1000+ Personal Finance Terms Defined From A To Z

Personal finance is an essential aspect of modern life, and understanding financial concepts is crucial for making wise financial decisions. From setting a budget to investing in the stock market, there are numerous terms and concepts to master in personal finance.

In this comprehensive list, we will explore personal finance terms defined from A to Z.

Whether you are a beginner or simply looking to expand your financial knowledge, this guide will equip you with the terminology and concepts you need to navigate the world of personal finance with confidence.

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031 exchange: A type of real estate transaction in which an investor can defer paying capital gains taxes by reinvesting the proceeds from the sale of one property into another “like-kind” property.
12b-1 fee: A fee charged by some mutual funds to cover the costs of marketing and distribution.
13-F: A quarterly report filed by institutional investment managers that lists their holdings of publicly traded securities
30-Day Annualized Yield: The hypothetical annual yield that an investment would have earned over a 30-day period, calculated by assuming that the investment had been held for a full year.
52-Week High/Low: The highest and lowest prices at which a stock has traded over the previous 52 weeks.
52-Week High: The highest price at which a stock has traded over the previous 52 weeks.
52-Week Low: The lowest price at which a stock has traded over the previous 52 weeks.
7-Day Annualized Yield: The hypothetical annual yield that an investment would have earned over a 7-day period, calculated by assuming that the investment had been held for a full year.
A
A – and A3 Rating: Credit ratings assigned to an issuer or debt instrument by rating agencies indicate a lower but still acceptable level of credit quality.
ABA routing number: A unique nine-digit number assigned to a bank or credit union by the American Bankers Association that is used to identify the institution in transactions.
ABC Agreement: An agreement between a company and a labor union that outlines terms and conditions for employee compensation, benefits, and work rules.
APR is the annual percentage rate, which represents the cost of borrowing money every year.
APY (Annual Percentage Yield): The total amount of interest earned on a deposit account (such as a savings account or CD) over a year, expressed as a percentage.
Abandonment Value: The estimated value of an asset if it were to be sold or discontinued, often used in the context of oil and gas exploration.
Abnormal Earnings Valuation: A method of valuing a company that takes into account its past earnings performance and adjusts it for abnormal or non-recurring factors
Abnormal Return: The difference between the actual return on investment and the expected return based on market or economic factors
Above Par: A term used to describe a security that is trading at a price higher than its face value.
Above the Market: A limit order to buy or sell a security at a price higher than the current market price.
Abstract of Title: A summary document that provides a history of ownership and transfers of a particular piece of property
Account balance: The amount of money in a bank account or any other financial account at a given point in time.
Account hold: A temporary freeze on a customer’s bank account that is initiated by the bank, often due to suspicious or fraudulent activity.
Account holder: the person responsible for the payments and charges on a credit card account
Accounting Rate of Return (ARR): A performance metric used in financial analysis that measures the average profitability of an investment over a particular period of time.
Accredited Investor: An individual or entity that meets certain criteria, such as high net worth or investment experience, that allows them to participate in certain types of investment opportunities.
Accretion: The process of gradually building up something, such as earnings, over time.
Accrual method: a method of accounting in which income and expenses are recorded when they are earned or incurred, regardless of when the cash is exchanged.
Accrued Market Discount: The difference between the face value of a fixed-income security and its current market value, calculated as the sum of discounts accrued over time.
Accumulation Phase: The stage in an investor’s life cycle where they are building up their savings and assets, often in preparation for retirement.
Acid Test Ratio: A financial ratio that measures a company’s ability to meet short-term obligations with its most liquid assets
Acquisition Premium: The amount paid by an acquiring company above the fair market value of the target company, reflecting the perceived value of the target’s assets or strategic advantages.
Active Bond Crowd refers to the members of the bond department of a securities firm who actively trade in the secondary market for bonds, particularly corporate bonds.
Active Bond refers to a bond that is actively traded in the secondary market. Active bonds may have high trading volumes and a tight bid-ask spread, which makes them more liquid. Trading of active bonds may be facilitated by a group of traders known as the active bond crowd.
Active investing refers to an investment strategy where the investor actively manages their portfolio in an attempt to outperform the market. Active investors may use various techniques, such as market timing or individual security selection, to generate higher returns.
Active Management refers to the active management of a portfolio of assets by a professional money manager or team of managers. Active managers may seek to generate higher returns than the market through strategies such as outperforming certain indices or selecting individual stocks based on their own internal analysis.
Active Risk refers to the risk that is incurred by actively managing a portfolio in an attempt to generate higher returns. Active risk can be contrasted with passive risk, which refers to the risk that is inherent in holding a particular asset or investment without actively managing it.
Activist Investor refers to an individual or group of investors who take an active role in the management or operations of a company in which they hold a significant ownership stake. Activist investors may seek to influence the company’s strategy, management, or board of directors to improve its performance.
Activity Ratio refers to a financial metric used to measure the efficiency of a company’s operations by calculating the amount of revenue generated per dollar of assets or per dollar of working capital.
Actual Return refers to the rate of return that an investment actually earns, taking into account factors such as dividends or interest earned and any capital gains or losses.
Adjustable Rate Mortgage (ARM) refers to a type of mortgage where the interest rate is adjusted periodically based on a benchmark interest rate, such as the prime rate. The interest rate on an ARM may be lower than on a fixed-rate mortgage, but it can potentially increase over time.
Adjusted Present Value (APV) refers to a method used in corporate finance to calculate the value of a leveraged firm by calculating the present value of the firm’s cash flows and subtracting the present value of the costs of financing. APV analysis is typically used to value a leveraged buyout or a project that is financed with a combination of debt and equity. The advantage of using APV analysis is that it allows for the tax shield of debt financing to be factored into the valuation, which can result in a more accurate estimate of the value of the firm.
Advance Refunding refers to a technique used in finance where new debt is issued to pay off existing debt before its maturity date. Advance refunding is typically done when interest rates have fallen and the issuer of the debt can save money by paying a lower interest rate on the new debt.
An advisor refers to a professional who provides advice or guidance to clients on financial matters such as investing, estate planning, or retirement planning. Advisors may be compensated through fees or commissions and may specialize in specific areas of financial planning or serve a broad range of clients.
Affirmative Obligation refers to a requirement placed on brokers or dealers to ensure that certain transactions are executed in a fair and orderly manner. Examples of transactions that may be subject to affirmative obligations include limit orders or orders to purchase securities in a new issue.
After Hours Trading refers to the trading of stocks or other securities after regular market hours. After-hours trading typically takes place between 4:00 p.m. and 8:00 p.m. Eastern Time and can be used by investors to react to news or events that occur outside of regular trading hours.
Agency Bond refer to debt securities issued by a government-sponsored entity such as Fannie Mae or Freddie Mac. Agency bonds are considered to be relatively safe investments, as they are backed by the U.S. government and are typically rated as investment-grade.
Aggressive Growth Fund refers to a mutual fund that invests in high-growth companies with the potential for significant capital appreciation. Aggressive growth funds typically invest in companies with high price-to-earnings ratios and high earnings growth rates and may also invest in small-cap or mid-cap companies.
Aggressive Investment Strategy refers to an investment strategy that seeks to generate high returns through high-risk investments such as small-cap stocks or options trading. Aggressive investment strategies may be appropriate for investors with a high tolerance for risk, but they may not be suitable for all investors.
All or Nothing Order (AON) refers to a type of order in which the entire order must be filled or none of it is executed. AON orders are typically used for large trades where partial execution could be disadvantageous.
Allowance for bad debt: An accounting entry made by a company to set aside a portion of its revenue as an allowance for uncollectible debts
Alternative Asset refer to an asset class that is not a traditional stock, bond, or cash investment. Alternative assets may include investments such as real estate, commodities, or private equity.
Alternative Order refers to an order type that allows traders to enter orders that are not contingent on the current market price. Examples of alternative orders include limit orders, stop orders, and trailing stop orders.
Altman’s Z-Score refers to a formula used to predict the likelihood of a company going bankrupt. The formula takes into account several financial ratios, such as working capital and total assets, to calculate a score that indicates the level of financial distress a company may be experiencing.
American Depositary Receipt (ADR) refers to a security that represents shares of a non-U.S. company that are held by a U.S. bank. ADRs are denominated and traded in U.S. dollars and are used by U.S. investors to gain exposure to foreign companies without having to buy shares on foreign exchanges.
Amortization is the process of paying off debt over time through regular payments that include both principal and interest.
An angel investor is an individual who provides financial backing to startups or entrepreneurs in exchange for ownership equity or convertible debt.
Analyst Expectation typically refers to the earnings and revenue estimates that financial analysts make for a company’s upcoming financial results. These expectations are often used by investors when deciding whether to buy or sell a particular stock.
Annual Equivalent Rate (AER): A financial metric used to calculate the interest rate on savings accounts or other interest-bearing financial products that take compounding into account. The AER provides a more accurate representation of the actual interest rate earned over the course of a year than the nominal rate.
Annual Percentage Yield (APY): A financial metric used to calculate the effective annual rate of return on investment, taking into account the effects of compounding. The APY is a more accurate representation of the actual rate of return than the nominal rate.
Annual fee: a yearly fee charged by the credit card issuer for using the card.
Annual percentage yield (APY): the annual percentage rate expressed in terms of the total interest earned on an account in a year.
Annualize: The process of converting a rate or return that is measured over a period of time into an annual rate or return.
Annuitization: the process of converting a lump sum of money into a stream of regular payments, typically through the purchase of an annuity.
Anti-Dilution Provision: A provision in a contract, typically a stock or option agreement, that provides protection for the holder of the security in the event of future dilution of the security’s value.
Anti-Martingale System: A betting or trading strategy that involves increasing the size of a position after a win and decreasing it after a loss, in contrast to the more common martingale strategy of doubling down after a loss.
Any-and-All Bid: A takeover bid in which the bidder offers to buy any and all of the target company’s outstanding stock rather than a specific number of shares.
Appraisal Ratio: A financial metric used to evaluate the performance of an investment portfolio by comparing the returns achieved to the amount of risk taken on.
Appreciation: The increase in value of an asset over time
Arbitrage Pricing Theory (APT): A mathematical model that attempts to explain the relationship between the returns on different assets and their underlying risk factors
Arbitrage Trading Program: A computer program that uses algorithms and automated trading strategies to identify and execute arbitrage opportunities in financial markets
Arbitrage is the practice of taking advantage of pricing differences between different markets or assets in order to make a profit with little or no risk.
Arbitrageur: A person or entity that engages in arbitrage trading.
Ask Price: The price at which a seller is willing to sell a security or other asset
Ask Size: The number of shares or units of security that are available for sale at the current ask price.
Assessed Value: The value assigned to a property by a government for the purpose of calculating property taxes.
Asset-Backed Securities (ABS) are bonds or notes that are backed by assets such as loans, leases, and receivables. These securities are often used to securitize auto loans, credit card receivables, and other types of consumer debt.
Asset Class: a group of similar types of investments, such as stocks, bonds, real estate, or commodities. Asset classes are usually categorized based on their risk and return characteristics.
Asset Management: The professional management of investments on behalf of individuals, institutions, or entities This typically includes managing a portfolio of stocks, bonds, real estate, and other assets with the goal of maximizing returns while minimizing risks.
Asset Turnover Ratio: A financial metric that measures how efficiently a company is using its assets to generate revenue. It is calculated by dividing a company’s net sales by its total assets.
Asset allocation refers to the process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash, in an effort to manage risk and optimize returns.
Asset allocation is the process of distributing an investor’s portfolio among different asset classes like stocks, bonds, and cash.
Assets Under Management (AUM): The total market value of all the assets that a financial institution or investment manager has under its control and manages on behalf of its clients.
Assets: Any items of economic value that are owned by a bank, including cash, investments, property, and equipment.
Assignable Contract: A contract that allows one party to transfer or assign its rights and obligations to another party, typically in the context of a real estate transaction or a futures contract.
Asymmetric Information: a situation in which one party to a transaction has more or better information than the other party. This can lead to market inefficiencies or even market failures.
Auction Market: A type of market in which buyers and sellers enter competitive bids and offer for a good or service, with the price determined by the highest bid and the lowest offer that meet at a certain point.
Automated Bond System (ABS): An electronic system used by bond traders to execute trades in the US Treasury bond market.
Automatic Investment Plan (AIP): a program offered by some investment firms that allows investors to automatically invest a set amount of money at regular intervals, typically monthly or quarterly.
Average Annual Growth Rate (AAGR): The average annual rate of growth of an investment or portfolio over a specified period of time.
Average Annual Return (AAR): The average annual rate of return of an investment or portfolio over a specified period of time.
Average Balance: The average balance of a bank account over a particular period, usually a month.
Average Down: A strategy in which an investor buys additional shares of a stock at a lower price in order to reduce the average cost of all their shares.
B
B Shares: A class of mutual fund shares that typically have higher fees and lower upfront costs than A shares but have higher ongoing expenses.
Back Door Listing: A process by which a company goes public without going through the traditional initial public offering (IPO) process.
Back Months: In the discourse of futures and options trading, Back Months refer to the months of contracts with expiration dates farthest in the future.
Back Office: The department or team of people within a financial institution responsible for processing transactions, performing various administrative tasks, and ensuring compliance with regulations.
Back Stop: An entity or party that provides support or assistance to prevent another from being in default or facing financial difficulties.
Back-Up: To create a duplicate copy of data, files, or software to be used as a backup in case the original is lost, damaged, or inaccessible.
Back-End Ratio: A metric used by lenders to measure the proportion of a borrower’s monthly gross income that is spent on housing expenses, including mortgage payments, property taxes, and insurance.
Back-Stop Purchaser: A party or entity that offers to purchase securities or assets in a company to lend support to the company and prevent it from facing financial difficulties.
Back-to-back letters of credit: A type of transaction where a seller uses a letter of credit from the buyer’s bank to secure a loan from their own bank, which they then use to fulfill their own letter of credit obligation.
Backing Away: A term used in derivatives markets to describe a situation where a trader withdraws from a previously agreed-upon transaction before it is finalized.
Backpricing: A technique used in finance and investing to value securities or assets based on past prices or historical pricing data.
Backtesting: A quantitative analysis technique used to assess the performance of a financial model or trading strategy by evaluating its accuracy and reliability based on historical data.
Backup line: A line of credit that a borrower can draw upon in case their primary line of credit is not available.
Backwardation: A market condition in futures trading where the spot price of a commodity or security is higher than its forward price.
Bad Paper: A term used to describe a loan or debt that is unlikely to be repaid due to the low creditworthiness of the borrower, poor collateral, or other factors.
Bad check: A check that is returned to the issuer unpaid due to insufficient funds in the account.
Bag Holder: An investor who holds onto a losing investment for a long time, hoping that the market will turn around and the investment will become profitable.
Bailout: Financial assistance provided by a government or other institution to a struggling company or industry in order to prevent its collapse.
Balance protection: A service offered by some financial institutions that cover the account holder’s transactions if their account balance drops below a certain threshold.
Balance sheet: A financial statement that provides a snapshot of a bank’s financial position at a specific point in time, showing the balance between assets and liabilities.
Balance transfer – transferring an outstanding balance from one credit card to another with a lower interest rate.
Balance transfer fee – A fee charged by the credit card issuer to transfer a balance from one card to another.
Balanced Fund: A type of mutual fund or ETF that invests in a mix of stocks, bonds, and other assets to achieve a balance between growth and income.
Balloon Interest: A type of loan that requires the borrower to make lower monthly payments for a certain period of time, followed by a large final payment to fully repay the loan, which includes the accumulated interest.
Balloon Maturity: The date on which a balloon loan, which requires a large final payment to fully repay the loan, comes due.
Balloon Mortgage: A type of mortgage that requires the borrower to make smaller monthly payments for a certain period of time, followed by a larger final payment to fully repay the loan, which includes the accumulated interest.
Bank Deposit Agreement: A legal document or contract between a bank and a depositor that outlines the terms and conditions of a deposit account, including the interest rate, fees, and withdrawal restrictions.
Bank Efficiency Ratio: The Bank Efficiency Ratio is a measure of a bank’s expenses relative to its revenue. It is calculated by dividing a bank’s non-interest expenses by its net interest income.
Bank Investment Contract (BIC): A type of contract used by financial institutions to manage their assets and liabilities. It typically involves the purchase of an insurance contract that guarantees a specified rate of return on the investment.
Bank Investment Contract (BIC): Bank Investment Contract is a contractual agreement between a bank and an investor, typically used in retirement plans, in which the bank guarantees a specified return on the investor’s principal.
Bank Reserve: The portion of a bank’s deposits that are held in reserve in order to cover potential losses or withdrawals.
Bank Run: A situation in which a large number of depositors withdraw their funds from a bank or financial institution in a short period of time, often due to concerns about the solvency of the institution.
Bank card association: A group of banks and financial institutions that work together to set standards and rules for bank card usage.
