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10-K: The Securities and Exchange Commission (SEC) requires that all publicly traded companies file a Form
12b-1 Fee: A number of load and no-load mutual funds levy 12b-1 fees on the value of your mutual fund account t
401(K): You participate in a 401(k) retirement savings plan by deferring part of your salary into an account
403(B): A 403(b) plan, sometimes known as a tax-sheltered annuity (TSA) or a tax-deferred annuity (TDA), is
457: These tax-deferred retirement savings plans are available to state and municipal employees. Like 401
529 College Savings Plan: Each 529 college savings plan is sponsored by a particular state or group of states, and while each
529 Prepaid Tuition Plan: With a prepaid tuition plan, you purchase tuition credits at current rates to be used at some point
8-K: The Securities and Exchange Commission (SEC) requires that all publicly traded companies use Form 8-
Accelerated Death Benefit: If your life insurance policy has an accelerated death benefit (ADB), you may qualify to use a porti
Account Balance: Your account balance is the amount of money you have in one of your financial accounts. For example,
Accredited Investor: An accredited investor is a person or institution that the Securities and Exchange Commission (SEC)
Accrued Interest: Accrued interest is the interest that accumulates on a fixed-income security between one interest pa
Accumulation Period: The accumulation period refers to the time during which your retirement savings accumulate in a defe
Accumulation Unit: Accumulation units are the shares you own in the separate account funds of a variable annuity during
Acquisition: If a company buys another company outright, or accumulates enough shares to take a controlling inter
Actively Managed Fund: Managers of actively managed mutual funds buy and sell investments to achieve a particular goal, suc
Activities Of Daily Living: To live independently, you must be able to handle certain essential functions, called activities of
Adjustable Rate Mortgage (ARM): An adjustable rate mortgage is a long-term loan you use to finance a real estate purchase, typically
Adjusted Gross Income (AGI): Your AGI is your gross, or total, income from taxable sources minus certain deductions. Income inclu
Advance-Decline (A-D) Line: The advance-decline line graphs the ratio of stocks that have risen in value — the advancers — t
Advancer: Stocks that have gained, or increased, in value over a particular period are described as advancers.
Affinity Fraud: Affinity fraud occurs when a dishonest person plays on your affiliation with a group — such as a h
After-Hours Market: Securities, such as stocks and bonds, may change hands on organized markets and exchanges after regu
After-Tax Contribution: An after-tax contribution, or excess deferral, is money you put into your 401(k) or other employer s
After-Tax Income: After-tax income, sometimes called post-tax dollars, is the amount of income you have left after fed
Agency Bond: Some federal agencies, including Ginnie Mae (GNMA) and the Tennessee Valley Authority (TVA), raise m
Agent: An agent is a person who acts on behalf of another person or institution in a transaction. For examp
Aggressive-Growth Fund: Aggressive-growth mutual funds buy stock in companies that show rapid growth potential, including st
All Or None Order (AON): When a trading order is marked AON, the broker who is handling the order must either fill the whole
Alpha: A stock's alpha is an analyst's estimate of its potential price increase based on the rate at which
Alternative Minimum Tax (AMT): The alternative minimum tax (AMT) was designed to ensure that all taxpayers pay at least the minimum
American Association Of Individual Investors (AAII): The goal of this independent, nonprofit organization is teaching individual investors how to manage
American Depositary Receipt (ADR): Shares of hundreds of major overseas-based companies, including names such as British Petroleum, Son
American Depositary Share (ADS): When a company based overseas wants to sell its shares in the US markets, it can offer them through
American Stock Exchange (AMEX): The AMEX is the second-largest floor-based stock exchange in the US after the New York Stock Exchang
American-Style Option: A listed option that you can exercise at any point between the day you purchase it and its expiratio
Amortization: Amortization is the gradual repayment of a debt over a period of time, such as monthly payments on a
Analyst: A financial analyst tracks the performance of companies and industries, evaluates their potential va
Annual Percentage Rate (APR): A loan's annual percentage rate, or APR, is what credit costs you each year, expressed as a percenta
