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 457 plan A 457 plan is a type of tax-advantaged retirement savings account offered to employees of state and local… 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

A

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Above-the-line deduction An above-the-line deduction is a type of tax deduction that you can subtract directly from your gross income… Taxation Aggregate supply Aggregate supply (AS) is the total quantity of goods and services that all firms in an economy are… Economics for Finance Aggregate demand Aggregate demand (AD) is the total amount of goods and services that all buyers in an economy (consumers,… Economics for Finance

B

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Budget A budget is a detailed financial plan that estimates your income and expenses over a specific period, typically… Personal Finance & Money Management Bond A bond is a fixed-income financial instrument that represents a loan made by an investor to a borrower,… Bonds & Fixed Income Bond fund A bond fund is a type of pooled investment vehicle—typically a mutual fund or an exchange-traded fund (ETF)—that… Mutual Funds, ETFs & Pooled Vehicles

C

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Credit spread A credit spread is the difference in yield between a corporate or government bond and a benchmark bond… Bonds & Fixed Income Credit report A credit report is a detailed record of an individual’s credit history, compiled by consumer reporting agencies (often… Credit, Debt & Lending Cost of equity The cost of equity is the rate of return that a company must offer to investors to compensate… Corporate Finance

D

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Discounted cash flow (DCF) Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment, company, or… Corporate Finance Dividend yield Dividend yield is a financial ratio that shows how much a company pays out in dividends each year… Stocks & Equity Markets Day order A day order is a type of order to buy or sell a security that is valid only… Financial Markets & Market Mechanics

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 Elasticity Elasticity is an economic concept that measures how much one economic variable changes in response to a change… Economics for Finance Estate tax The estate tax is a federal tax imposed on the transfer of a deceased person’s assets to their… Taxation

F

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Form S-1 Form S-1 is a registration statement filed with the Securities and Exchange Commission (SEC) by companies planning to… Financial Regulation Free cash flow (FCF) Free cash flow (FCF) is the cash a company generates after spending the money required to maintain or… Corporate Finance Free cash flow yield Free cash flow yield is a financial ratio that measures how much free cash flow a company generates… Financial Ratios & Analysis

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 Domestic Product (GDP) Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a… Economics for Finance 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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Hawkish vs. dovish In the world of central banking and monetary policy, the terms hawkish and dovish describe the general attitude… Monetary & Fiscal Policy Hurdle rate The hurdle rate is the minimum acceptable rate of return on an investment or project that a company… Corporate 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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IPO An IPO, or Initial Public Offering, is the process by which a private company sells shares of its… Stocks & Equity Markets 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 Inventory turnover Inventory turnover is a key financial ratio that measures how many times a company sells and replaces its… Financial Ratios & Analysis

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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Long-term capital gains Long-term capital gains are the profits you earn from selling an asset that you have held for more… Taxation 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 Large-cap Large-cap is a term used to describe a company with a very large market capitalization, typically over $10… Stocks & Equity Markets

M

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Mortgage-backed security (MBS) A mortgage-backed security (MBS) is a type of investment product that represents a claim on the cash flows… 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 Modified adjusted gross income (MAGI) Modified Adjusted Gross Income (MAGI) is a critical calculation used by the Internal Revenue Service (IRS) to determine… Taxation

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 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 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

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 Out-of-pocket maximum The out-of-pocket maximum is the most money you will have to pay for covered healthcare services in a… Insurance & Risk Protection

P

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Pecking order theory The pecking order theory is a corporate finance concept that explains how companies prioritize their sources of financing.… Corporate Finance P/E ratio The price-to-earnings (P/E) ratio is one of the most widely used tools for valuing a stock. It compares… Stocks & Equity Markets Preferred stock Preferred stock is a unique type of ownership in a company that sits in between common stock and… Stocks & Equity Markets

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 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

R

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Regulation Best Interest (Reg BI) The Regulation Best Interest (Reg BI) is a rule established by the U.S. Securities and Exchange Commission (SEC)… Financial Regulation Roth IRA A Roth IRA (Individual Retirement Account) is a powerful retirement savings vehicle that offers tax-free growth and tax-free… Retirement Planning Refundable tax credit A refundable tax credit is a type of tax credit that can reduce your tax liability below zero,… Taxation

S

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Share class B Share class B is a type of mutual fund share class that typically does not charge an upfront… Mutual Funds, ETFs & Pooled Vehicles 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 Savings account A savings account is a deposit account held at a bank or other financial institution that is designed… Banking & Depository Institutions

T

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Term life insurance Term life insurance is a type of life insurance policy that provides coverage for a specific period, or… Insurance & Risk Protection Tax-exempt Tax-exempt means that certain income, transactions, or entities are not subject to federal or state income taxes. This… Taxation 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 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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Volatility Volatility is a statistical measure of the dispersion of returns for a given security or market index. In… Investing Fundamentals Variable annuity A variable annuity is a type of insurance contract that offers a way to save for retirement by… 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

W

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Working capital Working capital is a financial metric that represents the difference between a company’s current assets and current liabilities.… Corporate Finance W-2 A W-2 form, officially called the “Wage and Tax Statement,” is a crucial tax document that employers in… Personal Finance & Money Management 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-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