Bank card: A card issued by a bank that can be used to withdraw cash or make purchases.
Bank credit: The total amount of credit available to a bank from all its sources.
Bank deposits: Funds that are placed in a bank account for safekeeping and earning interest.
Bank draft: A check written by one bank on behalf of another bank.
Bank efficiency ratio: The ratio of a bank’s operating expenses to its revenue.
Bank endorsement: A signature or stamp on the back of a check that indicates that it has been deposited or transferred to a specific account.
Bank failure: The closure of a bank by a regulatory authority due to insolvency or other financial difficulties.
Bank guarantee: A written promise by a bank to pay a specified amount of money if a debtor fails to fulfill their contractual obligations.
Bank holiday: A day when banks and financial institutions are closed, usually for a federal or state holiday.
Bank identification number (BIN): The first six digits on a bank card that identify the issuing bank.
Barclays Capital U.S. Aggregate Bond Index: The Barclays Capital U.S. Aggregate Bond Index is a market-weighted index of U.S. government and corporate bonds, mortgage-backed securities, and asset-backed securities.
Barrel of Oil Equivalent (BOE): Barrel of Oil Equivalent is a unit of measure used to compare the energy output of different types of fuel. It is defined as the amount of energy contained in one barrel of crude oil.
Basis Points (bps): Basis Points are a common unit of measure used in finance to represent one-hundredth of a percentage point.
Basis: Basis is the difference between the spot price of a commodity or security and the price of a futures contract for that same commodity or security.
Bear Market: Bear Market refers to a market or security that is experiencing a prolonged period of declining prices.
Bear: Bear refers to an investor who expects the price of a security or market to decline and may take on short positions or other positions that benefit from a market downturn.
Bearish Harami: Bearish Harami is a bearish candlestick pattern in technical analysis that occurs when a small bullish candle is followed by a larger bearish candle.
Behavioral Finance: Behavioral Finance is a field of study that examines how psychological biases can impact financial decision-making and market behavior.
Bellwether: Bellwether is a term used to describe a security, commodity, or market that is viewed as a leading indicator for the direction of other securities, commodities, or markets.
Belly Up: Belly Up is a colloquialism used to describe a company, fund, or other entity that has gone bankrupt or become insolvent.
Below Par: Below Par is a term used to describe a bond or other security that is trading below its face value, typically due to changing market conditions or credit quality concerns.
Belt and Suspenders: Belt and Suspenders is a risk management strategy that involves using multiple safeguards or redundancies to prevent potential problems or failures.
Benchmark: A Benchmark is a standard or benchmark against which the performance of an investment can be measured.
Beneficial Owner: A Beneficial Owner is a person who enjoys the benefits of owning a security, even if the security is registered under the name of another person or entity.
Best Ask: Best Ask is the lowest price at which a market maker or exchange is willing to sell a security.
Best Bid: Best Bid is the highest price at which a market maker or exchange is willing to buy a security.
Best Efforts: Best Efforts is a type of underwriting agreement in which an underwriter agrees to use its best efforts to sell as many shares of an initial public offering as possible, but does not guarantee a successful outcome.
Best Execution: Best Execution is the obligation that brokers have to seek the best possible price for their clients when executing trades.
Best-Price Rule: Best-Price Rule is a regulation that requires brokers to execute orders for their customers at the best available price, regardless of whether the order is executed on or off an exchange.
Beta: Beta is a measure of the volatility of a stock or portfolio in relation to the overall market.
Bid Price: Bid Price is the price at which a buyer is willing to purchase a security.
Bid Size: Bid Size is the number of shares or units of security that a buyer is willing to purchase at the bid price.
Bid-Ask Spread: Bid-Ask Spread is the difference between the highest price a buyer is willing to pay for a security (bid price) and the lowest price a seller is willing to accept (ask price).
Bitcoin: Bitcoin is a digital currency that operates independently of a central bank and uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds.
Black Friday: Black Friday refers to the day after Thanksgiving in the United States, which is traditionally the start of the holiday shopping season and is known for large retail sales and discounts.
Black Monday: Black Monday refers to the stock market crash that occurred on October 19, 1987.
Black Thursday: Black Thursday refers to the stock market crash that occurred on October 24, 1929, which is considered by some to be the start of the Great Depression.
Black Tuesday: Black Tuesday refers to the stock market crash that occurred on October 29, 1929, which is considered one of the most significant events leading to the Great Depression.
Blackout dates – specific days or periods when rewards or discounts cannot be redeemed.
Blank Check Preferred Stock: Blank Check Preferred Stock is a type of preferred stock that gives the board of directors the authority to determine the terms of the stock at a later date, as opposed to having the terms set at the time of issuance.
Blend Fund: A Blend Fund is a type of mutual fund that invests in a combination of growth and value stocks.
Blue Sheets: Blue Sheets are documentation that broker-dealers must provide to the Securities and Exchange Commission (SEC) upon request as part of an investigation into potential instances of market manipulation or insider trading.
Blue-Chip Stock: Blue-Chip Stock refers to a stock of a well-established, financially stable company with a long record of reliable performance.
Bo Derek: Bo Derek is a former actress and model, best known for her role in the 1979 film “10.”
Boiler Room: A Boiler Room is a fraudulent telemarketing operation that typically promotes dubious investments to unsuspecting victims.
Bond Equivalent Yield (BEY): Bond Equivalent Yield (BEY) is a measure of the annualized yield on a bond, calculated on a semi-annual basis.
Bond Fund: A Bond Fund is a type of mutual fund that invests primarily in bonds.
Bond Ladder: A Bond Ladder is an investment strategy in which an investor purchases a portfolio of bonds with varying maturities, creating a schedule of regular income.
Bond Laddering: Bond Laddering is a strategy in which an investor purchases a portfolio of bonds with varying maturities, with the intention of having bonds mature at regular intervals, creating a schedule of regular income.
Bond Option: A Bond Option is a type of financial derivative that gives the holder the right, but not the obligation, to buy or sell a bond at a specified price at or before a certain date.
Bond Quote: A Bond Quote is the current market price at which a particular bond is trading.
Bond Rating: A Bond Rating is a measure of the creditworthiness of a bond issuer, assigned by a rating agency based on their assessment of the issuer’s financial health and ability to repay debt.
Bond: A Bond is a debt security in which an issuer agrees to repay the principal plus interest to the bondholder at a later date.
Bondholder: A Bondholder is an individual or entity that owns one or more bonds issued by a company, government, or other entity.
Book Value of Equity Per Share (BVPS): Book Value of Equity Per Share (BVPS) is a metric that represents the total equity value of a company divided by the number of outstanding shares.
Book-Entry Savings Bond: A Book-Entry Savings Bond is a type of U.S. savings bond that is held electronically, rather than being issued as a physical certificate.
Book-Entry Securities: Book-Entry Securities are securities that are held electronically, rather than being issued as physical certificates.
Book-to-Bill Ratio: The Book-to-Bill Ratio is a measure of demand in the manufacturing industry, calculated by dividing the value of new orders received by the value of goods shipped or billed.
Bottom Fishing: Bottom Fishing is an investment strategy in which an investor buys securities that are believed to be undervalued, with the hope that their prices will rise.
Bottom-Up Investing: Bottom-Up Investing is an investment strategy that focuses on analyzing individual companies and their financial health, rather than analyzing broad economic trends.
Bounced Check: A check that is returned to the issuer unpaid due to insufficient funds in the account.
Bovespa Index: The Bovespa Index, also known as the Ibovespa, is the main stock market index of the São Paulo Stock Exchange in Brazil.
Brady Bonds: Brady Bonds were a type of debt security issued in the 1980s and 1990s, named after former U.S. Treasury Secretary Nicholas Brady, that was designed to help developing countries restructure their sovereign debt.
Break-even point – The point at which total revenue equals total costs.
Breakpoint: A Breakpoint is a point at which the commission rate charged by a mutual fund drops as the size of the investment increases.
Broken Date: A Broken Date is a settlement date for a security that falls on a day different from the standard settlement date for that security.
Broker-Dealer: A Broker-Dealer is an individual or firm that acts as both a broker (i.e., matches buyers and sellers of securities) and a dealer (i.e., buys and sells securities for their own account).
Brokerage Fee: A Brokerage Fee is a fee charged by a broker or brokerage firm for their services in executing a transaction or managing an investment account.
Brokered Certificate of Deposit: A Brokered Certificate of Deposit is a type of certificate of deposit that is bought and sold through a brokerage firm, rather than directly from a bank.
Budget – A financial plan which includes estimates of expected expenses and revenue over a certain period of time.
Budget committee – A group of individuals responsible for creating and reviewing budget proposals and recommendations.
Budget variance – The difference between the actual amount spent and the planned amount in a budget.
Build to Rent (BTR): Build to Rent (BTR) is a type of residential real estate construction in which buildings are designed and constructed specifically for the purpose of renting to tenants.
Bulge Bracket: Bulge Bracket refers to the largest and most prestigious investment banks in the world, which typically have global operations and offer a wide range of financial services.
Bull Market: A Bull Market is a market in which prices are generally rising over a sustained period of time, typically by 20% or more from a recent low.
Bull/Bear Ratio: The Bull/Bear Ratio is a market indicator that compares the number of bullish investors (Bulls) to the number of bearish investors (Bears).
Bull: A Bull is an investor who believes that the price of a particular security or the overall market will rise.
Bump-Up Certificate of Deposit (CD): A type of certificate of deposit that allows the holder to increase the interest rate on the CD to the current market rate one time during the term of the CD.
Buy Limit Order: A Buy Limit Order is an order to buy a security at a specified price or lower.
Buy Side: The Buy Side refers to the institutional investors (such as pension funds, mutual funds, and hedge funds) who buy and hold securities on behalf of their clients or shareholders.
Buy and Hold: Buy and Hold is an investment strategy in which an investor buys security and holds onto it for an extended period of time, regardless of short-term market fluctuations.
Buyer’s Market: A Buyer’s Market is a market in which there are more sellers than buyers, giving buyers greater bargaining power and potentially leading to lower prices.
Buying on Margin: Buying on Margin is a practice in which investors borrow money from their broker to buy securities, using the securities themselves as collateral.
C
C Shares: C Shares are a type of mutual fund share class that typically have a higher expense ratio than other share classes, but do not charge a front-end sales load or back-end sales load.
CAGR – Compound Annual Growth Rate: Compound Annual Growth Rate (CAGR) is a measure of the rate of return on an investment over a certain period of time, assuming that the investment has been growing at a compounded rate each year.
CAN SLIM is an investment strategy developed by William O’Neil, which stands for Current earnings, Annual earnings, New product or service, Supply and demand, Leader or laggard, Institutional sponsorship, and Market direction?
CD Ladder is a strategy used for investing in Certificates of Deposit (CDs) to provide steady returns while maintaining some level of liquidity. In this strategy, multiple CDs are purchased with different maturity dates, typically ranging from several months to several years. As each CD matures, its proceeds are reinvested in a new CD with the longest maturity, allowing the investor to balance liquidity and return.
CFA Exam, organized by the CFA Institute, is a globally recognized certification that deals with financial analysis, accounting, investment banking, securities, and more.
CFA Institute is a global association of investment professionals that offers certification, education, publications, conferences, and research to serve the investment industry.
Cage: A Cage is a secure area within a brokerage firm or financial institution where physical securities are stored.
Caisse Populaire is a French term that translates to “people’s bank”. In Canada, it is often used to refer to credit unions, which are financial cooperatives owned and operated by their members.
Calculation Agent is an entity that calculates the amount of payments owed to the holders of certain financial instruments, such as derivatives contracts.
Calendar Effect refers to the phenomenon where stock prices tend to exhibit predictable patterns based on the time of year.
Call Date is the date on which a bond issuer has the option to redeem a bond before its maturity date.
Call Market is a type of trading system where all buy and sell orders for a particular security are executed at specific times during the trading day.
Call Money refers to short-term loans that are made between banks or other financial institutions.
Call Price is the price at which the issuer of a callable security has the option to redeem the security before its maturity date.
Call Protection is a feature of some bonds or other debt instruments that prevents the issuer from calling the security before a certain date.
Call Provision is a feature of some bonds or other debt instruments that gives the issuer the option to redeem the security before its maturity date.
Call Risk refers to the risk that an issuer will call a bond or other debt instrument before its maturity date, which can result in a loss for the investor.
Call Rule is a regulatory rule that requires brokerage firms to allocate orders for new issues of stocks or bonds fairly among their customers.
Callable Bond is a bond that can be redeemed by the issuer before its maturity date.
Callable Certificate of Deposit (Callable CD): A certificate of deposit that can be redeemed by the issuer prior to its maturity date.
Callable Common Stock and Callable Preferred Stock are stocks that can be redeemed by the issuer before their maturity date.
Callable Security is a financial instrument that gives the issuer the option to redeem the security before its maturity date.
Camels: An acronym used by bank regulators to evaluate a bank’s overall financial health. The acronym stands for Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk.
Canada Learning Bond is a program, administered by the Canadian government, that provides financial assistance to help parents save for their child’s post-secondary education.
Canadian Income Trust is a type of investment vehicle in Canada that is designed to distribute income to investors on a tax-efficient basis.
Canary Call is a risk management technique used in options trading, where an investor sells a call option with a low strike price to finance the purchase of a higher strike price call option on the same underlying asset.
Cancel Former Order refers to the cancellation of a previously placed order that has not been filled.
Canceled Order refers to an order that has been canceled by the investor before it is executed by the broker.
Cancellation Bulletin – A list of canceled credit cards or debit cards.
Cancellation refers to the act of canceling an order, contract, or transaction.
Capital Appreciation refers to the increase in the value of an investment or asset over time.
Capital Asset Pricing Model (CAPM) is a financial model that predicts the expected return on an investment based on the level of risk associated with that investment.
Capital Budgeting is the process of identifying, evaluating, and selecting long-term investments that involve significant cash outlays.
Capital Dividend Account (CDA) is a tax account that Canadian corporations use to track tax-free amounts that are paid to shareholders.
Capital Flight refers to the movement of capital or assets out of one country and into another.
Capital Gain refers to the profit that an investor realizes from the sale of a capital asset.
Capital Gains Distribution refers to the distribution of profits that a mutual fund or other investment vehicle generates from the sale of its portfolio assets.
Capital Gains Treatment refers to the tax treatment of capital gains, which are typically taxed at a lower rate than other types of income.
Capital Loss refers to the loss that an investor realizes from the sale of a capital asset.
Capital Markets refer to financial markets where stocks, bonds, and other securities are traded between buyers and sellers.
Capital Stock refers to the total amount of common and preferred shares that a company is authorized to issue and has issued to investors. It represents the long-term funding of a company that is provided by investors, and it is reported in the balance sheet of the company.
Capital adequacy ratio: A measure of a bank’s ability to absorb losses due to credit losses, market risks, or operational risks. It is calculated by dividing a bank’s capital by its risk-weighted assets.
Capital expenditures – Large, long-term investments in items such as buildings or equipment.
Capital gain: A profit that is made when an asset is sold for more than its original purchase price.
Capital market: A financial marketplace where long-term securities (those with maturities of more than one year) are bought and sold.
Capitalization Rate is the rate of return that investors use to evaluate the value of income-producing properties. It is calculated as the net operating income (NOI) of the property divided by its current market value.
Capitalization is the process of computing the total value of a company’s outstanding shares, which includes the value of common stock, preferred stock, and long-term debt. It is a measure of the company’s financial health and is usually expressed as a ratio of debt to equity.
Capitulation is a term used in the financial markets to describe the surrender of investors to selling pressures, resulting in a market downturn.
Card issuer – the financial institution or company that issues credit cards to customers.
Carding Forum – An online forum where stolen credit card information is traded or sold.
Case-Shiller Home Price Index is a measurement of monthly house prices in the United States. It uses data from repeat sales of single-family homes to create a composite index of home values.
Cash Cow is a company, product, or service that generates strong positive cash flows, which can be used to support other areas of the business.
Cash Dividend refers to a portion of a company’s profits that are paid out to shareholders in the form of cash.
Cash Flow Per Share is a financial ratio that measures the amount of cash generated per share of outstanding stock.
Cash Flow Return on Investment is a financial ratio that measures the cash flow earned by a company relative to the amount of money invested. It is generally used to evaluate the profitability of an investment.
Cash Flow from Financing Activities is the section of a company’s cash flow statement that reports the inflows and outflows of cash resulting from activities such as issuing or retiring debt, paying dividends, or issuing or repurchasing stock.
Cash Flow to Capital Expenditures is a financial ratio that compares a company’s cash flow from operations to its capital expenditures. It is used to evaluate a company’s ability to fund its own growth through internal resources.
Cash Market refers to a market in which financial instruments are bought and sold for cash, as opposed to a futures or options market.
Cash Price is the price of an asset when it is bought or sold for cash, without financing.
Cash advance – withdrawing cash from an ATM or bank using your credit card.
Cash flow – The amount of money flowing in and out of a business or household.