Annual Percentage Yield (APY): Annual percentage yield is the amount you earn on an interest-bearing investment in a year, expresse
Annual Renewable Term Insurance: If your term life insurance is an annual renewable policy, you can renew your coverage each year wit
Annual Report: By law, each publicly held corporation must provide its shareholders with an annual report showing i
Annuitant: An annuitant is a person who receives income from an annuity. If you receive a distribution from an
Annuitization: Annuitization means that you convert part or all of the money in a qualified retirement plan or nonq
Annuitize: When you annuitize, you choose to convert the assets in your deferred annuity or other retirement sa
Annuity: Originally, an annuity simply meant an annual payment. That’s why the retirement income you receiv
Annuity Principal: The annuity principal is the sum of money you use to buy an annuity and the base on which annuity ea
Annuity Unit: Annuity units are the shares you own in variable annuity subaccounts, also called annuity funds or s
Appreciation: When an asset such as stock, real estate, or personal property increases in value without any improv
Approved Charge: With traditional fee-for-service health insurance, the insurance company sets an approved or allowab
Arbitrage: Arbitrage is the technique of simultaneously buying at a lower price in one market and selling at a
Arbitration: Arbitration is a way to resolve conflicts between parties or individuals, and may be considered midd
Arithmetic Index: An arithmetic index gives equal weight to the percentage price change of each stock that's included
Ask: The ask price (a shortening of asked price) is the price at which a market maker or broker offers to
Asset: Assets are everything you own that has any monetary value, plus any money you are owed. They include
Asset Allocation: Asset allocation is a strategy, advocated by modern portfolio theory, for reducing risk in your inve
Asset Class: Different categories of investments are described as asset classes. Stock, bonds, and cash — inclu
Asset Management Account (AMA): All-in-one asset management accounts provide the financial advantages of an investment account combi
Asset-Backed Bond: Asset-backed bonds, also known as asset-backed securities, are secured by loans or by money owed to
Assignment: Assignment occurs when someone who has written, or sold, a listed option receives a notice that the
At-The-Money: At-the-money is another way of saying at the current price. Options whose exercise price is the same
Auction Market: Auction market trading, sometimes known as open outcry, is the way the major exchanges, such as the
Audit: An audit is a professional, independent examination of a company's financial statements and accounti
Audit Committee: The corporate audit committee is the liaison between the company’s management, the board of direct
Automatic Enrollment: Your employer has the right to sign you up for your company's 401(k) plan, in what's known as an aut
Automatic Exercise: If you hold a call option, automatic exercise may occur if the contract is in-the-money by a certain
Average: A stock market average is a mathematical way of reporting the composite change in prices of the stoc
Average Annual Yield: Average annual yield is the average yearly income on an investment, expressed as a percentage. You c
Average Daily Balance: The average daily balance method is one of the ways that the finance charge on your credit card may
Baby Bond: Bonds whose par values are less than $1,000 are often described as baby bonds, or, in the case of mu
Baccalaureate Bond: Baccalaureate bonds are tax-free zero coupon bonds issued by certain states specifically to help fam
Back-End Load: Some mutual funds impose a back-end load, or a contingent deferred sales charge, if you sell shares
Back-Up Withholding: Back-up withholding is triggered when a bank, brokerage firm, or other institution pays interest, di
Balance Of Trade: The difference between the value of a country's imports and exports during a specific period of time
Balance Sheet: A balance sheet is a statement of a company’s financial position at a particular moment in time. T
Balanced Fund: Balanced funds are mutual funds that invest in a portfolio of common stocks, preferred stocks, and b
Balloon Mortgage: With a balloon mortgage, you make monthly payments over the mortgage term, which is typically five,
Bankruptcy: Bankruptcy means being insolvent, or unable to pay your debts. In that case, you can file a bankrupt
Barbell Strategy: When you use a barbell strategy you invest equivalent amounts in short-term and long-term bonds, cre
