glass-Steagall Act (officially the Banking Act of 1933) was a landmark piece of U.S. legislation that created… Financial Regulation 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

H

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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 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 Hard inquiry A hard inquiry (also called a hard pull or hard credit check) is a record of when a… Credit, Debt & Lending

I

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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 Advisers Act of 1940 The Investment Advisers Act of 1940 is a landmark piece of federal legislation that established the legal framework… Financial Regulation IRS Form 1040 IRS Form 1040, officially titled the “U.S. Individual Income Tax Return,” is the standard federal income tax form… Taxation

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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Liquidity Liquidity is a financial concept that describes how quickly and easily an asset can be bought or sold… Financial Markets & Market Mechanics 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 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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Money supply – M2 Money supply M2 is a broad measure of the total amount of money in an economy. It includes… Monetary & Fiscal Policy 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 Market order A market order is an instruction to buy or sell a security immediately at the best available current… Financial Markets & Market Mechanics

N

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NCUA insurance NCUA insurance refers to the deposit insurance coverage provided by the National Credit Union Administration (NCUA) to members… Banking & Depository Institutions Net (take-home) income Net income, often called take-home pay, is the amount of money you actually receive after all deductions are… Personal Finance & Money Management Net income Net income is the bottom line of a company’s income statement. It represents the total profit a business… Financial Statements & Accounting

O

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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 Open market operations Open market operations (OMO) are the primary tool used by the Federal Reserve System to influence the supply… Monetary & Fiscal Policy

P

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Pay stub A pay stub, also known as a paycheck stub, earnings statement, or pay advice, is a document provided… Personal Finance & Money Management Policy limit A policy limit is the maximum amount an insurance company will pay for a covered loss under an… Insurance & Risk Protection Private mortgage insurance (PMI) Private mortgage insurance, commonly known as PMI, is a type of insurance that protects the lender (the bank… Real Estate & Mortgage Finance

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 Qualified dividend A qualified dividend is a type of dividend payment that meets specific criteria set by the Internal Revenue… Taxation 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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Roth conversion A Roth conversion is a financial strategy where you transfer funds from a Traditional IRA (or other eligible… Retirement Planning 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 Risk-return tradeoff The risk-return tradeoff is a fundamental concept in investing that describes the direct relationship between the potential reward… Investing Fundamentals

S

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Standard deviation Standard deviation is a statistical measure that quantifies the amount of variation or dispersion in a set of… Investing Fundamentals Share class C Share class C is a type of mutual fund share class that typically charges a level load, meaning… Mutual Funds, ETFs & Pooled Vehicles Share repurchase A share repurchase, also known as a stock buyback, is a corporate action in which a company buys… Corporate Finance

T

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Treasury auction A Treasury auction is the primary method used by the U.S. Department of the Treasury to borrow money… Monetary & Fiscal Policy Traditional IRA A Traditional IRA (Individual Retirement Account) is a tax-advantaged retirement savings account that allows individuals to contribute pre-tax… Retirement Planning 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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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 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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Volatility Volatility is a statistical measure of the dispersion of returns for a given security or market index. In… Investing Fundamentals Vesting Vesting is a legal and financial term that refers to the process by which an employee earns the… Retirement Planning 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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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 Working capital Working capital is a financial metric that represents the difference between a company’s current assets and current liabilities.… Corporate Finance

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 Yield is a financial term that measures the income generated by an investment, typically expressed as a percentage… Investing Fundamentals 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-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