Cash flow statement – A financial statement that tracks the inflow and outflow of cash over a specific period of time.
Cash method – A method of accounting in which income and expenses are recorded when cash is received or paid.
Cash-Flow Matching is a technique used by investors to match the cash inflows from an investment with the cash outflows required to make the investment.
Cashback – A reward program that gives customers back a percentage of the money spent on purchases.
Cashier’s Check: A check that is drawn on a bank’s account, rather than the account of the check writer, and is guaranteed by the bank.
Catalyst is an event or factor that initiates a change in the financial markets or within a specific company.
Catastrophe Call is a provision in a bond or debt instrument that allows the issuer to redeem the security if a catastrophic event occurs.
Certificate of Deposit (CD) is a type of savings account provided by banks and credit unions that pays a fixed interest rate for a specific period of time. CDs are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) and are considered to be low-risk investments.
Certificate of Deposit Account Registry Services (CDARS): A service that allows investors to access FDIC insurance coverage for their whole investment portfolio by investing in CDs from multiple banks with one account.
Certified Check: A check that is guaranteed by the bank and is considered a safe form of payment.
Certified Financial Planner (CFP) is a professional certification program for financial planners granted by the Certified Financial Planner Board of Standards (CFP Board) in the United States.
Certified Kingdom Advisor (CKA) is a professional certification program offered by Kingdom Advisors, an organization that promotes the integration of Christian values into financial planning.
Chargeback – A transaction reversal initiated by a cardholder, where a transaction is disputed and funds are returned to the cardholder’s account.
Chartered Financial Analyst (CFA) is a professional certification offered by CFA Institute for Investment and financial professionals.
Chartered Investment Counselor (CIC) is a professional certification program offered by the Investment Adviser Association for investment professionals who offer personalized investment counseling or management services to individuals and institutions.
Checkable Deposits: Deposits in a bank account that can be withdrawn by writing a check or using a debit card.
Chicago Board of Trade (CBOT) is a commodities exchange that specializes in futures and options trading, owned by the CME Group.
Chicago Mercantile Exchange (CME) is a derivatives and futures exchange that specializes in futures and options trading, owned by the CME Group.
Class A shares and Class B shares are common stock classifications that differentiate the voting rights and dividend payments among shareholders of the same company.
Clean Up Call is a call provision in a mortgage-backed security or asset-backed security that allows the issuer to buy back some or all of the underlying securities if certain criteria are met.
Clearinghouse is an exchange-owned intermediary that acts as a guarantor, assuming counterparty risk for buyers and sellers in financial transactions.
Closed-End Fund (CEF) is a type of investment fund that issues a fixed number of shares, which are traded on a stock exchange.
Closing Bell refers to the signal that marks the end of trading on the New York Stock Exchange. It is a bell that is sounded at 4:00 pm Eastern time, and it signifies the official closing of the trading day.
Closing Costs: The fees and expenses associated with completing a real estate transaction, such as appraisal fees, title insurance, and attorney fees.
Closing Price: The final price at which a security trades on an exchange or market for the day.
Closing Quote: The final bid and ask prices of security at the end of a trading day.
Collateral: Property or other assets that a borrower pledges to a lender as security for a loan.
Collateralized Bond Obligation (CBO): A type of bond that is collateralized by a pool of bonds or other debt instruments.
Collateralized Debt Obligation (CDO): A type of structured asset-backed security that is backed by a diversified pool of underlying assets, such as loans, bonds, or other debt instruments.
Collateralized Mortgage Obligation (CMO): A type of mortgage-backed security that is backed by a pool of mortgages that have been packaged together and sold as an investment.
Commercial Bank: A bank that provides financial services to businesses and individuals.
Commercial Mortgage-Backed Security (CMBS): A type of mortgage-backed security that is backed by a pool of commercial mortgages.
Commercial Paper: A short-term debt instrument issued by large companies to finance current operations.
Commercial Real Estate: Property that is used for commercial or investment purposes.
Commission: A fee charged by brokers or agents for their services, such as buying or selling securities or other assets on behalf of a client.
Commodification: The process of turning something into a commodity, or a standardized product that can be bought and sold on a market.
Commodities: Raw materials or primary agricultural products that are bought and sold, such as wheat, oil, or gold.
Commodity Futures Trading Commission (CFTC): A government agency tasked with regulating commodity futures and options markets in the United States.
Commodity Index: An index that tracks the performance of a basket of commodities.
Commodity Market: A commodity Market is a marketplace where raw or primary products are exchanged. These commodities are usually natural resources, such as oil, gold, or agricultural products.
Commodity Parity Price: Commodity Parity Price is the price at which a commodity would be in equilibrium with the purchasing power of a certain currency.
Commodity Research Bureau Index (CRB): Commodity Research Bureau Index (CRB) is an index that measures the price movements of a basket of commodities, including energy, precious metals, and agricultural products.
Commodity: A raw material or primary agricultural product that can be bought and sold, such as gold, oil, or wheat.
Common Stock: Common Stock is a type of stock that represents ownership in a corporation and gives the holder the right to vote on shareholder matters, such as the election of the board of directors.
Composite Index: Composite Index is a stock market index that tracks the overall performance of a particular stock exchange or market, typically by combining the performance of several different sectors or industries.
Composite: Composite refers to an index or measurement that combines several different indicators or components into a single value.
Compound Annual Growth Rate (CAGR): CAGR is a measure of the rate of return on an investment over a certain period of time, assuming that the investment has been growing at a compounded rate each year.
Compound Interest: Compound Interest is interest that is calculated on the initial principal and also on the accumulated interest of previous periods.
Compound Interest: Interest that is calculated on the principal amount plus any accumulated interest.
Compound: Compound refers to the process of combining two or more elements or substances to create a new compound with different properties.
Compounding: Compounding is the process of earning interest on investment over time, where the interest earned is added to the principal amount and then earns its own interest.
Condominium: Condominium is a type of real property ownership where individuals own their own unit or apartment within a larger building or development, while also sharing ownership of common areas and amenities.
Consensus Estimate: A consensus estimate is the average of all the analysts’ estimates for the earnings or revenue of a company for a particular period, used as a benchmark for comparison to the actual reported results.
Consolidated Reports of Condition: Reports that banks are required to file with regulators that provide information on the bank’s financial condition, including its assets, liabilities, and equity.
Construction Loan: A construction loan is a type of loan that is used to finance the construction of a new building or other real estate project, with payments made to the borrower in stages as the project progresses.
Consumer Cyclical: Consumer cyclical is a term used to describe a company whose performance is highly correlated with the general state of the economy, with sales and profits typically rising during periods of economic growth and falling during economic downturns.
Contactless Payment – A payment method where a transaction is made by tapping a card or mobile device on a payment terminal.
Contactless payments – a method of payment where a customer can make a transaction with their card without having to physically swipe or insert it into a terminal.
Contango: Contango is a term used in commodity markets to describe a situation where the futures price of a commodity is higher than the expected spot price at the time of delivery, reflecting the cost of carrying the commodity until delivery.
Contingent Deferred Sales Charge: Contingent Deferred Sales Charge is a fee that is charged by some mutual funds or annuities if the investor sells their shares before a specified date, typically declining in size over time.
Continuous Auction Method: Continuous Auction Method is a type of market structure in which the order book is continuously updated with orders from buyers and sellers, allowing for continuous trading throughout the day.
Contrarian: Contrarian is an investment strategy that involves buying securities that are currently out of favor or unpopular among investors, on the belief that they will eventually rebound or recover.
Conventional Loan: Conventional loan is a type of mortgage loan that is not guaranteed or insured by the government, typically requiring a higher down payment and credit score compared to government-backed loans.
Conversion Ratio: Conversion Ratio is the number of common shares that can be obtained by exercising a convertible security, such as a convertible bond or preferred stock.
Convertible Bond: Convertible Bond is a type of bond that can be converted into a predetermined number of common shares of the issuing company, typically at the option of the holder.
Convertible Preferred Stock: Convertible Preferred Stock is a type of preferred stock that can be converted into a predetermined number of common shares of the issuing company, typically at the option of the holder.
Convexity: Convexity is a measure of the curvature of the relationship between bond prices and interest rates, reflecting the sensitivity of the bond’s price to changes in interest rates.
Cornering the Market: Cornering the Market is a situation in which an individual or group of investors acquires a controlling position in the supply of a particular commodity or financial instrument.
Corporate Bond: Corporate Bond is a type of bond issued by a company or corporation, typically offering a higher rate of interest than government bonds but also carrying a higher level of risk.
Correction: Correction is a term used in financial markets to describe a temporary decline in the value of securities or indexes after a period of unusually high market performance.
Correlation: Correlation is a statistical measure that indicates the degree to which two or more variables are related, reflecting the extent to which changes in one variable are associated with changes in another.
Cost Basis: Cost Basis is the original price paid for an investment, including any associated transaction fees or commissions.
Cost Benefit Analysis: Cost Benefit Analysis is a technique used to evaluate the potential benefits and costs associated with a proposed investment or project, allowing decision-makers to compare the expected costs and benefits in order to determine whether the investment is worthwhile.
Cost-benefit analysis – An evaluation of the costs and benefits of a potential investment or decision.
Cost of Equity: Cost of Equity is the rate of return required by investors in a company’s stock, representing the cost of capital for the company and reflecting the risk associated with the investment.
Cost of capital – The cost of borrowing money to invest in a project or business.
Cost of goods sold – The cost of producing or acquiring a product or service.
Countercyclical Stock: Countercyclical Stock refers to a stock of a company whose performance tends to move in the opposite direction to the business cycle, with profits and revenues rising during economic downturns.
Coupon Bond: A coupon Bond is a type of bond that pays periodic interest payments to the holder based on a fixed coupon rate.
Coupon Equivalent Rate (CER): Coupon Equivalent Rate is a conversion rate used to compare the yield of a coupon bond to that of a discount bond.
Coupon Equivalent Yield (CEY): Coupon Equivalent Yield is a measure of the yield of a coupon bond, expressed as a percentage of the bond’s face value.
Coupon Rate: Coupon Rate is the fixed annual interest rate paid by a bond, expressed as a percentage of the bond’s face value.
Covenant: Covenant is a condition or restriction that is included in a loan or bond agreement, and is meant to protect the interests of the lender or investor.
Credit Card – A card that allows the user to borrow funds from a bank or financial institution to make purchases.
Credit Card Act – A federal law that regulates credit cards and requires that lenders disclose key terms and conditions.
Credit Card Balance – The amount of money owed to a credit card issuer for purchases made using a credit card.
Credit Limit – The maximum amount of credit that a lender is willing to extend to a borrower.
Credit Risk: Credit Risk is the risk that a borrower will default on a loan or bond, causing the lender or investor to lose some or all of their investment.
Credit Score – A measure of an individual’s creditworthiness based on their credit history.
Credit Spread: Credit Spread is the difference in yield between two bonds that have the same maturity but different credit ratings, reflecting the risk associated with the investments.
Credit counseling – Professional financial counseling for individuals seeking to improve their credit scores and pay off debt.
Credit limit – the maximum amount of credit available on a credit card account.
Credit line increase – An increase in the maximum credit limit of a credit card account.
Credit rating – A score used to determine creditworthiness.
Credit score – a numerical representation of creditworthiness that can affect an individual’s ability to get a credit card.
Credit score: A numerical representation of a person’s creditworthiness, calculated based on their credit history, debt-to-income ratio, and other factors.
Credit utilization – the amount of credit used compared to the total amount of credit available.
Cross-Listing: Cross-Listing is the process of listing a company’s shares on multiple stock exchanges in different countries, potentially increasing liquidity and visibility for the company.
Cumulative Dividend: Cumulative Dividend is a type of dividend payment that is owed to shareholders of a company’s stock and accumulates over time if not paid.
Current Ratio: Current Ratio is a financial ratio that measures a company’s ability to pay its short-term debts using its current assets.
Current Yield: Current Yield is a financial ratio that measures the annual return on a bond investment, calculated by dividing the annual interest payments by the current market price of the bond.
Custodian: A custodian is a financial institution or individual that is responsible for holding and safeguarding financial assets on behalf of clients.
Cyclical Stock: Cyclical Stock refers to a stock of a company whose performance is strongly tied to the business cycle, with profits and revenues following the ups and downs of the economy.
D
DAX Index: DAX Index is a stock market index that represents 30 of the largest and most liquid companies listed on the Frankfurt Stock Exchange in Germany.
Daily Factor: Daily Factor is a component of the calculation of interest on a bond, representing the fraction of a year that has elapsed since the previous coupon payment.
Dalal Street: Dalal Street is a street in Mumbai, India, that is known as the financial hub of the country and houses the headquarters of many leading Indian financial institutions.
Dark Pool Liquidity: Dark Pool Liquidity refers to the trading of financial assets outside of public exchanges, allowing investors to trade large blocks of securities without affecting market prices.
Dash to Trash: Dash to Trash refers to a phenomenon characterized by investors flocking to stocks that are considered to be deeply undervalued and have low price-to-earnings ratios, in the hopes of achieving outsized returns.
Dawn Raid: Dawn Raid is a term used to describe a surprise takeover bid in which an acquiring company buys a substantial portion of the target company’s shares early in the morning before the markets open.
Day Order: A day Order is a type of order to buy or sell a financial asset that is valid for the duration of a single trading day.
Day Trader: Day Trader is an individual who engages in the buying and selling of financial assets within the same trading day, with the goal of profiting from short-term price movements.
Day-Around Order: Day-Around Order is a type of order to buy or sell a financial asset that remains valid for two trading days, allowing for more flexibility than a Day Order.
Day-Count Convention: Day-Count Convention is a method used to calculate the interest earned on bond investment, taking into account the number of days in a given period and any applicable interest accrual rules.
Daylight Overdraft: An overdraft that occurs when a bank’s account is in a negative balance at the end of the day.
Dead Cat Bounce: Dead Cat Bounce is a term used in investing to describe a temporary recovery in the price of a stock, bond, or other financial asset that is followed by a further decline.
Death Bond: Death Bond refers to a type of bond that is issued by a company in which the issuer uses the proceeds raised from the bond issue to fund the purchase of life insurance policies on their own employees or on a third-party pool of insured individuals.
Death Put: A death Put is a provision in a bond that allows the bondholder to sell the bond back to the issuer at face value if the bondholder experiences a specific life-changing event, such as a terminal illness, disability, or loss of a job.
Death Star IPO: Death Star IPO is a term used to describe an initial public offering (IPO) that is so large and complex that it requires multiple underwriters to pull off.
Debentures: Debentures are a type of debt security that is not backed by collateral or specific assets, but rather by the issuer’s creditworthiness and reputation.
Debt – Money owed to creditors or lenders.
Debt Ratio: A debt Ratio is a financial ratio that measures the amount of debt a company has relative to its total assets.
Debt Security: Debt Security is a financial instrument that represents a debt owed by the issuer to the holder of the security, such as a bond or note.
Debt Service Coverage Ratio: A debt Service Coverage Ratio is a financial ratio that measures a company’s ability to cover its debt payments from its operating income.
Debt to Equity Ratio (D/E): Debt to Equity Ratio is a financial ratio that measures the amount of debt a company has relative to its equity, indicating how much a company relies on debt financing as opposed to equity financing.
Debt-to-income ratio – The ratio of debt payments to income, used to assess the ability to take on additional debt.
Debt-to-income ratio: The proportion of a person’s monthly income that goes toward debt repayment, including mortgages, car loans, credit card debt, and other types of debt.
Declaration Date: Declaration Date is the date on which a company’s board of directors announces the upcoming payment of a dividend.
Dedicated Portfolio: Dedicated Portfolio is a portfolio of securities that is constructed to achieve a specific investment goal or objective.
Deed of Trust: Deed of Trust is a legal document that pledges the title to real property as security for a debt.
Deed: Deed is a legal document that conveys ownership of a property or asset from one party to another.
Deep Discount Bond: Deep Discount Bond is a bond that is sold at a deep discount to its face value and pays little or no interest until maturity.
Default – failing to make minimum payments or breaking other terms of the card agreement.
Default Risk: Default Risk is the risk that a borrower will default on their debt repayment obligations.
Default: Failure to meet the legal obligations of a loan, such as failing to make payments on a loan or to pay back the principal in full.
Defensive Company: Defensive Company is a company whose products or services are in demand even during economic downturns or recessionary periods.
Defensive Stock: Defensive Stock is a stock that tends to perform relatively well during periods of economic downturn or market volatility, often in industries that produce essential goods or services.
Deferred Interest Bond: A type of bond in which the interest payments are deferred until a later date, typically the maturity date of the bond. Deferred Interest Bonds are also known as zero-coupon bonds, as they do not pay any interest until the maturity date. Instead, these bonds are sold at a discount to their face value, and investors receive the full face value of the bond when it matures. The amount of the discount is based on prevailing market interest rates and the time until maturity.
Deficit – A negative difference between income and expenses.