Basis: Basis is the total cost of buying an investment or other asset, including the price, commissions, an
Basis Point: Yields on bonds, notes, and other fixed-income investments fluctuate regularly, typically changing o
Basis Price: When you sell a security, such as a stock or bond, or real estate, the price you use to calculate yo
Bear Market: A bear market is sometimes described as a period of falling securities prices and sometimes, more sp
Bear Spread: A bear spread is an options strategy that you use when you anticipate a decline in the price of the
Bearer Bond: A bearer bond is a certificate that states the security's par value, the rate at which interest will
Bearer Form: When securities are issued as paper certificates and the issuing corporation has no record of the ow
Behavioral Finance: Behavioral finance combines psychology and economics to explain why and how investors act and to ana
Beige Book: Beige book is the colloquial name for the Federal report that is formally titled Summary of Commenta
Bellwether: A market bellwether is a security whose changing price is considered a signal that the market is cha
Benchmark: An investment benchmark is a standard against which the performance of an individual security or gro
Beneficial Owner: When your stocks are registered in street name, the brokerage firm has title to the stocks but you a
Beneficiary: A beneficiary is the person or organization who receives assets that are held in your name in a reti
Beta: Beta is a measure of an investment's relative volatility. The higher the beta, the more sharply the
Bid: The bid is the price a market maker or broker is willing to pay for a security, such as a stock or b
Bid And Ask: Bid and ask is better known as a quotation or quote. Bid is the price a market maker or broker offer
Big Board: The Big Board is the nickname of the New York Stock Exchange (NYSE), the oldest stock exchange in th
Blind Pool: If the general partner of a limited partnership does not say which investments the partnership will
Blind Trust: A blind trust is created when a third party, such as an investment adviser or other trustee, assumes
Block Trade: When at least 10,000 shares of stock or bonds valued at $200,000 or more are bought or sold in a sin
Blue Chip Stock: Blue chip stock is the common stock of a large, well-regarded US company. The companies in that info
Blue Sky Laws: Blue sky laws require companies that sell stock, mutual funds, and other financial products to regis
Boiler Room: A boiler room is a location used by con artists to contact potential victims out-of-the-blue — an
Bond: Bonds are debt securities issued by corporations and governments. Bonds are, in fact, loans that you
Bond Fund: A bond mutual fund sells shares in the fund to investors and uses the money it raises to invest in a
Bond Rating: Independent agencies, such as Standard & Poor's (S&P) and Moody's Investors Service, assess the like
Bond Swap: In a bond swap, you buy one bond and sell another at the same time. For example, you might sell one
Book Value: Book value is the net asset value (NAV) of a company's stocks and bonds. Finding the NAV involves su
Book-Entry Security: Book-entry securities are stocks, bonds, and similar investments whose ownership is recorded electro
Bottom Fishing: Investors using a bottom-fishing strategy look for stocks that they consider undervalued because the
Bottom-Up Investing: When you use a bottom-up investing strategy, you focus on the potential of individual stocks, bonds,
Bourse: Bourse is the French term for a stock exchange, meaning, literally, purse. The national stock market
Brady Bond: These bonds of Latin American countries, named for former US Secretary of the Treasury Nicholas Brad
Breakout: Stock prices fluctuate constantly, but each stock typically moves within a fairly narrow range. That
Breakpoint: A breakpoint is the level at which your account balance in a mutual fund company or the size of a ne
Broker: A broker acts as an agent or intermediary for a buyer and a seller. The buyer, seller, and broker ma
Broker-Dealer: A broker-dealer (B/D) is a license granted by the Securities and Exchange Commission (SEC) that enti
Brokerage Account: To buy and sell securities through a broker-dealer or other financial services firm, you establish a
Brokerage Firm: Brokerage firms, also known as broker-dealers, are licensed by the Securities and Exchange Commissio
Brokerage Window: A 401(k) account that permits its plan participants to buy and sell investments through a designated
Bucket Shop: A bucket shop is an illegal brokerage firm, whose salespeople pose as legitimate brokers and attempt
Budget: A budget is a written record of income and expenses during a specific time frame, typically a year.
