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 403(b) A 403(b) plan is a tax-advantaged retirement savings account designed specifically for employees of certain tax-exempt organizations, such… Retirement Planning

A

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Accounts receivable Accounts receivable (AR) is the money owed to a business by its customers for goods or services that… Financial Statements & Accounting Accrued interest Accrued interest is the interest that has accumulated on a bond or other fixed-income security since the last… Bonds & Fixed Income Asset class An asset class is a group of investments that share similar characteristics, behave similarly in the marketplace, and… Investing Fundamentals

B

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Beneficiary A beneficiary is a person, organization, trust, or estate that is legally designated to receive assets or benefits… Insurance & Risk Protection Broker-dealer A broker-dealer is a financial firm or individual that engages in the buying and selling of securities for… Financial Markets & Market Mechanics Backdoor Roth A Backdoor Roth is a legal strategy that allows high-income earners to contribute to a Roth IRA, even… Retirement Planning

C

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Corporate bond A corporate bond is a debt security issued by a corporation to raise capital from investors. When an… Bonds & Fixed Income Certificate of deposit (CD) A Certificate of Deposit (CD) is a time deposit offered by banks, credit unions, and other depository institutions… Banking & Depository Institutions Personal Finance & Money Management Correlation Correlation is a statistical measure that describes the degree to which two securities move in relation to each… Investing Fundamentals

D

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Defined contribution plan A defined contribution plan is a retirement savings plan where the employer, employee, or both make regular contributions… Retirement Planning Dark pool A dark pool is a private electronic marketplace for trading securities, primarily stocks, that operates outside of public… Financial Markets & Market Mechanics Deductible A deductible is the amount of money you must pay out of your own pocket for covered healthcare… Insurance & Risk Protection

E

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EV/EBITDA The EV/EBITDA ratio is a valuation multiple that compares a company’s enterprise value (EV) to its earnings before… Financial Ratios & Analysis Expected return Expected return is a key concept in investing that represents the average amount of profit or loss an… Investing Fundamentals 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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Federal funds rate The federal funds rate is the interest rate at which depository institutions (such as banks and credit unions)… Monetary & Fiscal Policy Form S-1 Form S-1 is a registration statement filed with the Securities and Exchange Commission (SEC) by companies planning to… Financial Regulation Fixed annuity A fixed annuity is a type of insurance contract designed to provide a guaranteed, steady stream of income,… Retirement Planning

G

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Gross margin Gross margin is a key financial metric that shows how efficiently a company produces and sells its products.… Financial Ratios & Analysis Growth stock A growth stock is a share in a company that is expected to grow at an above-average rate… Stocks & Equity Markets Gift tax The gift tax is a federal tax in the United States imposed on the transfer of property or… Taxation

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 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 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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Interest on reserve balances (IORB) Interest on reserve balances (IORB) is the interest rate that the Federal Reserve System pays to banks and… Monetary & Fiscal Policy 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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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 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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Modified adjusted gross income (MAGI) Modified Adjusted Gross Income (MAGI) is a critical calculation used by the Internal Revenue Service (IRS) to determine… Taxation Maturity In the world of bonds, maturity is the predetermined date on which the issuer must repay the bond’s… Bonds & Fixed Income 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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Nominal GDP Nominal Gross Domestic Product (GDP) is a measure of the total value of all final goods and services… Economics for Finance Net margin Net margin, also known as net profit margin, is a key profitability ratio that measures how much of… Financial Ratios & Analysis Non-discretionary spending Non-discretionary spending, also called essential or mandatory spending, refers to expenses that are necessary for basic living and… Personal Finance & Money Management

O

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Ordinary dividend An ordinary dividend is a type of payment that a corporation makes to its shareholders from its profits,… Taxation Online bank An online bank is a financial institution that operates entirely or primarily through digital channels, such as a… Banking & Depository Institutions Opportunity cost Opportunity cost is the value of the next best alternative that you give up when you make a… Economics for Finance

P

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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 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 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 Qualified plan A qualified plan is a retirement savings plan that meets the requirements of the Internal Revenue Code (IRC)… Retirement Planning Quantitative tightening (QT) Quantitative tightening (QT) is a contractionary monetary policy tool used by a central bank, like the Federal Reserve,… Monetary & Fiscal Policy

R

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Revolving debt Revolving debt is a type of credit arrangement that allows borrowers to draw, repay, and re-borrow funds up… Credit, Debt & Lending 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 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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Share class (Class A/B/C) Share class (Class A/B/C) refers to different categories of shares offered by a mutual fund, each with its… Stocks & Equity Markets Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is the primary federal agency responsible for enforcing federal securities laws, regulating… Financial Regulation 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 Tax-loss harvesting Tax-loss harvesting is a strategy used by investors to reduce their taxable income by selling investments that have… Taxation

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 Unsecured debt Unsecured debt is a type of loan or credit that is not backed by any form of collateral.… Credit, Debt & Lending Universal life insurance Universal life insurance is a type of permanent life insurance that offers flexible premiums, adjustable death benefits, and… 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 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

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 Wash-sale rule The wash-sale rule is a regulation by the Internal Revenue Service (IRS) that prevents investors from claiming a… Taxation 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