Delisting: Delisting is the process by which a company’s stock is removed from a stock exchange, and it is no longer available for trading on the exchange.
Demand Deposit: A type of account that allows withdrawals to be made without prior notice, such as a checking account.
Deposit Interest Rate: The interest rate that a bank pays to its depositors for keeping their money in the bank.
Depreciation – The allocation of the cost of an asset over its useful life.
Derivative: A financial instrument that derives its value from an underlying asset such as stocks or bonds.
Derivative: A derivative is a financial instrument that derives its value from an underlying asset, index, or reference rate.
Detachable Warrant: Detachable Warrant is a type of warrant that can be separated from the security to which it is attached and traded independently.
Dilution: Dilution is the reduction in the ownership percentage of existing shareholders when a company issues new shares.
Direct Access Trading (DAT): Direct Access Trading (DAT) is a system that allows traders to place orders directly with an exchange, rather than going through a broker.
Discount Broker: Discount Broker is a brokerage firm that charges lower fees than traditional full-service brokers.
Disposition: Disposition is the sale or transfer of an asset, such as property or security.
Distressed Sale: Distressed Sale is the sale of an asset at a price lower than its market value due to the seller’s financial distress or urgent need for cash.
Distressed Securities: Distressed Securities are securities issued by companies that are in financial distress or facing bankruptcy.
Diversification: Diversification is the practice of investing in a variety of assets with different risk profiles, in order to minimize the impact of any one asset on the overall portfolio’s performance.
Diversified Common Stock Fund: Diversified Common Stock Fund is a type of mutual fund that invests in a portfolio of common stocks of various companies to diversify the risk.
Divestiture: Divestiture is the opposite of an acquisition, wherein a company sells off a subsidiary, division, or asset.
Dividend Achievers: Dividend Achievers are companies that have a history of raising their dividends for at least 10 consecutive years.
Dividend Aristocrats: Dividend Aristocrats are stocks of companies that have managed to increase their dividends every year for at least 25 consecutive years.
Dividend Capture Strategy: Dividend Capture Strategy is a short-term trading strategy in which an investor buys a stock right before the dividend is paid and then sells the stock immediately after the dividend is paid, aiming to capture the dividend payout.
Dividend Declaration Date: The dividend Declaration Date is the date on which a company’s board of directors declares the upcoming dividend payment.
Dividend Yield: Dividend Yield is a financial ratio that measures the amount of annual dividends paid out by a company relative to its share price.
Dividend: Dividend is a payment made by a company to its shareholders, usually in the form of cash or additional shares, as a return on their investment.
Dogs of the Dow: Dogs of the Dow is an investment strategy that involves investing in the 10 stocks of the Dow Jones Industrial Average with the highest dividend yield at the beginning of the year, and holding them for the entire year.
Dollar Cost Averaging: Dollar Cost Averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. This helps to reduce the impact of market fluctuations on the portfolio.
Dow 30: Dow 30, also known as Dow Jones Industrial Average (DJIA), is a stock market index that tracks the performance of 30 large publicly traded companies in the United States.
Down Payment: A down payment is the initial payment made by a buyer when purchasing a property or asset. It is typically a percentage of the purchase price and can affect the terms of the financing agreement.
Downgrade: Downgrade is a negative change in a credit rating, typically issued by a credit rating agency, indicating that the borrower’s creditworthiness has deteriorated.
Downside: Downside is the risk of a loss in value or decline in the price of an investment or asset.
Downstream: Downstream is the part of the supply chain that involves the distribution and sale of finished products to end consumers.
DuPont Analysis: DuPont Analysis is a financial analysis method that breaks down return on equity (ROE) into three components: profitability, asset efficiency, and leverage.
DuPont Identity: The DuPont Identity, also known as DuPont Analysis, is a financial performance analysis framework that breaks down return on equity (ROE) into three key components: profit margin, asset turnover, and financial leverage.
Dual-Class Ownership: Dual-Class Ownership is a structure in which a company has two classes of shares, typically called Class A and Class B. Class A shares typically have fewer voting rights than Class B shares, allowing insiders to maintain control of the company.
Dual-Class Stock: Dual-Class Stock is a type of stock structure in which a company issues two classes of shares with different voting rights. Typically, one class has more voting rights than the other, enabling insiders to retain control of the company even if they own a minority of the outstanding shares.
Due Diligence: Due Diligence is the process of conducting a thorough investigation of a potential investment opportunity to ensure that all material facts are disclosed and that the investment aligns with the investor’s goals and risk tolerance.
Due date – the date by which a cardholder must make at least the minimum payment on their credit card balance.
Duration: Duration is a measure of the sensitivity of a bond’s price to changes in interest rates. It takes into account the bond’s cash flows and the time at which they are received.
Dutch Auction: A Dutch Auction is a type of auction in which the auctioneer begins with a high asking price and gradually lowers it until a bidder is willing to accept the price.
Dwarf: A Dwarf is a slang term used to describe a stock or other investment that is small in size, often with a low market capitalization.
Dynamic Asset Allocation: Dynamic asset allocation is an investment strategy that involves adjusting the percentage of assets allocated to different asset classes based on market conditions and the investor’s goals.
E
E-CBOT: E-CBOT, or the Chicago Board of Trade Electronic Trading Platform, is an electronic trading platform that allows traders to buy and sell futures contracts and other derivatives.
E-Mini: E-Mini is a type of futures contract that is electronically traded on the Chicago Mercantile Exchange. It is related to the standard S&P 500 futures contract but has a smaller value.
EAFE Index: The EAFE (Europe, Australasia, Far East) index is a stock market index that tracks the performance of major companies in Europe, Asia, and Australia.
ECN Broker: An ECN broker is a type of broker that provides direct access to an electronic communication network (ECN) for trading securities.
EE Bonds: EE bonds are a type of savings bond issued by the U.S. Treasury that earns a fixed rate of interest.
EMV chip – a chip embedded in credit cards that enhances security and reduces the risk of fraud.
Each Way: Each Way is a term used in betting and gambling that refers to placing two bets on the same event: one to win and one to place.
Early Amortization: Early Amortization is a state in which securitization is paid off earlier than expected due to changes in the cash flow of the underlying assets.
Early Call: Early Call is a provision in a debt security that allows the issuer to call the bond before its maturity date.
Earnest Money: Earnest Money is a deposit made by a buyer to show their seriousness about purchasing a property.
Earning Assets: Earning assets are assets that generate income, such as dividends, interest, or rental income.
Earnings Announcement: An earnings announcement is a public statement made by a publicly traded company reporting its earnings for a particular period.
Earnings Call: An earnings call is a conference call in which a publicly traded company discusses its financial results for a particular reporting period with analysts and investors.
Earnings Estimate: An earnings estimate is a forecast of a company’s earnings for a particular period, typically made by financial analysts.
Earnings Multiplier: The earnings multiplier is a financial ratio that measures the market value of a company’s stock relative to its earnings per share.
Earnings Surprise: An earnings surprise occurs when a company’s actual earnings for a particular period are significantly different from the earnings that were expected by financial analysts.
Earnings Yield: The earnings yield is a financial ratio that measures a company’s earnings per share relative to its share price.
Easement in Gross: An easement in gross is a legal right granted to a person or entity to use another person’s property for a specific purpose, without the need for the property to be adjacent or next to the person’s own property.
Easement: An easement is a legal right granted to a person or entity to use another person’s property for a specific purpose.
Easy-to-Borrow List: An easy-to-borrow list is a list of securities that can be borrowed easily by traders or investors for short selling.
Eat Well, Sleep Well: Eat well, sleep well is a trading strategy that involves buying a stock at the end of the day and selling it at the beginning of the next trading day.
Eating Stock: Eating stock is a term used to describe a situation in which a trader or investor takes on a large position in a stock, which is difficult to liquidate quickly.
Effective Annual Interest Rate: The effective annual interest rate is the actual interest rate that is earned or paid on an investment or loan, taking into account the effect of compounding over time.
Effective Duration: Effective duration is a measure of the sensitivity of a bond’s price to changes in interest rates, taking into account the effect of changes in cash flows due to embedded options.
Effective Yield: The effective yield is the rate of return that is earned or paid on an investment, taking into account the effect of compounding over time.
Efficiency Ratio: A ratio used to evaluate a bank’s efficiency in managing its expenses relative to its revenue. It is calculated by dividing a bank’s operating expenses by its net revenue.
Efficient Frontier: The efficient frontier is a graphical representation of the optimal portfolio of investments that offers the highest return for a given level of risk.
Eighthed: Eighthed is a term used to describe security that has been divided into eight parts.
Either-Or Order: An either-or order is a type of order in which a customer requests to buy or sell a security at a specified price, but only if another order has been executed.
Elasticity – The degree to which a demand or supply of a product or service responds to changes in price.
Election Period: The election period is the period of time during which employees of a company can enroll in or change their benefits plan.
Electronic Communication Network (ECN): An ECN is a type of trading platform that uses electronic systems to automatically match buy and sell orders between market participants.
Electronic Funds Transfer (EFT): The transfer of funds between bank accounts using a computerized network, such as the Automated Clearing House (ACH).
Emergency fund – Money set aside for unexpected expenses or loss of income.
Emerging Markets Fund: An emerging markets fund is a mutual fund or exchange-traded fund (ETF) that invests in the stock markets of developing countries.
Eminent Domain: Eminent domain is the right of the government to take private property for public use, with compensation paid to the owner.
Encumbrance: An encumbrance is a claim or liability against a property, such as a mortgage or a lien.
Enterprise Zone: An enterprise zone is a designated area in which businesses are eligible for certain tax incentives and other benefits to promote economic development.
Equity Financing: Equity financing is a method of raising capital for a company by selling ownership shares in the company to investors.
Equity Fund: An equity fund is a mutual fund or exchange-traded fund (ETF) that invests primarily in a diversified portfolio of stocks.
Equity Income Fund: An equity income fund is a mutual fund or exchange-traded fund (ETF) that invests primarily in dividend-paying stocks.
Equity Linked Note (ELN): An equity-linked note is a type of structured investment product that is linked to the performance of an underlying equity index or stock.
Equity Multiplier: The equity multiplier is a financial ratio that measures the amount of a company’s assets that are financed by its equity.
Equity Risk Premium: The equity risk premium is the excess return that investors demand to hold stocks over risk-free assets.
Equity Underwriter: An equity underwriter is an investment bank or other financial institution that assists a company in raising equity capital by underwriting and distributing new securities.
Equity-Linked Securities (ELKS): Equity-linked securities are a type of structured investment product that is linked to the performance of an underlying equity index or stock.
Equity: Equity refers to the ownership interest in a company, property, or other asset.
Equity: The value of an asset after all liabilities have been subtracted. In the case of a company, equity refers to the value of the company’s assets minus its liabilities.
Equivalent Annual Cost (EAC): The equivalent annual cost is a financial calculation that helps to compare the costs of different investment projects or capital expenditures.
Equivalent Taxable Interest Rate: The equivalent Taxable Interest Rate is the interest rate that a tax-exempt investment would need to earn to provide the same after-tax return as a taxable investment.
Escrow Account: An escrow account is a special account that is typically used in real estate transactions, where money is held by a neutral third party until certain conditions are met.
Escrow Agreement: An escrow agreement is a legal document that outlines the terms and conditions of an escrow arrangement.
Escrow: Escrow refers to a financial arrangement in which a third party holds and regulates payment of the funds required for two parties involved in a transaction.
Euro Interbank Offered Rate (EURIBOR): EURIBOR is the average interest rate at which a large number of European banks from different countries lend money to one another.
Eurobank: A bank that operates primarily in Europe, often with a focus on international banking and finance.
Eurobond: A Eurobond is a bond that is issued on an international market, typically denominated in a currency other than the currency of the country where it is issued.
European Credit Research Institute (ECRI): The ECRI is a research institute that focuses on household finance and credit markets in Europe.
Ex-Dividend Date: Ex-dividend date is the date on which the seller of a stock is no longer entitled to the next dividend payment. In other words, if you buy a stock on or after the ex-dividend date, you will not receive the next dividend payment.
Excess Return: Excess return refers to the difference between the actual return on investment and the expected return.
Exchange-Traded Fund (ETF): An ETF is an investment fund that is traded on a stock exchange, similar to a stock.
Exchangeable Bonds: Exchangeable bonds are bonds that can be converted into shares of a different company.
Expectations Theory: The expectations theory is a theory of the term structure of interest rates that suggests that long-term interest rates are determined by the expectations of future short-term interest rates.
Expense Ratio: The expense ratio is the percentage of assets that are used to cover the operating expenses of a mutual fund or ETF.
Expenses – The money going out for all necessary and discretionary items.
Extended Trading: Extended trading is the period of time outside of regular market hours when trades can still be executed.
F
FAAMG Stocks: FAAMG is an acronym for Facebook, Amazon, Apple, Microsoft, and Google (now Alphabet), and refers to a group of high-performing technology stocks.
FANG Stocks: FANG is an acronym for Facebook, Amazon, Netflix, and Google (now Alphabet), and refers to a group of high-performing technology stocks.
FDIC Insured Account: A bank account that is insured by the Federal Deposit Insurance Corporation (FDIC), which provides insurance coverage for deposits up to a certain limit.
Face Value: Face value is the nominal value of a security, as stated on the security itself.
Fade: In finance, fade refers to a trading strategy where an investor seeks to profit by taking a contrarian view of the market, by selling securities that are in an upward trend and buying securities that are in a downward trend.
Fair Credit Billing Act – A federal law that regulates billing practices for credit card accounts to ensure fair and accurate billing.
Fair Value: Fair value is the estimated value of a company or asset, based on factors such as its earnings, assets, and market conditions.
Fallen Angel: A fallen angel is a bond that has been downgraded from investment grade (BBB- or higher) to below investment grade (BB+ or lower).
Falling Knife: The falling knife is a term used to describe a stock or other security that is in freefall, with no clear support levels to prevent it from declining further.
Fannie Mae (FNMA): Fannie Mae is a government-sponsored enterprise that serves to increase the flow of credit to the housing market.
Federal Deposit Insurance Corporation (FDIC): A U.S. government agency that provides insurance coverage for deposits in banks and other financial institutions.
Federal Home Loan Bank System (FHLB): A U.S. government-sponsored enterprise that provides funding for residential mortgage loans.
Federal Home Loan Mortgage Corporation (Freddie Mac): Freddie Mac is a government-sponsored enterprise that provides liquidity and stability to the U.S. housing market by purchasing and securitizing mortgages.
Federal Open Market Committee (FOMC): The FOMC is the monetary policymaking body of the Federal Reserve System, responsible for setting monetary policy in the United States.
Federal Reserve System (FRS): The central banking system of the United States, responsible for implementing monetary policy and regulating banks and financial institutions.
Federal Reserve: The central bank of the United States, responsible for implementing monetary policy, supervising and regulating banks, and ensuring the stability of the financial system.
Fill or Kill (FOK): Fill or kill is a type of trade order that is designed to either fill the entire order or cancel it immediately.
Final Maturity Date: Final maturity date is the date on which a debt or other financial instrument must be fully repaid.
Finance Charge – The cost of borrowing money, including interest and other fees, expressed as a percentage of the amount borrowed.
Financial Advisor: A financial advisor is a professional who provides financial advice and assistance to clients in areas such as investments, insurance, and retirement planning.
Financial Analyst: A financial analyst is a professional who analyzes financial data and helps clients make investment decisions.
Financial Market: A financial market is a market where financial instruments such as stocks, bonds, currencies, and commodities are bought and sold.
Financial Planner: A financial planner is a professional who helps clients develop a plan to achieve their financial goals, often covering areas such as retirement planning, investment strategy, and risk management.
Financial Risk Manager: A financial risk manager is a professional who manages financial risk by analyzing market trends and identifying potential risks.
Financial Times 100 Index (FTSE): The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange by market capitalization.
Firewall: A firewall is a software or hardware system that acts as a barrier between an internal network and an external network, allowing or denying traffic based on a set of defined rules.
First-Time Homebuyer: A first-time homebuyer is a person who is purchasing their first home.
Fiscal year – A 12-month accounting period used by governments and businesses for financial planning and reporting.
Fiscal year: An accounting period of twelve months that may or may not be the same as the calendar year.
Fixed Income Security: A fixed income security is a financial instrument that provides a fixed rate of return, such as bonds or debentures.
Fixed Income: Fixed income refers to a type of investment that provides a fixed return on investment, typically in the form of interest payments.
Fixed Rate Certificate of Deposit (CD): A certificate of deposit that pays a fixed rate of interest for a specified term.
Fixed Rate Certificate of Deposit (CD): A fixed-rate certificate of deposit is a type of savings account that pays a fixed interest rate for a specified term.
Fixed costs – Expenses that do not change regardless of the level of production or sales.
Fixed expenses – Expenses that stay the same from month to month, such as rent or mortgage payments.
Fixed-Rate Capital Securities: Fixed-rate capital securities are debt instruments that pay a fixed interest rate, typically for a set term.