Bull Market: A prolonged period when stock prices as a whole are moving upward is called a bull market, although
Bull Spread: A bull spread is an options strategy that you use when you anticipate an increase in the price of th
Buy Down: When you make an up-front cash payment to reduce your monthly payments on a mortgage loan, it’s ca
Buy Side: Institutional money managers, such as mutual funds, pension funds, and endowments, are the buy side
Buy-And-Hold: Buy-and-hold investors take a long-term view of investing, generally keeping a bond from date of iss
Buyback: When a company purchases shares of its own publicly traded stock or its own bonds in the open market
Buyers Agent: A buyer's agent represents a buyer in a real estate transaction, negotiating with the seller's agent
Bylaws: Bylaws are the self-imposed rules governing an incorporated company. The bylaws cover details such a
Cafeteria Plan: Some employers offer cafeteria plans, more formally known as flexible spending plans, which give you
Call: In the bond markets, a call is an issuer's right to redeem bonds it has sold before the date they ma
Call Option: Buying a call option gives you, as owner, the right to buy a fixed quantity of the underlying produc
Callable Bond: A callable bond can be redeemed by the issuer before it matures if that provision is included in the
Cap: A cap is a ceiling, or the highest level to which something can go. For example, an interest rate ca
Capital: Capital is money that is used to generate income or make an investment. For example, the money you u
Capital Appreciation: Any increase in a capital asset's fair market value is called capital appreciation. For example, if
Capital Gain: When you sell an asset at a higher price than you paid for it, the difference is your capital gain.
Capital Gains Distribution: When mutual fund companies sell investments that have increased in value, the profits, or capital ga
Capital Gains Tax (CGT): A capital gains tax is due on profits you realize on the sale of a capital asset, such as stock, bon
Capital Loss: When you sell an asset for less than you paid for it, the difference between the two prices is your
Capital Markets: Capital markets are the physical and electronic markets where equity and debt securities, commoditie
Capital Preservation: Capital preservation is a strategy for protecting the money you have available to invest by choosing
Car Insurance: Car insurance covers theft of and damage to your car or damage that your car causes, plus liability
Cash Balance Plan: A cash balance retirement plan is a defined benefit plan that has many of the characteristics of a d
Cash Basis Accounting: Cash basis accounting is one of two ways of recording revenues and expenses. Using this method, a co
Cash Equivalent: Short-term, low-risk investments, such as US Treasury bills or short-term certificates of deposit (C
Cash Flow: Cash flow is a measure of changes in a company’s cash account during an accounting period, specifi
Cash Market: In a cash market buyers pay the market price for securities, currency, or commodities 'on the spot,'
Cash Settlement: To settle a futures contract where the underlying asset is a financial instrument, such as a stock i
Cash Surrender Value: The cash surrender value of a permanent life insurance policy is the amount you receive if you cance
Cash Value: Cash value is the amount that an account is worth at any given time. For example, the cash value of
Cash Value Account: If you have a permanent life insurance policy, part of each premium you pay goes into a tax-deferred
Catastrophic Illness Insurance: Many health insurance policies cap, or limit, the amount they will pay to cover medical expenses. Bu
Catch-Up Contribution: You are entitled to make an annual catch-up contribution to your employer sponsored retirement savin
Ceiling: If there is an upper limit, or cap, on the interest rate you can be charged on an adjustable-rate lo
Central Bank: Most countries have a central bank, which issues the country's currency and holds the reserve deposi
Central Registration Depository (CRD): The Central Registration Depository (CRD) is an automated database maintained by NASD. The database
Certificate Of Accrual On Treasury Securities (CATS): CATS are US Treasury zero-coupon bonds that are sold at deep discount to par, or face value. Like ot
Certificate Of Deposit (CD): CDs are time deposits. When you purchase a CD from a bank, up to $100,000 is insured by the Federal
Check Hold: When you deposit a check, your bank or other financial institution may delay crediting the money to
Check Truncation: To process payments faster and more efficiently, many banks no longer transport paper checks, but re
