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
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 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

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 Asset class An asset class is a group of investments that share similar characteristics, behave similarly in the marketplace, and… Investing Fundamentals Accounts receivable Accounts receivable (AR) is the money owed to a business by its customers for goods or services that… Financial Statements & Accounting

B

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Beige Book The Beige Book, formally known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District,… Monetary & Fiscal Policy Beneficiary A beneficiary is a person, organization, trust, or estate that is legally designated to receive assets or benefits… Insurance & Risk Protection 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

C

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Credit rating – Moody’s Moody’s Investors Service, commonly known as Moody’s, is one of the “Big Three” credit rating agencies alongside S&P… Bonds & Fixed Income Current assets Current assets are a category of assets on a company’s balance sheet that are expected to be converted… Financial Statements & Accounting 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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Duration Duration is a fundamental concept in bond investing. It measures how sensitive a bond’s price is to changes… Bonds & Fixed Income Discount rate The discount rate is the interest rate that the Federal Reserve System charges commercial banks and other depository… Monetary & Fiscal Policy 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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Early withdrawal penalty An early withdrawal penalty is a fee imposed by the Internal Revenue Service (IRS) when you take money… Retirement Planning EBITDA EBITDA is an acronym that stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a widely… Financial Statements & Accounting Expense ratio The expense ratio is the annual fee that all mutual funds, exchange-traded funds (ETFs), and other pooled investment… Mutual Funds, ETFs & Pooled Vehicles

F

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Front-end load A front-end load is a sales charge or commission that investors pay when they purchase shares of a… Mutual Funds, ETFs & Pooled Vehicles Federal Reserve Board The Federal Reserve Board, often called the Federal Reserve Board of Governors, is the main governing body of… 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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Goodwill Goodwill is an intangible asset that arises when one company purchases another company for a price greater than… Financial Statements & Accounting Gross margin Gross margin is a key financial metric that shows how efficiently a company produces and sells its products.… Financial Ratios & Analysis 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

H

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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 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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Itemized deduction An itemized deduction is a specific expense that you can subtract from your Adjusted Gross Income (AGI) to… Taxation Income (investment) Investment income is money you earn from your investments without having to work for it actively. Instead of… Investing Fundamentals Interest rate An interest rate is the cost of borrowing money or the return earned on savings, expressed as a…

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 Loan origination fee A loan origination fee is an upfront charge imposed by a lender to process, underwrite, and fund a… Credit, Debt & Lending Long-term disability insurance Long-term disability insurance (LTD) is a type of insurance policy that provides income replacement if you become unable… Insurance & Risk Protection

M

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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 Mortgage A mortgage is a type of secured loan used to finance the purchase of real estate, such as… Real Estate & Mortgage Finance 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

N

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Nasdaq The Nasdaq (originally an acronym for the National Association of Securities Dealers Automated Quotations) is a global electronic… Stocks & Equity Markets 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 NCUA insurance NCUA insurance refers to the deposit insurance coverage provided by the National Credit Union Administration (NCUA) to members… Banking & Depository Institutions

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 Operating margin Operating margin is a profitability ratio that measures how much profit a company makes from its core business… Financial Ratios & Analysis Order book An order book is a real-time, electronic list of buy and sell orders for a specific financial security,… Financial Markets & Market Mechanics

P

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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 Pecking order theory The pecking order theory is a corporate finance concept that explains how companies prioritize their sources of financing.… Corporate Finance Passive investing Passive investing is a long-term investment strategy that aims to match the performance of a broad market index,… Investing Fundamentals

Q

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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 Quantitative easing (QE) Quantitative easing (QE) is an unconventional monetary policy tool used by a central bank — like the U.S.… Monetary & Fiscal Policy

R

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Real GDP Real GDP (Gross Domestic Product adjusted for inflation) is a critical economic measure that reflects the total value… Economics for Finance Renters insurance Renters insurance is a type of policy designed specifically for people who rent their home or apartment. It… Insurance & Risk Protection Roth IRA A Roth IRA (Individual Retirement Account) is a powerful retirement savings vehicle that offers tax-free growth and tax-free… Retirement Planning

S

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Stock split A stock split is a corporate action where a company increases the number of its outstanding shares by… Stocks & Equity Markets Share repurchase A share repurchase, also known as a stock buyback, is a corporate action in which a company buys… Corporate Finance Supply and demand Supply and demand is a fundamental economic model that explains how prices are determined in a market economy.… Economics for Finance

T

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Tax bracket A tax bracket is a range of income subject to a specific tax rate in a progressive tax… Taxation Term life insurance Term life insurance is a type of life insurance policy that provides coverage for a specific period, or… Insurance & Risk Protection 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 Underwater mortgage An underwater mortgage, also known as being in a state of negative equity, occurs when the outstanding balance… Real Estate & Mortgage Finance 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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Vesting Vesting is a legal and financial term that refers to the process by which an employee earns the… Retirement Planning Value stock A value stock is a share of a company that trades at a lower price relative to its… Stocks & Equity Markets Volatility Volatility is a statistical measure of the dispersion of returns for a given security or market index. In… Investing Fundamentals

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 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