Fixed-rate mortgage: A mortgage where the interest rate remains the same throughout the entire loan term.
Flat Yield Curve: A flat yield curve is a yield curve where the yields on bonds with different maturities are similar.
Float: Float refers to the number of shares of a company that is available for trading in the open market.
Floor Broker: A floor broker is a member of a stock exchange who executes orders on behalf of other traders who are on the exchange trading floor.
Follow-On Offering: A follow-on offering is a public offering of additional shares of stock by a company that has already gone public.
Fool’s Gold: Fool’s gold is a term used to describe investments or other opportunities that appear to be attractive, but are actually deceptive or likely to result in losses.
Forced Liquidation: Forced liquidation is the process of selling assets to satisfy a debt or other obligation.
Forecast – An estimate of future financial performance based on past performance and other relevant data.
Forecasting error – The difference between the forecasted amount and the actual amount.
Foreclosure: Foreclosure is the legal process by which a lender takes possession of a property due to the borrower’s failure to make mortgage payments.
Foreign transaction fee – a fee charged for using a credit card to make purchases in a foreign currency or when traveling abroad.
Forever Stock: A forever stock is a stock that is expected to be held in an investor’s portfolio indefinitely due to its stable earnings and potential for long-term growth.
Forward Dividend Yield: Forward dividend yield is the estimated dividend yield on a stock over the next year.
Forward Price-to-Earnings Ratio (Forward P/E): The forward price-to-earnings ratio is a method of valuing a company’s stock by dividing its current stock price by its estimated earnings per share over the next year.
Forward Pricing: Forward pricing is a method used by mutual funds to determine the price of transactions made after the close of the stock market on a particular day.
Forward Rate: A forward rate is an interest rate that is agreed upon today for a loan or investment that will occur in the future.
Forward Trading: Forward trading is a type of trading in which two parties agree to buy or sell an asset at a set price on a future date.
Free Asset Ratio (FAR): The free asset ratio is a measure of an insurance company’s ability to meet its obligations to policyholders.
Free Cash Flow per Share: Free cash flow per share is a measure of the amount of cash a company generates after accounting for capital expenditures and other cash outflows, divided by the number of outstanding shares of common stock.
Free Float: Free float is the portion of a company’s outstanding shares that are available for trading on the open market.
Front Running: Front running is the practice of trading on a security based on advanced knowledge of a large upcoming transaction that will affect the security’s price.
Front-End Load: A front-end load is a fee that is charged when an investor buys shares in a mutual fund or other investment product.
Frozen Account: An account that has been restricted by a bank or financial institution, often due to suspected fraud, illegal activity, or court order.
Full-Service Broker: A full-service broker is a broker that provides a wide range of investment services to clients, including research, advice, and trade execution.
Fully Vested: Fully vested refers to the point at which an individual’s right to a stock option or other benefit is guaranteed, regardless of whether the individual remains with the company or not.
Fund Manager: A fund manager is a person or entity responsible for managing a fund, and making investment decisions on behalf of the fund’s investors.
Fund: A fund is a pool of money that is set aside for a specific purpose, such as investing in securities, financing a project, or supporting a charitable cause.
Fundamental Analysis: Fundamental analysis is a method of analyzing securities that seek to evaluate a company’s financial health and performance by examining its financial statements, industry trends, and economic conditions.
Funds Settlement: Funds settlement is the process of transferring money from one account to another to complete a financial transaction.
Funds from Operations (FFO): Funds from operations is a financial metric used by companies in the real estate industry to measure their cash flow.
Funds from Operations Per Share (FFOPS): Funds from operations per share is a measure of a real estate investment trust’s (REIT) ability to generate cash flow from its operations per outstanding share of common stock.
Futures Commission Merchant (FCM): A futures commission merchant is a firm or individual that is authorized to buy and sell futures contracts on behalf of clients.
Futures Market: A futures market is a financial exchange where futures contracts are bought and sold.
Futures: A futures contract is a legal agreement to buy or sell a commodity or financial asset at a predetermined price at a specified time in the future.
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G7 Bond: A G7 bond is a bond issued by one of the seven countries that make up the Group of Seven (G7), which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
Gadfly: A gadfly is a person who persistently annoys or provokes others with criticism, inquiries, or demands for change.
Gain: Gain is the increase in value or profit that is realized from an investment or business activity.
Gambler’s Fallacy: The gambler’s fallacy is the mistaken belief that the results of a random event, such as the flip of a coin, will “even out” over time, leading a person to believe that if a particular outcome has not occurred recently, it is more likely to occur in the future.
General Obligation Bond: A general obligation bond is a type of municipal bond that is backed by the full faith and credit of the issuing government entity, and is typically used to finance public infrastructure projects.
Gilts: Gilts are bonds issued by the British government, considered to be one of the safest types of bonds available.
Ginnie Mae (GNMA): Ginnie Mae (Government National Mortgage Association) is a U.S. government agency that guarantees mortgage-backed securities (MBS) issued by approved lenders.
Glass-Steagall Act: The Glass-Steagall Act was a U.S. law passed in 1933 that established a separation between investment banking and commercial banking.
Go-Shop Period: A go-shop period is a period of time in a merger or acquisition when the target company is allowed to solicit alternative offers from other potential buyers.
Going Private: In finance, “going private” refers to the process of a publicly traded company becoming a privately held company, often through a leveraged buyout or stock buyback.
Going Public: In finance, “going public” refers to the process of a privately held company becoming a publicly traded company through an initial public offering (IPO).
Gold BUGS Index (HUI): The Gold BUGS Index (HUI) is a basket of publicly traded gold mining companies that is used as a benchmark for the performance of the gold mining sector.
Gold Bug: A gold bug is an investor or collector who is bullish on gold and believes that it is a safe haven asset that can protect against inflation, currency devaluation, and economic uncertainty.
Gold Bull: A gold bull is an investor or market participant who is bullish on gold and expects its price to increase.
Gold Certificate: A gold certificate is a form of paper currency that was issued by the United States government from 1863 to 1933, representing a specific amount of gold held in reserve.
Gold Fix: The Gold Fix was a daily conference call held by a group of banks to set the price of gold, based on supply and demand factors.
Gold Fund: A gold fund is a type of mutual fund or exchange-traded fund (ETF) that invests in gold or gold-related assets.
Gold Option: A gold option is a financial contract that gives the holder the right, but not the obligation, to buy or sell a specific amount of gold at a specified price on or before a specified date.
Gold Reserve Act of 1934: The Gold Reserve Act of 1934 was a law that nationalized gold and made it illegal for private citizens to own gold, except for limited amounts of gold coinage.
Gold-Silver Ratio: The gold-silver ratio is a measure of how many ounces of silver it takes to buy one ounce of gold, used as an indicator of the relative values of the two metals.
Goldbrick Shares: Goldbrick shares are stocks or securities that are fraudulently represented as legitimate investments but provide little to no actual value.
Golden Cross: The golden cross is a bullish technical analysis pattern that occurs when a shorter-term moving average (such as the 50-day moving average) crosses above a longer-term moving average (such as the 200-day moving average).
Good Delivery: Good Delivery is a standard set by the London Bullion Market Association (LBMA) for the quality and purity of gold and silver bars traded on the London market.
Good Faith Estimate: A good faith estimate is an estimate provided by a lender to a borrower that outlines the anticipated costs associated with a mortgage or other loan.
Good Faith Estimate: Refers to a written estimate of the fees and costs associated with obtaining a mortgage or other loan, provided by the lender to the borrower.
Good Faith Money: Refers to a deposit or earnest money provided by a buyer as a sign of good faith in a real estate transaction.
Good This Month: Refers to an order to buy or sell securities that are only valid for the current month.
Good This Week: Refers to an order to buy or sell securities that are only valid for the current week.
Good Through: Refers to an order to buy or sell securities that are valid until a specified date or until it is filled.
The goodness of Fit: Refers to a statistical measure of how well a model or set of data fits a given set of observations.
Goodwill Impairment: Refers to a reduction in the value of a company’s goodwill on its balance sheet, typically due to a decline in the company’s financial performance or market conditions.
Goodwill-to-Assets Ratio: Refers to a financial ratio that measures the percentage of a company’s total assets that are represented by its goodwill.
Gordon Growth Model: Refers to a method for valuing stocks that use a company’s current earnings and expected growth rate to estimate its future earnings and stock price.
Government Bond: Refers to a debt security issued by a government entity, typically with a fixed interest rate and a maturity date.
Grace period – A period of time that is granted after the statement’s due date, during which no interest is charged on new purchases.
Grace period – the amount of time a cardholder can pay their balance in full before interest is charged.
Graduated Vesting: Refers to a vesting schedule for stock options or other equity awards that gradually increases the percentage of shares or options that become exercisable over time.
Grant: Refers to a financial award or gift provided by an organization or individual to another person, typically for a specific purpose.
Grantee: Refers to the person or entity that receives a grant or other financial award.
Grantor: Refers to the person or entity that provides a grant or other financial award.
Gray Market: Refers to the sale of goods through unauthorized, unofficial, or unlicensed channels, often involving goods that are not available through official distributors or retailers.
Great Depression: Refers to a severe economic downturn that lasted from 1929 to 1939 and had widespread impacts on global economies.
H
Hard Skills: Specific skills or abilities that can be measured and taught, such as programming, accounting, or project management.
Harmonic Mean: A calculation used in finance to determine the average of values that vary over time, such as a stock’s price or a company’s earnings.
Head And Shoulders Pattern: A technical analysis chart pattern that can indicate a reversal in a stock’s price trend.
Health Maintenance Organizations (HMOs): A type of healthcare insurance plan that typically requires members to choose a primary care physician and limits coverage to in-network providers.
Health Savings Account (HSA): A tax-advantaged savings account that can be used to pay for qualified medical expenses.
Hedge 1: A strategy used to offset or minimize risk, typically by using financial instruments such as options, futures, or short positions.
Hedge Fund: A type of investment fund that uses a variety of strategies, often including hedging, to generate returns for investors.
Herfindahl-Hirschman Index (HHI): A measure of market concentration used in antitrust analysis, calculated by summing the squared market shares of all firms in a market.
Heteroskedasticity: A statistical term that refers to the tendency of the variance of a variable to change as its value changes.
High-Low Method: A simplified method of estimating fixed and variable costs by using the high and low points of a range of activity.
High-Net-Worth Individual (HNWI): A person with a net worth of at least $1 million, typically excluding their primary residence.
Hold Harmless Clause: A provision in a contract that relieves one party of liability for certain actions or events.
Holding Company: A company that owns a controlling interest in one or more other companies, typically for the purpose of managing its investments.
Home Equity Loan: A loan that allows homeowners to borrow against the equity in their homes, typically for a fixed interest rate and set repayment timeline.
Homeowners Association (HOA): An organization that manages and enforces rules for a community or development of homes.
Homeowners Association Fee (HOA Fee): A fee paid by homeowners in a community or development for the maintenance and management of shared amenities and areas.
Homestead Exemption: A legal provision that allows homeowners to exempt a portion of their home’s value from property taxes.
Horizontal Integration: A business strategy in which a company acquires or merges with another company in the same industry or market, often to gain a larger market share or increase efficiency.
Hostile Takeover: An attempt by one company to take control of another company without the approval or cooperation of the target company’s management or board of directors.
Housing Bubble: A period of rapid increases in housing prices, often fueled by speculation or easy access to credit, which can lead to a market crash and financial instability.
Human Capital: The knowledge, skills, and abilities that a person possesses, often considered an asset that can generate economic value for that person or company.
Hurdle Rate: The minimum rate of return that an investment must generate in order for it to be considered viable or profitable.
Hyperinflation: A period of extremely rapid inflation, typically characterized by a significant increase in the general price level of goods and services over a short period of time.
Hypothesis Testing: A statistical process used to determine the likelihood that a hypothesis or proposition is true, often by comparing it to a null hypothesis or using a significance test.
I
Income: Money earned from employment, investments, or other sources.
Income Statement: A financial statement that shows a company’s revenue, expenses, and profit or loss over a specific period of time.
Indemnity: Compensation for damages or losses suffered.
Indemnity Insurance: Insurance that pays for damages or losses suffered by the policyholder, often used in professional liability or malpractice cases.
Index Fund: A type of mutual fund or exchange-traded fund (ETF) that tracks a broad market index, such as the S&P 500, and aims to match its performance.
Individual Retirement Account (IRA): A tax-advantaged retirement savings account for individual investors, typically offered by banks, brokerages, and other financial institutions.
Industrial Revolution: A period of significant technological and economic development in the 18th and 19th centuries, characterized by the widespread use of machinery and the growth of manufacturing industries.
Inferior Good: A type of product or service for which demand decreases as income increases, often associated with lower-quality or less desirable items.
Inflation: The rate at which the general price level of goods and services in an economy is increasing over time, often measured by the Consumer Price Index (CPI) or other indices.
Initial Public Offerings (IPOs): The first sale of stock in a company to the public, often used as a means of raising capital and generating liquidity for early investors.
Insider Trading: The illegal practice of using non-public information to buy or sell stocks or other securities, often associated with corporate insiders or other individuals with access to confidential information.
Insurance: A financial product that provides protection against specific risks or losses, typically by paying out a predetermined amount of money in the event of a covered loss.
Insurance Premium: The amount paid by the policyholder for an insurance policy, often based on the level of risk and the potential payout for the insurer.
Interest Coverage Ratio: A financial ratio that measures a company’s ability to pay interest expenses on its outstanding debt, often calculated as earnings before interest and taxes (EBIT) divided by interest expense.
Interest Rate: The amount charged by a lender for borrowing money, usually expressed as a percentage of the loan amount.
Internal Rate of Return (IRR): A financial calculation used to estimate the potential profitability of an investment, often used to compare multiple investment options or determine whether an investment is viable.
Internal Revenue Service (IRS): The federal agency responsible for collecting taxes and enforcing tax laws in the United States. The IRS is responsible for processing and reviewing tax returns, conducting audits, and collecting taxes owed to the government.
International Financial Reporting Standards (IFRS): A set of accounting standards established by the International Accounting Standards Board (IASB) that are used by many countries around the world 1. These standards provide guidelines for financial reporting by companies and aim to promote transparency and comparability in financial statements.
International Monetary Fund (IMF): An international organization that promotes global financial stability and monetary cooperation. The IMF provides loans and technical assistance to countries experiencing financial difficulties and works to establish policies that promote economic growth and stability.
Interpersonal Skills: The ability to communicate effectively with others and build strong relationships. In a financial context, strong interpersonal skills are important for financial advisors, bankers, and other professionals who work closely with clients and customers.
Inventory Turnover: A financial ratio that measures the number of times a company’s inventory is sold and replaced over a specific period of time. This ratio can be used to measure a company’s efficiency in managing its inventory and its ability to generate sales.
Inverted Yield Curve: A financial phenomenon in which short-term interest rates are higher than long-term interest rates. This is typically seen as a sign of economic weakness or impending recession, as investors demand higher yields for short-term investments in order to compensate for increased risk.
Invisible Hand: A term coined by economist Adam Smith to describe the self-regulating nature of free markets. The invisible hand refers to the idea that the individual actions of buyers and sellers in a market will naturally lead to an efficient allocation of resources and the best outcome for society as a whole.
Irrevocable Trust: A type of trust in which the terms and conditions cannot be changed once the trust is established. This type of trust is commonly used for estate planning purposes, as it can be used to transfer assets to beneficiaries without the need for probate and can also provide tax benefits.
J
J-Curve: A financial phenomenon in which an initial decline in a country’s trade balance is followed by a later improvement. This is typically seen in countries that are undergoing economic reforms or engaging in trade liberalization.
January Effect: A theory that suggests that stock prices tend to rise in the month of January, often due to a combination of year-end tax planning and investor optimism.
Japanese Government Bond (JGB): A type of government bond issued by the Japanese government. JGBs are considered to be some of the safest bonds in the world and are often used as a benchmark for other types of bonds.
Jensen’s Measure: A financial performance metric developed by economist Michael Jensen that measures the return a portfolio generates in excess of its expected return, based on the level of risk associated with the portfolio.
Job Market: The overall demand for labor in an economy, as well as the supply of available workers. The job market can have a significant impact on individual wages, unemployment rates, and overall economic growth.
John Maynard Keynes: A British economist who is widely regarded as one of the most influential economists of the 20th century. Keynes is best known for his theories on macroeconomics and his advocacy for government intervention to stimulate economic growth during times of recession.
Joint and Several Liability: A legal principle that holds multiple individuals or entities responsible for a single debt or obligation. Each individual or entity is liable for the entire amount, which means that creditors can pursue payment from any or all of them.
Joint Probability: A statistical concept that measures the likelihood of two or more events occurring together. Joint probability is often used in financial modeling to assess the probability of different scenarios occurring at the same time.