Checking Account: Checking accounts are transaction accounts that allow you to authorize the transfer money to another
Churning: If a broker intentionally mishandles buying and selling securities in your investment account, it's
Circuit Breaker: After the stock market crash of 1987, stock and commodities exchanges established a system of trigge
Claim: You file an insurance claim when you send your insurance company paperwork asking the company to pay
Clearance: Clearance is the first half of the process that completes your order to buy or sell a security. Duri
Clearing Firm: Clearing firms handle the back-office details of securities transactions between broker-dealers, mak
Clearinghouse: Clearing corporations, or clearinghouses, provide operational support for securities and commodities
Closed-End Fund: Closed-end mutual funds are actively managed funds that raise capital only once, by issuing a fixed
Closely Held: A closely held corporation is one in which a handful of investors, often the people who founded the
Closing Costs: When you purchase real estate, there are expenses — known as closing costs — you pay to finalize
Closing Price: The closing price of a stock, bond, option, or futures contract is the last trading price before the
Closing Statement: A closing statement, also called a HUD1 or settlement sheet, is a legal form your closing or settlem
Coinsurance: When your healthcare insurance has a coinsurance provision, you and your insurer divide the responsi
Collateral: Assets with monetary value, such as stock, bonds, or real estate, which are used to guarantee a loan
Collateralized Mortgage Obligation (CMO): CMOs are fixed-income investments backed by mortgages or pools of mortgages. A conventional mortgage
Collectible: When you invest in objects rather than in capital assets such as stocks or bonds, you are putting yo
Collegesure CD: CollegeSure® CDs are certificates of deposit designed to let you prepay future college costs at tod
Commercial Bank: Commercial banks offer a full range of retail banking products and services, such as checking and sa
Commercial Paper: To help meet their immediate needs for cash, banks and corporations sometimes issue unsecured, short
Commission: Securities brokers and other sales agents typically charge a commission, or sales charge, on each tr
Committee On Uniform Securities Identifying Procedures (CUSIP): The Committee on Uniform Securities Identifying Procedures (CUSIP) assigns codes and numbers to all
Commodity: Commodities are bulk goods and raw materials, such as grains, metals, livestock, oil, cotton, coffee
Commodity Futures Trading Commission (CFTC): The CFTC is the federal agency that regulates the US futures markets, as the Securities and Exchange
Common Stock: When you own common stock, your shares represent ownership in the corporation and give you the right
Community Property: In nine US states, any assets, investments, and income that are acquired during a marriage are consi
Competitive Trader: Competitive traders, also known as registered competitive traders or floor traders, buy and sell sto
Composite Trading: Composite trading figures report end-of-day price changes, closing prices, and the daily trading vol
Compound Interest: When the interest you earn on an investment is added to form the new base on which future interest a
Compounding: Compounding occurs when your investment earnings or savings account interest is added to your princi
Comptroller Of The Currency: The Office of the Comptroller of the Currency, housed in the US Department of the Treasury, charters
Conduit IRA: A conduit IRA is another name for a rollover IRA, which you establish with money you roll over from
Confirmation: When you buy or sell a stock or bond, your brokerage firm will send you a confirmation, or printed d
Conglomerate: A conglomerate is a corporation whose multiple business units operate in different, often unrelated,
Conscience Fund: Conscience funds, also known as socially responsible funds, allow you to invest in companies whose b
Consensus Recommendation: A consensus recommendation for an individual stock compiles ratings from a number of analysts who tr
Consumer Confidence Index: The consumer confidence index is released each month by the Conference Board, an independent busines
Consumer Price Index (CPI): The consumer price index (CPI) is compiled monthly by the US Bureau of Labor Statistics and is a gau
Contango: The price of a futures contract tends to reflect the cost of storage, insurance, financing, and othe
Contingency Order: A contingency order to buy or sell a security or other investment product is one that has strings at
Contingent Beneficiary: A contingent beneficiary receives the proceeds of an insurance policy, term-certain annuity, individ
Contingent Deferred Sales Load: A contingent deferred sales load, also called a back-end load, is a sales charge some mutual funds i
Continuous Net Settlement: In continuous net settlement, most securities transactions are finalized, or cleared and settled, wi
Contrarian: An investor who marches to a different drummer is sometimes described as a contrarian. In other word
Conversion Price: A conversion price is the predetermined price, set at the time of issue, at which you can exchange a
Convertible Bond: Convertible bonds are corporate bonds that give you the alternative of converting their value into c
Convertible Hedge: When you use a convertible hedge, you buy a convertible bond, which you can exchange under certain c
Convertible Term: A convertible term life insurance policy can be converted into a permanent life policy at some point
Cook The Books: When a company cooks the books, it is deliberately — and illegally — providing false information
Cooling-Off Period: In the financial industry, a cooling-off period applies when a new issue is being brought to market.
Cooperative (Co-Op): A co-op is a corporation that owns a particular residential property. The shareholders are the tenan
Copayment: If you have a managed-care health insurance plan, your copayment is the fixed amount you pay — oft
Core Earnings: Standard & Poor's (S&P) developed the core earnings measure to give investors a more uniform way to
Cornering The Market: If someone tries to buy up as much of a particular investment as possible in order to control its pr
Corporate Bond: Corporate bonds are debt securities issued by publicly held corporations to raise money for expansio
Correction: A correction is a drop — usually a sudden and substantial one of 10% or more — in the price of a
Correlation: In investment terms, correlation is the extent to which the values of different types of investments
Correspondent: A correspondent is a financial institution, such as a bank or brokerage firm, that handles transacti
Cost Basis: The cost basis is the original price of an asset — usually the purchase price plus commissions. Yo
Cost-Of-Living Adjustment (COLA): A COLA results in a wage or benefit increase that is designed to help you keep pace with increased l
Council Of Economic Advisors (CEA): The Council of Economic Advisors' job is to assist and advise the president of the United States on
Countercyclical Stock: Stocks described as countercyclical tend to continue to maintain their value and provide regular inc
Counterparty: In any financial contract, the persons or institutions entering the contract on the opposite sides o
Counterparty Risk: Counterparty risk is the risk that the person or institution with whom you have entered a financial
Coupon: Originally, bonds were issued with coupons, which you clipped and presented to the issuer or the iss
Coupon Rate: The coupon rate is the interest rate that the issuer of a bond or other debt security promises to pa
Covered Option: When you sell call options on stock that you own, they are covered options. That means if the option
Crash: A crash is a sudden, steep drop in stock prices. The downward spiral is intensified as more and more
Credit: Credit generally refers to the ability of a person or organization to borrow money, as well as the a
Credit Bureau: The three major credit bureaus — Equifax, Experian, and TransUnion — collect information about t
Credit Limit: A credit limit, also known as a credit line, is the maximum amount of money you can borrow under a r
Credit Line: A credit line, or line of credit, is a revolving credit agreement that allows you to write checks or
Credit Rating: Your credit rating is an independent statistical evaluation of your ability to repay debt based on y
Credit Report: A credit report is a summary of your financial history. Potential lenders will use your credit repor
Credit Score: Your credit score is a number, calculated based on information in your credit report, that lenders u
Credit Union: Credit unions are financial cooperatives set up by employee and community associations, labor unions
Creditor: A person or company who provides credit to another person or company functions as a creditor. For ex
Crossed Market: A market in a particular stock or option is described as crossed when a bid to buy that stock or opt
Cumulative Voting: With this method of voting for a corporation's board of directors, you may cast the total number of
Currency Fluctuation: A currency has value, or worth, in relation to other currencies and those values change constantly.