Joint-Stock Company: A type of company that issues shares of stock to its owners. This structure allows investors to own a portion of the company and share in its profits and losses, while also limiting their liability to the amount of their investment.
Joint Tenancy: A type of property ownership in which multiple individuals own an equal share of the property. Upon the death of one owner, their share is passed on to the surviving owners.
Joint Venture (JV): A business arrangement in which two or more parties agree to work together on a specific project or for a specific period of time. Joint ventures can be beneficial for sharing risks and resources, as well as accessing new markets.
Jones Act: The Jones Act, also known as the Merchant Marine Act of 1920 1, is a federal law that regulates maritime commerce in the United States. The Jones Act requires that goods shipped between U.S. ports be transported by ships that are built in the U.S., crewed by U.S. citizens, and owned by U.S. companies.
Joseph Schumpeter: Joseph Schumpeter was an Austrian economist who is best known for his contributions to the study of business cycles and technological innovation. Schumpeter’s theory of creative destruction posits that market economies are constantly being disrupted by new innovations, which destroy old industries and create new ones.
Journal: A personal finance journal is a record of one’s income, expenses, and financial goals. Keeping a journal can be a useful tool for tracking spending, identifying areas where money can be saved, and monitoring progress towards financial goals.
Joint Tenants With Right of Survivorship (JTWROS): JTWROS is a form of joint ownership of property in which each owner has an equal share and the right of survivorship. This means that if one owner dies, their share of the property automatically passes to the surviving owner(s) without the need for probate.
JPY (Japanese Yen): The JPY is the currency of Japan. It is one of the most heavily traded currencies in the world and is considered a major currency in the foreign exchange market.
Jumbo CD: A jumbo CD is a type of certificate of deposit that requires a larger minimum deposit than a traditional CD. Jumbo CDs typically offer higher interest rates than traditional CDs, but may also have longer terms.
Jumbo Loan: A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. Jumbo loans typically have higher interest rates and stricter qualification requirements than conforming loans.
Junk Bond: A junk bond is a type of bond that is considered to be high-risk and has a low credit rating. Junk bonds typically offer higher interest rates than investment-grade bonds, but also carry a higher risk of default.
Juris Doctor (JD): The JD is a professional degree in law that is required to practice law in the United States. The JD typically requires three years of full-time study and covers topics such as contracts, torts, and constitutional law.
Jurisdiction Risk: Jurisdiction risk refers to the risks that can arise when operating in a foreign country or jurisdiction. These risks can include legal and regulatory risks, financial risks, and political risks, among others.
Just In Case (JIC): Just In Case refers to saving money or making preparations for unexpected expenses or financial emergencies. Examples might include keeping some savings in an emergency fund or purchasing insurance to protect against unexpected events.
Just In Time (JIT): Just In Time refers to a strategy of managing inventory or production in which goods are produced or delivered only when they are needed. The goal of JIT is to reduce costs and improve efficiency by minimizing waste and excess inventory.
K
Kaizen: Kaizen is a Japanese term that refers to continuous improvement. In the context of business, it typically involves making small, incremental improvements to processes in order to increase efficiency and reduce waste.
Karl Marx: Karl Marx was a German philosopher and economist who is best known for his criticism of capitalism and development of Marxist theory. His works include The Communist Manifesto and Das Kapital.
Keltner Channel: The Keltner Channel is a technical analysis indicator that is used to identify market trends and potential trading opportunities. It consists of an upper and lower band that are based on the average true range of the price of an asset.
Keogh Plan: A Keogh plan is a type of retirement savings plan for self-employed individuals or small businesses. Keogh plans can have higher contribution limits than other types of retirement plans, but may also have more complex rules and regulations.
Key Performance Indicators (KPI): KPIs are metrics used to measure the success or performance of an organization or specific business objectives. Examples of KPIs might include revenue growth, customer satisfaction, or employee turnover.
Key Person Insurance: Key person insurance is a type of life insurance that is designed to protect a business in the event that a key employee or business owner dies or becomes unable to work. The proceeds of the insurance policy are typically used to cover lost income or other costs associated with replacing the key person.
Key Rate Duration: Key rate duration is a measure of the sensitivity of a bond or other fixed-income security to changes in interest rates. It is calculated by examining the impact of a change in interest rates on the security at specific key points along the yield curve.
Keynesian Economics: Keynesian economics is an economic theory that emphasizes the role of government intervention in managing economic activity. It is based on the ideas of British economist John Maynard Keynes and suggests that government spending and intervention can help to stabilize the economy during times of recession.
Kickback: A kickback is a form of bribery in which a person or company offers money or other incentives in exchange for favorable treatment or business opportunities. Kickbacks are illegal in many jurisdictions.
Kiddie Tax: The kiddie tax is a tax on unearned income (such as investment income) of children under the age of 18. The purpose of the tax is to prevent parents from shifting income to their children in order to take advantage of lower tax rates.
Kids In Parents’ Pockets Eroding Retirement Savings (KIPPERS): KIPPERS refers to adult children who continue to depend financially on their parents and may impact their parents’ ability to save for retirement.
Kiosk 1: A kiosk is a small, standalone booth or retail location that is typically used for selling goods or providing services, often in a high-traffic area such as a shopping mall or airport.
Kiting: Kiting is a form of check fraud in which a person writes a check from one account, deposits it in another account, and withdraws funds before the check clears.
Klinger Oscillator: The Klinger Oscillator is a technical analysis indicator that is used to measure volume and determine the strength of a trend in the price of an asset.
Knock-In Option: A knock-in option is a type of option that becomes active (or “knocks in”) when the price of an underlying asset reaches a predetermined level.
Knock-Out Option: A knock-out option is a type of option that becomes inactive (or “knocks out”) when the price of an underlying asset reaches a predetermined level.
Know Sure Thing (KST): The KST is a technical analysis indicator that is used to identify emerging market trends and potential trading opportunities.
Know Your Client (KYC): KYC is a regulatory requirement in the finance industry that requires businesses to verify the identity of their clients and assess potential money laundering or terrorism financing risks.
Knowledge Economy: The knowledge economy refers to an economy that is based on knowledge and technology, rather than traditional manufacturing or resource extraction industries.
Knowledge Process Outsourcing (KPO): KPO is a type of outsourcing arrangement in which a company contracts with another company for specialized knowledge-based services, such as market research or data analysis.
Korean Composite Stock Price Indexes (KOSPI): The KOSPI is a stock market index that is based on the stock prices of companies listed on the Korea Exchange.
Kurtosis: Kurtosis is a statistical measure that is used to describe the shape of a probability distribution. It measures the “peakedness” or “flatness” of the distribution relative to the normal distribution.
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Laissez-Faire: An economic theory advocating minimal governmental intervention in economic affairs.
Law of Demand: A principle stating that the quantity of a good or service demanded varies inversely with its price.
Law of Supply: A principle stating that the quantity of a good or service supplied varies directly with its price.
Law of Supply and Demand: A principle stating that the market price of a good or service is determined by the interaction of supply and demand in a competitive market.
Leadership: The ability to inspire and influence others towards a common goal or vision.
Letter of Intent (LOI): A preliminary written agreement that outlines the terms and conditions of a proposed transaction or deal.
Letters of Credit: Financial instruments used by businesses to facilitate trade by providing credit support for transactions.
Leverage: The use of borrowed money to invest or purchase assets, in order to amplify potential gains or losses.
Leverage Ratio: A measure of a company’s debt relative to its equity, used to evaluate its financial risk.
Leveraged Buyout (LBO): A financial transaction in which a company is acquired using a significant amount of debt, often to take it private.
Liability: An obligation to pay money, provide goods or services, or satisfy other debts or obligations.
Liability Insurance: An insurance policy that protects against claims of liability or negligence, typically purchased by individuals or businesses.
Limit Order: An order to buy or sell a security at a specified price or better.
Limited Government: A form of government characterized by restricted powers, protection of individual liberties, and the rule of law.
Limited Liability Company (LLC): A type of business entity that provides liability protection for its owners while allowing for flexible management.
Limited Partnership (LP): A type of partnership that includes both general partners (with unlimited liability) and limited partners (with liability limited to their investment).
Line of Credit (LOC): An agreed-upon amount of credit that a lender makes available to a borrower, typically used for short-term financing needs.
Liquidation: The process of selling off assets to pay debts, typically in the context of a business or investment.
Liquidity: The ease with which an asset can be converted into cash without losing its value.
Liquidity Coverage Ratio (LCR): A measure of a bank’s ability to meet short-term financial obligations in a hypothetical crisis scenario.
Liquidity Ratio: A measure of a company’s ability to meet its short-term financial obligations using its available liquid assets.
Loan-To-Value Ratio (LTV): A ratio used by lenders to assess the risk of a loan, calculated by dividing the loan amount by the appraised value of the asset being purchased.
London Inter-Bank Offered Rate (LIBOR): A benchmark interest rate that measures the cost of borrowing in the interbank market for short-term loans.
Ltd. (Limited): A suffix used in the name of a business entity to indicate that its liability is limited to the assets of the company, and the personal assets of its owners are not at risk.
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Macroeconomics: The study of the economy as a whole, including topics such as inflation, unemployment, economic growth, and monetary policy.
Magna Cum Laude: A Latin term meaning “with great honor,” typically used to denote high academic achievement.
Management by Objectives (MBO): A goal-setting framework that involves aligning individual or team goals with organizational objectives.
Margin: The difference between the cost of a product or investment and its selling price, used to calculate profit margins or margin calls for leveraged investments.
Margin Call: A demand by a lender that an investor deposit additional funds into their account to cover losses when the value of the investment falls below a certain level.
Market Share: The percentage of total sales or revenue within a particular industry or market that is earned by a particular company or product.
Marketing: The process of promoting and selling products or services, including activities such as market research, advertising, branding, and sales.
Marketing Strategy: A plan for achieving marketing goals, typically involving market research, target audience identification, and tactical implementation.
Master Limited Partnership (MLP): A type of business entity that combines the tax benefits of a partnership with the liquidity of publicly traded securities.
Memorandum of Understanding (MOU): A written agreement that outlines the terms and conditions of a proposed transaction or deal, often used as a preliminary document before a more detailed contract is drafted.
Mercantilism: An economic theory that advocates government intervention in trade to accumulate wealth and strengthen national power.
Mergers and Acquisitions (M&A): The process of combining two or more companies through a variety of financial and legal transactions.
Milton Friedman: An American economist who advocated for free market principles and was a proponent of monetarism, which emphasizes the role of money in the economy.
Mixed Economic System: An economic system that combines elements of command and market economies, often with government intervention in certain aspects of the economy.
Monetary Policy: The use of government policy to control the supply and demand of money and credit in the economy in order to achieve economic goals such as price stability, full employment, and economic growth.
Money Laundering: The process of disguising the proceeds of illegal or illegitimate activity as legitimate funds, often through a series of financial transactions.
Monopolistic Competition: A market structure in which there are many producers selling similar but not identical products, leading to competition based on product differentiation and marketing.
Monte Carlo Simulation: A computational technique used to model and generate possible outcomes for complex systems or processes, often used in financial planning and risk assessment.
Moore’s Law: A prediction made by Intel co-founder Gordon Moore in 1965 that the number of transistors on a microchip would double approximately every two years, leading to exponential increases in computing power and cost reductions.
Moving Average Convergence Divergence (MACD): A technical analysis tool used to identify changes in the momentum of an asset’s price between short-term and long-term moving averages.
Multilevel Marketing: A marketing strategy that involves recruiting and compensating sales representatives for their own sales as well as sales made by the representatives they recruit, creating a hierarchical structure of salespeople.
Mutual Fund: An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other assets.
Mutually Exclusive: A term used to describe events or choices that cannot occur at the same time, often used in financial decision-making to compare options and calculate probabilities.
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Nasdaq: A global electronic marketplace for buying and selling securities, particularly for technology and growth-oriented companies.
Nash Equilibrium: A concept in game theory where multiple participants make choices that are optimal for them individually, but if any one participant changes their choice, it would not improve their outcome.
Negative Correlation: A statistical relationship between two variables in which an increase in one variable is associated with a decrease in the other variable.
Neoliberalism: A political and economic philosophy that advocates for free markets, privatization of industry and services, deregulation of business, and reduction in government intervention in the economy.
Net Asset Value (NAV): A financial metric used to evaluate and price mutual funds, exchange-traded funds (ETFs), and other investment vehicles, calculated by subtracting the fund’s liabilities from its assets and dividing by the number of shares outstanding.
Net Income (NI): A company’s total earnings after all expenses, taxes, and other deductions have been made.
Net Operating Income (NOI): A financial measure used in real estate investing to calculate the amount of income generated by a property after operating expenses have been deducted.
Net Present Value (NPV): A financial metric used to evaluate the profitability of an investment by calculating the sum of the present value of future cash flows, discounted to reflect the time value of money, minus the initial investment.
Net Profit Margin: A financial metric used to measure a company’s profitability by calculating the proportion of revenue earned that represents profit after all expenses have been deducted.
Net Worth: A measure of an individual’s financial health and resources, calculated by subtracting liabilities from assets.
Netting: A financial process of matching and offsetting transactions or obligations between two parties, reducing the overall amount of debt or risk involved.
Network Marketing: A sales strategy that relies on a network of distributors to sell products or services, with each distributor receiving a commission on sales made by themselves and those they recruit.
Networking: The process of establishing and maintaining personal and professional relationships in order to enhance one’s career prospects, gain access to opportunities, and exchange information.
New York Stock Exchange (NYSE): The largest stock exchange in the world by market capitalization, located in New York City and home to many of the world’s largest publicly traded companies.
Next of Kin: The person or people who are closest in relation to an individual, typically used in legal and medical contexts to designate who should be notified in the event of an emergency or death.
NINJA Loan: A type of mortgage loan that stands for “no income, no job, no assets,” indicating that no documentation of income, employment, or assets is required to qualify for the loan.
Nominal: A financial term used to describe a value that has not been adjusted for inflation or other factors, often used in contrast to real or inflation-adjusted values.
Non-Disclosure Agreement (NDA): A legal contract between two or more parties that outlines confidential or proprietary information that the parties agree not to disclose to others without permission.
Normal Distribution: A common statistical distribution that follows a bell-shaped curve, with the majority of data clustered around the mean and progressively fewer data points as you move away from the mean in either direction.
North American Free Trade Agreement (NAFTA): A trade agreement between the United States, Canada, and Mexico that eliminated many tariffs and trade barriers between the three countries, in effect from 1994-2020.
Not for Profit: An organization or entity that operates for purposes other than making a profit, typically in the areas of education, religion, health care, philanthropy, or social services.
Notional Value: The nominal, or face, amount of a financial instrument or contract, such as a bond or derivatives contract, which is used to calculate payments and fees.
Novation: A legal process in which one party transfers its rights and obligations under a contract to another party, who assumes those rights and responsibilities as if they had originally entered into the contract.
Null Hypothesis: A statistical hypothesis that assumes there is no significant difference between the observed data and what would be expected by chance or random variation.
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Offset: A financial arrangement where two accounts are linked so that money in one account can be used to offset money owed in the other account. For example, in the UK, if you have a mortgage and a savings account with the same bank, the interest earned on your savings account can be used to offset the interest charged on your mortgage.
Old Age, Survivors, and Disability Insurance (OASDI): A US federal program that provides financial assistance to retired, disabled, or widowed individuals and their families. Also commonly referred to as Social Security.
Oligopoly: A market structure in which a small number of large firms dominate a market, often resulting in limited competition and pricing power.
Onerous Contract: A contract that places a significant burden or obligation on one or more parties, often to the point of being unfairly burdensome or oppressive.
Online Banking: A service offered by banks and financial institutions that allows customers to manage their accounts, transfer money, pay bills, and access other financial services through the internet or mobile apps.
Open Market Operations: A monetary policy tool used by central banks to influence interest rates by buying or selling government securities in the open market.
Operating Income: A company’s income from its regular business operations, before deductions for taxes and interest on debt.
Operating Leverage: A measure of a company’s fixed operating costs relative to its variable costs, used to evaluate how changes in volume or sales can impact a company’s profits.
Operating Margin: A financial ratio that measures a company’s operating income as a percentage of its revenue, often used to evaluate a company’s profitability.
Operations Management: The design, execution, and control of business operations, including production, inventory management, logistics, and supply chain management.
Opportunity Cost: The cost of forgoing an opportunity in order to pursue another option, often used in financial decision-making to evaluate the potential gains and losses of different choices.
Option: A financial contract that gives the holder the right, but not the obligation, to buy or sell an asset at a certain price and time.
Organization of the Petroleum Exporting Countries (OPEC): A global organization of 13 oil-producing countries that coordinates policies and decisions related to oil production and pricing.
Organizational Behavior (OB): The study of how individuals, groups, and organizations behave and interact within the context of work and business.
Original Equipment Manufacturer (OEM): A company that produces parts or products that are used in other company’s products, often sold under the other company’s brand name.
Original Issue Discount (OID): The difference between the face value of a debt instrument (e.g. a bond) and the price at which it was originally issued, often resulting in a discounted interest rate for the buyer.
Out Of The Money (OTM): A term used in options trading to describe an option that has no intrinsic value because its strike price is unfavorable compared to the current market price of the underlying asset.
Outsourcing: The practice of hiring outside companies or individuals to perform tasks or services that are typically done in-house, often to reduce costs or increase efficiency.
Over-The-Counter (OTC): A market for financial instruments, such as stocks and bonds, that are not traded on a formal exchange but instead sold directly between buyers and sellers.
Over-The-Counter Market: The market for financial instruments that are traded over the counter (OTC), which is outside of organized exchanges such as the NYSE or NASDAQ.
Overdraft: A banking service that allows an account holder to withdraw more money than is available in their account, resulting in a negative balance and often accompanied by fees and interest charges.
Overhead: The expenses incurred by a business that are not directly related to producing products or services, such as rent, utilities, and salaries for administrative staff.
Overnight Index Swap: A type of interest rate swap in which one party pays a fixed interest rate while the other pays a floating interest rate based on an overnight index, such as the Federal Funds Rate.
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P-Value: A statistical measure that helps determine the significance of results in a study or experiment, often used in hypothesis testing.
Partnership: A business structure in which two or more individuals own and operate the business together, sharing profits and losses.
Penny Stocks Trade: A type of stock that is valued at less than $5 per share, often associated with high risk and volatility.
Per Capita GDP: The total gross domestic product (GDP) of a country divided by its population, used as a measure of a country’s economic productivity and standard of living.
Perfect Competition: A market structure in which there are many buyers and sellers of a similar product or service, resulting in little to no control over pricing or market share for any one individual actor.
Personal Finance: The management of one’s personal financial resources, including income, expenses, savings, investments, and financial planning.
Phillips Curve: A graphical representation of the inverse relationship between unemployment and inflation, suggesting that as unemployment decreases, inflation increases.
Ponzi Schemes: Definition, Examples, and Origins: A fraudulent investment scheme in which returns are paid to earlier investors using funds from newer investors, rather than from actual profits or earnings.
Porter’s 5 Forces: A framework used to analyze and evaluate the competitive forces within an industry, including the bargaining power of suppliers, threat of new entrants, rivalry among existing competitors, bargaining power of buyers, and threat of substitute products or services.
Positive Correlation: A relationship between two variables in which they move in the same direction, meaning that as one variable increases, the other also tends to increase.
Pre-Market: The period of time before the official opening of a stock market, during which certain trading activities may take place.
Preference Shares: A type of stock that typically pays a fixed dividend and has priority over common shares in the distribution of assets in the event of a company bankruptcy.
Preferred Stock: Another term for preference shares.
Present Value: The current value of a future cash flow or stream of cash flows, taking into account the time value of money and potential interest or inflation rates.
Price-to-Earnings Ratio (P/E Ratio): A financial ratio used to evaluate the relative value of a company’s stock by comparing its current market price to its earnings per share (EPS).
PEG Ratio: A financial ratio used to evaluate a company’s stock by comparing its P/E ratio to its earnings growth rate, helping to determine whether the company is overvalued or undervalued.
Pro Rata: A Latin term meaning “in proportion,” often used to describe the proportional allocation of investment returns or liabilities among multiple parties based on their respective ownership or investment amounts.
Producer Price Index (PPI): A measure of the average change in prices received by domestic producers for their goods and services over time, often used as an indicator of inflationary pressures in the economy.
Profit: The amount of earnings or income that remains after deducting all expenses and taxes, often used as a measure of a company’s financial performance or an individual’s income.
Profit and Loss Statement (P&L): A financial statement that summarizes a company’s revenues, expenses, and net income or loss over a specific period of time, often used to assess the financial health of a business.
Promissory Note: A written promise to pay a certain amount of money, often including details such as payment terms, interest rates, and collateral requirements.
Prospectus: A legal document that provides information about a company’s securities offering, including details about the company’s business, financials, risks, and intended use of proceeds.
Public Limited Company (PLC): A type of business structure in which shares are publicly traded and investors can buy and sell the company’s stock on a stock exchange or other public market.
Put Option: A financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a specified price within a certain period of time.
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Q Ratio (Tobin’s Q): A financial ratio that measures the market value of a company’s assets relative to their replacement cost, often used as an indicator of whether a company’s stock is overvalued or undervalued.
Quadruple Witching: A day on which stock index futures, stock index options, stock options, and single stock futures all expire, which can lead to increased market volatility and trading volumes.
Qualified Dividend: A type of dividend paid to shareholders that meets certain IRS requirements for long-term capital gains tax rates.
Qualified Institutional Buyer (QIB): An institutional investor who meets certain SEC qualifications for investing in securities offerings that are otherwise not available to the general public.
Qualified Institutional Placement (QIP): A type of private placement in which securities are sold only to qualified institutional buyers, often used as a way for companies to raise funds quickly and efficiently.
Qualified Longevity Annuity Contract (QLAC): A type of annuity contract that allows individuals to defer tax payments on a portion of their retirement income until a later date, often used as a way to supplement retirement savings and manage tax obligations.
Qualified Opinion: An auditor’s report that contains reservations or limitations on the company’s financial statements, often used as a warning to investors that there may be potential issues or risks related to the company’s financial performance.
Qualified Retirement Plan: A type of employer-sponsored retirement plan that meets certain IRS requirements for tax benefits and participant eligibility.
Qualified Terminable Interest Property (QTIP) Trust 3: A type of trust that allows individuals to transfer assets to their surviving spouse while maintaining control over how those assets will be distributed after the spouse’s death, often used as a way to manage estate taxes and provide for future generations.
Qualitative Analysis: A research method that uses subjective data such as interviews, surveys, and observations to gain insights into a particular topic or phenomenon.
Quality Control: A process of ensuring that products or services meet certain standards and specifications, often used to prevent defects, minimize waste, and improve customer satisfaction.
Quality of Earnings: A measure of the perceived sustainability and reliability of a company’s earnings, often used as an indicator of the company’s financial health.
Quality Management: A set of principles and practices focused on continuous improvement and customer satisfaction, often used to increase efficiency, reduce costs, and improve overall business performance.
Quantitative Analysis (QA): A research method that uses numerical data and statistical analysis to gain insights into a particular topic or phenomenon.
Quantitative Easing: A monetary policy tool used by central banks to increase the money supply by purchasing government bonds or other securities, often used to stimulate economic growth and prevent deflation.
Quantitative Trading: A technique used by investors and traders that employs mathematical and computational algorithms to identify and capitalize on market inefficiencies or trends.
Quantity Demanded: The amount of a good or service that consumers are willing and able to buy at a specific price point, often used to understand consumer behavior and market demand.
Quarter (Q1, Q2, Q3, Q4): A period of three months used to divide the fiscal year or financial reporting calendar into four equal parts, often used to track financial performance over time.
Quarter on Quarter (QOQ): A comparison of financial performance or economic data for one quarter of a year to the previous quarter of the same year, often used to identify trends or changes in performance over time.
Quasi Contract: An implied contract that is not formally established but is implied by the actions of the parties involved, often used to enforce obligations and provide remedies in cases where no formal contract exists.
Quick Assets: A financial metric that measures a company’s ability to meet its short-term liabilities using the most liquid and easily convertible assets, often used to evaluate liquidity risk.
Quick Ratio: A financial ratio that measures a company’s ability to meet its short-term liabilities using its most liquid assets, often used to evaluate liquidity risk.
Quintiles: A statistical term that refers to the division of a sample or population into five equal parts based on a specific variable or characteristic, often used to analyze socioeconomic data.
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R-Squared: A statistical measure that represents the proportion of the variance in an outcome variable that can be explained by an independent variable in a regression model, often used to evaluate the quality of the model fit.
Racketeering: A criminal activity that encompasses a wide range of illegal actions, often involving the extortion of money or property from individuals or businesses through threat or force.
Rate of Return: A financial metric that represents the gain or loss on an investment over a specified period of time, expressed as a percentage of the initial investment.
Rational Choice Theory: A social science theory that assumes individuals are rational decision-makers who weigh the costs and benefits of different courses of action when making choices.
Real Estate: Property consisting of land and any structures or improvements on it, often used for residential, commercial, or industrial purposes.
Real Estate Investment Trust (REIT): A type of investment vehicle that invests primarily in real estate properties and is structured as a publicly traded corporation 1, often used as a way for individual investors to invest in real estate without having to buy and manage properties themselves.
Real Gross Domestic Product (GDP): A macroeconomic indicator that measures the total value of goods and services produced within a given country’s borders, adjusted for inflation.
Receivables Turnover Ratio: A financial metric that measures the rate at which a company collects its accounts receivable, often used to evaluate liquidity and cash flow.
Registered Investment Advisor (RIA): An individual or firm that provides professional investment advice and is registered with the Securities and Exchange Commission (SEC) or state regulatory agencies.
Regression: A statistical technique used to identify and quantify the relationship between two or more variables, often used to make predictions and inform decision-making.
Relative Strength Index (RSI): A technical analysis indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in a stock.
Renewable Resource 2: A natural resource that can be replenished or renewed over time, such as wind, solar, hydro, or geothermal power.
Repurchase Agreement (Repo): A short-term financing arrangement in which a borrower sells securities to a lender and agrees to repurchase them at a later date, often used by banks and other financial institutions to manage their short-term cash needs.
Requests for Proposal (RFP): A document used in procurement processes to solicit proposals from potential vendors or contractors for specific goods or services.
Required Minimum Distribution (RMD): The minimum amount that a traditional IRA or qualified retirement plan account holder must withdraw annually after reaching age 70.5 or 72, depending on their birth year. Failure to take RMDs can result in significant tax penalties.
Retained Earnings: The portion of a company’s profits that are kept by the company rather than paid out as dividends to shareholders.
Return on Assets (ROA): A financial metric that measures a company’s profitability relative to the total assets it has, often used to evaluate a company’s efficiency in using its assets to generate profits.
Return on Equity (ROE): A financial metric that measures a company’s profitability relative to the total equity held by shareholders, often used to evaluate a company’s ability to generate profits from investments made by shareholders.
Return on Invested Capital (ROIC): A financial metric that measures a company’s profitability relative to the total amount of capital invested in the company, often used to evaluate a company’s ability to generate profits from all sources of capital, including equity and debt.
Return on Investment (ROI): A financial metric that measures the return on an investment relative to its cost, often used to evaluate the profitability of different investment opportunities.
Roth 401(k): A type of retirement savings plan available to employees that combines features of a traditional 401(k) plan with features of a Roth IRA, allowing employees to make after-tax contributions that can be withdrawn tax-free in retirement.
Roth IRA: A type of individual retirement account (IRA) that allows investors to make after-tax contributions that can grow tax-free and be withdrawn tax-free in retirement.
Rule of 72: A simple rule used to estimate the number of years it takes for an investment to double in value, calculated by dividing 72 by the annual rate of return.
Russell 2000 Index: A stock index that tracks the performance of the smallest 2,000 companies in the Russell 3000 Index, often used as a benchmark for small-cap stocks.
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S&P 500 Index (Standard & Poor’s 500 Index): A stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States 12, often used as a benchmark for the overall stock market.
Sarbanes-Oxley (SOX) Act of 2002 13: A federal law passed after several large corporate accounting scandals to enforce stricter standards for financial reporting and corporate governance in public companies.
Securities and Exchange Commission (SEC): A government agency responsible for protecting investors and maintaining fair and orderly functioning of securities markets in the United States.
Security 13: A financial instrument that represents ownership, debt, or other financial obligations of an individual or entity. Examples include stocks, bonds, and options.
Series 63: A securities license that allows individuals to sell mutual funds and similar securities in certain jurisdictions in the United States.
Series 7: A securities license that allows individuals to sell a wide range of securities products, including stocks, bonds, and mutual funds, in the United States.
Sharpe Ratio: A measure of risk-adjusted return that indicates the excess return earned by an investment relative to the risk-free rate, divided by the investment’s volatility.
Short Selling: A strategy used by investors to profit from the decline in the value of a security, involving borrowing shares and selling them with the expectation of buying them back at a lower price and returning them to the lender.
Social Media: Online platforms and tools that enable users to create, share, and communicate content with others, often used for networking, promotion, and customer engagement purposes in businesses and personal branding.
Social Responsibility: The idea that businesses and individuals have a duty to act in the best interest of society, considering the impact of their actions on the environment, community, and other stakeholders.
Solvency Ratio: A financial metric that measures a company’s ability to meet its long-term financial obligations, often expressed as the ratio of total assets to total liabilities.
Spread: The difference between the bid and ask prices of a security, often used as a measure of liquidity and trading costs.
Standard Deviation: A statistical measure of the amount of variability or dispersion around the average or expected value of a set of data points, often used as a measure of risk in financial investment.
Stock: A type of security that represents ownership in a publicly traded company and entitles the owner to a share of that company’s assets and earnings.
Stock Keeping Unit (SKU): A unique identification code assigned to each product in inventory management and retail operations.
Stock Market: A marketplace where investors can buy and sell shares of publicly traded companies, such as the New York Stock Exchange (NYSE) or Nasdaq.
Stop-Limit Order: A type of order to buy or sell a security at a specified price or better, which becomes a limit order once the stop price is reached or exceeded.
Straddle: An option strategy that involves buying a call option and a put option on the same underlying asset at the same strike price and expiration date, often used to profit from volatility or uncertainty in the market.
Strength, Weakness, Opportunity, and Threat (SWOT) Analysis: A strategic analysis framework used to identify internal and external factors that affect the performance and competitiveness of a business, often presented in the form of a matrix.
Subsidiary: A company that is owned or controlled by another company, which is called the parent company or holding company.
Supply Chain: The network of organizations, resources, and activities involved in the creation and delivery of a product or service to customers, from raw material sourcing to final distribution.
Sustainability: The ability of a system or process to endure and maintain its integrity and function over time, often with a focus on environmental, social, and economic factors in business and society.
Systematic Sampling: A sampling technique in which a population is divided into equal segments or strata and a random sample is selected from each segment, often used in market research and opinion polling to reduce sampling bias.
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T-Test: A statistical hypothesis test used to determine if there is a significant difference between the means of two groups.
Tariff: A tax on imported or exported goods, often used to protect domestic industries or incentivize international trade agreements.
Technical Analysis: A method of evaluating securities by analyzing statistical trends and market activity, such as price and volume, to predict future performance.
Tenancy in Common (TIC): A form of joint ownership of property in which each owner has a separate and undivided interest in the property, which can be transferred or inherited.
Term Life Insurance: A type of life insurance policy that provides coverage for a specified term, often at a lower premium than permanent life insurance policies.
Terminal Value (TV): The value of an asset or investment at the end of a specified time period or forecast horizon, often used in financial modeling.
Third World: A historically used term to describe developing countries, often with lower levels of economic and social development than industrialized nations.
Total-Debt-to-Total-Assets: A financial ratio that measures the proportion of total liabilities to total assets, often used to evaluate a company’s leverage and solvency.
Total Expense Ratio (TER): A measure of the total costs associated with investing in a mutual fund or exchange-traded fund (ETF), usually expressed as a percentage of the fund’s assets.
Total Quality Management (TQM): A management philosophy and approach that emphasizes continuous improvement, customer focus, and employee involvement in all aspects of a business.
Total Shareholder Return (TSR): A measure of the overall return on investment for a shareholder, including dividends and changes in stock price over a specified period of time.
Trade Deficit: A situation where a country’s imports exceed its exports, often resulting in a negative balance of trade and currency outflows.
Trailing 12 Months (TTM): A financial metric that calculates a company’s financial performance over the past 12 months, often used to evaluate trends and momentum.
Tranches: A portion of a debt security or investment that is divided into smaller pieces or tiers, often with different levels of risk or priority in repayment.
Transaction: A transfer of funds or assets between two parties, often involving the exchange of goods or services for payment.
Treasury Bills (T-Bills): Short-term debt securities issued by the US government to finance its operations, often used as a low-risk investment option.
Treasury Inflation-Protected Security (TIPS): A type of Treasury bond that is indexed to inflation 1, providing a hedge against inflation for investors.
Triple Bottom Line (TBL): A framework used by businesses and organizations to evaluate their social, environmental, and financial performance and impacts.
Troubled Asset Relief Program (TARP): A program created by the US government in 2008 to stabilize the financial system during the subprime mortgage crisis, primarily through the purchase of troubled assets from financial institutions.
Trust: A legal entity created to hold and manage assets for the benefit of one or more beneficiaries, often used in estate planning or asset protection.
Trust Fund: A type of fund set up to hold assets for the benefit of a specific purpose or group of beneficiaries, often managed by a trustee.
Trustee: A person or entity appointed to manage and oversee the assets held in a trust for the benefit of the beneficiaries.
TSA PreCheck: A program administered by the Transportation Security Administration (TSA) that allows eligible travelers to move through security checkpoints more quickly and efficiently at US airports.
Turnover: A financial ratio that measures the frequency with which a company’s assets are replaced or sold, often used to evaluate efficiency and productivity.
U
Underlying Asset: A financial asset that gives value to a derivative security, such as a futures contract or option.
Underwriter: A financial professional or institution that assesses and assumes the risk of selling securities or other financial products to investors, often in the form of an initial public offering (IPO).
Underwriting: The process of evaluating and assuming the risk of selling securities or other financial products to investors, often done by an underwriter in an IPO or other offering.
Unearned Income: Income received by an individual or entity from sources other than labor, such as interest, dividends, or rental income.
Unemployment: The state of not having a job despite actively seeking and being available for work.
Unemployment Rate: The percentage of the labor force who are unemployed but actively seeking work.
Unicorn: A privately held startup company with a valuation over $1 billion.
Unified Managed Account (UMA): A type of investment management account that combines multiple investment products 1, such as mutual funds, ETFs, and individual securities, into a single portfolio that is managed as a whole by a professional investment manager.
Uniform Distribution: A probability distribution in which each value has an equal chance of being selected, often used in finance to calculate expected returns or risks for a given investment strategy.
Uniform Gifts to Minors Act (UGMA): A law that allows minors to receive gifts or inheritances that are held in trust by a custodian until the minor reaches the age of majority, after which the assets are transferred to the minor directly.
Uniform Transfers to Minors Act (UTMA): A similar law to UGMA that allows minors to receive gifts or inheritances that are held in trust until the minor reaches a specified age, although UTMA offers more flexibility in the types of assets that can be held in the trust.
Unilateral Contract: A contract in which one party makes a promise in exchange for an act or performance by the other party, such as an insurance policy.
Unit Investment Trust (UIT): A type of investment company that issues a fixed portfolio of securities that is not actively managed, and is redeemable by investors at a specified price.
United Nations (UN): An international organization founded in 1945 to promote peace, security, and cooperation among nations.
Unlevered Beta: A measure of a company’s risk that excludes the effects of debt, calculated as the beta of a company without accounting for its leverage or financial structure.
Unlevered Free Cash Flow (UFCF): A measure of a company’s cash flow that excludes the effects of debt on its financial performance, calculated as the cash generated by a company after accounting for capital expenditures required to maintain its current level of operations.
Unlimited Liability: A situation in which the owner(s) of a business are personally responsible for all financial obligations incurred by the business, regardless of the amount or nature of the debt.
Unsecured Loan: A loan that is not backed by collateral, such as a personal loan or credit card debt, making it a riskier type of borrowing from the lender’s perspective.
Upside: A term used in finance to describe the potential gain or profit from an investment or business venture.
U.S. Dollar Index (USDX): An index that measures the strength of the U.S. dollar relative to a basket of other currencies, often used as a benchmark for global currency markets and investments.
U.S. Savings Bonds: A type of debt security issued by the U.S. government to individual investors that pays a fixed rate of interest over a specified period of time.
Utilities Sector: A category of stocks that includes companies that provide essential services such as gas, water, and electric power, often considered a defensive sector with relatively stable revenues and dividends.
Utility: A term used in finance to describe the degree to which an investment or financial product meets a particular need or objective, such as providing income, managing risk, or achieving growth.
V
Valuation: The process of determining the current worth of an asset or company, often through various forms of financial analysis and market research.
Value Added: The difference between the value of a company’s output and the value of the inputs it requires, often used as a measure of productivity and efficiency.
Value Chain: The various stages and processes involved in creating and delivering a product or service, from the initial design to the final delivery to the customer.
Value Investing: An investment approach that focuses on finding undervalued assets that are trading at prices below their intrinsic value, often by analyzing financial statements and market trends.
Value Proposition: The unique combination of features and benefits that a particular product or service offers to potential customers, often used to differentiate a business from its competitors.
Value at Risk (VaR): A measure of the potential loss that a particular investment or portfolio may face under various market conditions, often used in risk management.
Value-Added Tax (VAT): A consumption tax that is added to the price of goods and services at each point in the supply chain, often used by governments to generate revenue.
Variability: The degree to which a particular variable or set of data fluctuates or changes over time, often used as a measure of risk or uncertainty in financial analysis.
Variable Annuity: A type of annuity that offers variable returns based on the performance of underlying investment vehicles, often used to provide income in retirement.
Variable Cost: A cost that varies in proportion to changes in the level of production or output, often used in cost accounting and financial analysis.
Variance: A statistical measure of the spread or variability of a set of data, often used in financial analysis and risk management.
Vega: A measure of the sensitivity of an option’s price to changes in the underlying asset’s volatility, often used in options trading and risk management.
Velocity of Money: The rate at which money changes hands within an economy, often used as a measure of economic activity and growth.
Venture Capital: A type of financing that provides funding to early-stage businesses and startups in exchange for an ownership stake, often used to support innovation and growth.
Venture Capitalist (VC): An individual or firm that provides venture capital funding to startups and early-stage businesses.
Vertical Analysis: A method of financial analysis that compares each item on a company’s financial statements to a base figure, often used to evaluate changes in financial performance over time.
Vertical Integration: A business strategy that involves acquiring or controlling all or most of the companies involved in the production and distribution of a particular product or service.
Vesting: The process by which an employee earns the right to receive company contributions to their retirement plan, often based on years of service or meeting certain performance metrics.
Visual Basic for Applications (VBA): A programming language used to automate tasks and create applications within Microsoft Office products such as Excel and Word.
VIX (CBOE Volatility Index): A measure of market volatility based on options prices for the S&P 500 index, often used as an indicator of market risk and investor sentiment.
Volatility: The degree of fluctuation or variability in the price of a particular security or market, often used as a measure of risk or uncertainty.
Volcker Rule: A regulation that limits the ability of banks to engage in proprietary trading and certain types of investments with their own funds, named after former Federal Reserve Chairman Paul Volcker.
Volume Weighted Average Price (VWAP): A measure of the average price of a security over a given time period, weighted by the volume of shares traded at each price level.
Voluntary Employees Beneficiary Association Plan (VEBA): A type of tax-exempt trust used to fund healthcare benefits for employees and their dependents, often used by employers to provide retiree health benefits.
W
W-2 Form: A tax form used by employers to report wages, tips, and other compensation paid to an employee, as well as taxes withheld and other information related to employment.
W-4 Form: A tax form used by employees to indicate their tax filing status and determine the amount of federal income tax to be withheld from their paychecks.
W-8 Form: A tax form used by foreign individuals and entities to claim exemption from certain taxes on income earned in the United States.
Waiver of Subrogation: A legal agreement in which one party agrees not to seek reimbursement from another party in the event of a loss, often used in insurance contracts and construction contracts.
Wall Street: A metonym for the financial markets, particularly the stock and bond markets, and the financial institutions that operate in them.
War Bond: A debt security issued by a government to finance military operations during times of war.
Warrant: A financial instrument that gives the holder the right to purchase a security at a specific price within a specified time frame.
Wash Sale: A sale of a security at a loss followed by the purchase of the same or a substantially identical security within 30 days, which may result in disallowed losses for tax purposes.
Wash-Sale Rule: A tax rule that prohibits investors from claiming a loss on the sale of a security if they purchase a substantially identical security within 30 days before or after the sale.
Wealth Management: A professional service that provides personalized financial advice and investment management to high-net-worth individuals and families.
Wearable Technology: Electronic devices such as smartwatches, fitness trackers, and augmented reality glasses that can be worn on the body and provide various functions and features.
Weighted Average: A type of average that takes into account the relative importance or quantity of each item being averaged.
Weighted Average Cost of Capital (WACC): A calculation used to determine the cost of capital for a company, taking into account the proportion of debt and equity in its capital structure.
White-Collar Crime: Nonviolent financial crimes committed by individuals or organizations, often in a professional or business setting, such as fraud, insider trading, and embezzlement.
White Paper: A document that provides information and analysis on a particular topic, often used in business and government settings to inform decision-making.
Wholesale Price Index (WPI): An economic indicator that measures changes in the prices of goods sold in bulk, often used as a measure of inflation or as a GDP deflator.
Wire Fraud: The use of electronic communications to fraudulently obtain money or property, often through phishing emails or other forms of online deception.
Wire Transfers: Electronic transfers of funds between bank accounts, often used for large or cross-border transactions.
Withholding Allowance: A number that an employee claims on their W-4 form to determine the amount of federal income tax to be withheld from their paychecks, based on their estimated tax liability for the year.
Withholding Tax: The amount of tax that an employer withholds from an employee’s wages or salary to pay their federal, state, and local taxes.
Working Capital (NWC): The difference between a company’s current assets and current liabilities, often used as a measure of a company’s short-term financial health and liquidity.
Works-in-Progress (WIP): Unfinished goods or projects that are still in the process of being completed, often used in manufacturing or construction industries.
World Trade Organization (WTO): An international organization that promotes free trade and fosters cooperation on trade policy issues among its member countries.
WorldCom: A telecommunications company that filed for bankruptcy in 2002 after it was revealed that it had engaged in accounting fraud, resulting in one of the largest corporate scandals in U.S. history.
X
X-Efficiency: A concept in economics that refers to a firm’s ability to efficiently use its resources and inputs in order to produce the optimal level of output. The “X” refers to the firm’s output beyond what would be produced at the minimum efficient scale under perfect competition.
X-Mark Signature: A type of electronic signature that consists of a graphical representation of an “X” or another mark made by the signer, often used in situations where the signer is unable to physically sign a document.
XBRL (eXtensible Business Reporting Language): A coding language used by companies to express financial and other business data in a standardized format, allowing for easier analysis and comparison across companies and industries.
XCD (Eastern Caribbean Dollar): The official currency of eight Caribbean countries, including Dominica, Grenada, and Saint Vincent and the Grenadines.
XD: A symbol used in the stock market to indicate that a stock is trading without the right to receive a previously declared dividend.
Xenocurrency: A currency that is not the official currency of the country where it is being used, often used in situations where the official currency is not easily obtainable or is subject to high inflation or devaluation.
Xetra: An electronic trading system used by the Frankfurt Stock Exchange to facilitate the trading of stocks, bonds, and other securities.
XML (Extensible Markup Language): A coding language used to structure and organize data, often used in financial and business applications to facilitate the exchange of information between different systems and platforms.
XRT: An abbreviation used to refer to exchange-traded funds (ETFs) that invest in a diverse group of retail companies, often used as a measure of the overall performance of the retail sector.
Y
Yacht Insurance: Insurance coverage designed to provide protection for yachts and other types of boats, often including coverage for liability, damage, and other risks.
Yale School of Management: A graduate business school at Yale University, offering MBA, EMBA, and doctoral programs in management and related fields.
Yankee Bond: A bond issued in the United States by a foreign entity, typically denominated in U.S. dollars and subject to U.S. regulations and taxation.
Yankee Market: The market for U.S. dollar-denominated bonds issued by foreign entities, often used by these entities to access U.S. capital markets and investors.
Year-End Bonus: A bonus payment given to employees at the end of the calendar year, often as a reward for their hard work or as an incentive to stay with the company.
Year-Over-Year (YOY): A comparison of data or performance for a particular period of time with the same period from the previous year, often used to analyze trends and changes over time.
Year to Date (YTD): A period of time beginning at the start of the calendar year and ending on the current day, often used for tracking financial performance or other metrics over the course of the year.
Year’s Maximum Pensionable Earnings (YMPE): A limit on the annual income that is subject to Canadian Pension Plan (CPP) contributions, used to determine the maximum pension amount that can be earned each year.
Yearly Rate Of Return Method: A method of calculating the annual rate of return on an investment, taking into account the total amount of interest earned and the length of time the investment was held.
Yearly Renewable Term (YRT): A type of term life insurance that is renewable on an annual basis.
Yield: The return on an investment, typically measured as a percentage of the initial investment.
Yield Basis: The method used to calculate the yield on an investment, often based on factors such as coupon rate, current market price, and time to maturity.
Yield Curve: A graphical representation of the relationship between bond yields and time to maturity, often used to analyze trends and changes in interest rates.
Yield Curve Risk: The risk associated with changes in the shape or slope of the yield curve, often affecting the value of fixed-income investments.
Yield Maintenance: A prepayment penalty that may be charged by lenders when borrowers pay off a loan before its maturity date, often used in commercial real estate lending.
Yield on Cost (YOC): The annual dividend or interest income generated by an investment, expressed as a percentage of the original cost or purchase price of the investment.
Yield on Earning Assets: The return generated by a bank or financial institution on its earning assets, such as loans and investments, expressed as a percentage of those assets.
Yield Spread: The difference between the yield on a risky investment, such as a corporate bond, and the yield on a risk-free investment, such as a U.S. Treasury bond, often used as a measure of credit risk.
Yield to Call: The expected rate of return on a callable bond, taking into account both the bond’s yield and the likelihood of it being called or redeemed early.
Yield to Maturity (YTM): The total return anticipated on a fixed-income investment, assuming the investor holds the investment until its maturity date and all interest payments are reinvested at the same rate.
Yield to Worst (YTW): The lowest potential yield that can be received on a bond without the issuer defaulting, often used to estimate the bond’s downside risk.
Yield Variance: The difference between the expected yield on an investment and the actual yield achieved, often used as a measure of investment performance.
York Antwerp Rules: A set of international guidelines governing the liability and responsibilities of carriers and cargo owners in maritime law.
Yuppie: A term used in the 1980s to describe young, upwardly mobile professionals characterized by their urban lifestyle, financial success, and materialistic values.
Z
Z-Score: A statistical formula used to indicate the likelihood of a company going bankrupt.
Z-Test: A statistical test used to determine whether two sample means are significantly different from each other.
Zacks Investment Research: A financial services company that provides investment research and analysis to investors.
ZCash: A cryptocurrency that uses advanced cryptography to enhance privacy and security.
Zero Balance Account (ZBA): A checking account that automatically transfers funds from a master account to cover checks written against it to maintain a zero balance.
Zero-Based Budgeting (ZBB): A budgeting method in which all expenses must be justified for each new period, rather than basing the budget on the previous period’s spending.
Zero-Beta Portfolio: A portfolio in which the beta, or market risk, is zero or very close to zero, meaning that the portfolio’s returns are not correlated with the market’s returns.
Zero-Bound: A monetary policy situation in which interest rates are close to zero and cannot be lowered further to stimulate the economy.
Zero Coupon Inflation Swap: A financial contract that exchanges one stream of cash flows, based on inflation, for another stream of cash flows, based on a fixed interest rate and a principal amount.
Zero Coupon Swap: A financial contract that exchanges one stream of cash flows, based on fixed interest payments and a principal amount, for another stream of cash flows, based on floating interest rates.
Zero Cost Collar: An options strategy that involves buying a cap on interest rates and selling a floor on interest rates, with the premiums offsetting each other.
Zero-Coupon Bond: A bond that makes no periodic interest payments, but is instead sold at a discount to its face value and pays the face value at maturity.
Zero-Lot-Line House: A type of residential housing in which the house is built right up to the property line, often used in urban or densely populated areas.
Zero-One Integer Programming: A mathematical optimization technique in which variables can only take on the values of 0 or 1.
Zero-Rated Goods: Goods that are exempt from value-added tax (VAT) or goods and services tax (GST).
Zero-Sum Game: A situation in which one person’s gain is exactly equal to another person’s loss, resulting in a net gain of zero.
Zero-Volatility Spread (Z-spread): The Z-spread, also known as the zero-volatility spread or static spread, is the constant spread that, when added to each spot interest rate on the Treasury yield curve, makes the present value of a bond’s cash flows equal to its price. It is a measure of the spread that an investor would realize over the entire Treasury spot rate curve if the bond were sold.
Zeta Model 3: A mathematical formula used to predict bankruptcy risk that takes into account a company’s working capital, retained earnings, market value of equity, and earnings before interest and taxes (EBIT).
Zig Zag Indicator: A technical analysis tool that uses trend lines to filter out price fluctuations and identify trend reversals in financial markets.
zk-SNARK: A type of cryptography used in certain privacy-focused cryptocurrencies like ZCash, which allows for anonymous and confidential transactions to be made without revealing the identities of the sender and recipient.
Zombies: In finance, zombies are companies that are only able to survive due to low interest rates, and are at risk of going bankrupt if rates were to rise.
Zoning: Zoning is the process of dividing land into different zones or districts for specific uses, such as residential, commercial, and industrial.
Zoning Ordinance: A set of regulations that govern the use of land within a particular jurisdiction, including zoning classifications, restrictions, and building codes.

Final Thoughts
Remember, personal finance doesn’t have to be boring! Whether you’re budgeting, investing, or trying to save money, a little bit of humor can go a long way. So the next time you’re feeling overwhelmed with personal finance jargon, just remember – you’ve got this! Now go forth and conquer your finances! And as always, don’t forget: Mo’ money, mo’ problems (but also mo’ opportunities for financial stability and freedom)