Currency Swap: In a currency swap, the parties to the contract exchange the principal of two different currencies i
Currency Trading: The global currency market, where roughly $1.9 trillion a day changes hands, is by far the largest f
Current Return: Current return, also called current yield, is the amount of interest you earn on a bond in any given
Current Yield: Current yield is a measure of your rate of return on an investment, expressed as a percentage. With
Custodial Account: If you want to make investments on a minor’s behalf, or transfer property you own to that person,
Custodian: A custodian is legally responsible for ensuring that an item or person is safe and secure. In invest
Cyclical Stock: Cyclical stocks tend to rise in value during an upturn in the economy and fall during a downturn. Th
Daily Trading Limit: The daily trading limit is the most that the price of a futures contract can rise or fall in a singl
Date Of Maturity: The date of maturity, or maturity date, is the day on which a bond's term ends, and its issuer repay
Day Order: A day order is an instruction you give to your broker to buy or sell a security at the market price
Day Trader: When you continuously buy and sell investments within a very short time, perhaps a few minutes or ho
Dealer: Dealers, or principals, buy and sell securities for their own accounts, adding liquidity to the mark
Death Benefit: A death benefit is money your beneficiary collects from your life insurance policy if you die while
Debenture: A debenture is an unsecured bond. Most bonds issued by corporations are debentures, which are backed
Debit: A debit is the opposite of a credit. A debit may be an account entry representing money you owe a le
Debit Balance: A debit balance is what you owe. It’s entered as accounts receivable on the books of the lender an
Debit Card: A debit card — sometimes called a cash plus card — allows you to make point-of-sale (POS) purcha
Debt: A debt is an obligation to repay an amount you owe. Debt securities, such as bonds or commercial pap
Debt Security: Debt securities are interest-paying bonds, notes, bills, or money market instruments that are issued
Debt-To-Equity Ratio: A company's debt-to-equity ratio indicates the extent to which the company is leveraged, or financed
Decimal Pricing: US stocks, derivatives linked to stocks, and some bonds trade in decimals, or dollars and cents. Tha
Decliner: Stocks that have dropped, or fallen, in value over a particular period are described as decliners. I
Decreasing Term Insurance: With a decreasing term life insurance policy, the amount of the death benefit decreases each year of
Deductible: A deductible is the dollar amount you must pay for healthcare, damage to your property, or any other
Deduction: A deduction is an amount you can subtract from your gross income or adjusted gross income to lower y
Deed: A deed is a written document that transfers ownership of land or other real estate from the owner, a
Deep Discount Bond: Deep discount bonds are originally issued with a par value, or face value, of $1,000. But they decli
Deep Discount Brokerage Firm: A financial services company that offers rock-bottom rates for large-volume securities transactions
Default: If a person or institution responsible for repaying a loan or making an interest payment fails to me
Defensive Security: Defensive securities tend to remain more stable in value than the overall market, especially when pr
Deferred Annuity: A deferred annuity contract allows you to accumulate tax-deferred earnings during the term of the co
Defined Benefit Plan: A defined benefit plan — popularly known as a pension — provides a specific benefit for retired
Defined Contribution Plan: In a defined contribution retirement plan, the benefits — that is, what you can expect to accumula
Deflation: Deflation, the opposite of inflation, is a gradual drop in the cost of goods and services, usually c
Delivery Date: The delivery date, also known as the settlement date, is the day on which a stock, option, or bond t
Delta: The relationship between an option's price and the price of the underlying stock or futures contract
Department Of Veterans Affairs (VA) Mortgage: Department of Veterans Affairs (VA) mortgages enable qualifying veterans or their surviving spouses
Depositary Bank: A US bank that holds American depositary shares (ADSs), or shares of corporations based outside the
Depository Trust And Clearing Corporation (DTCC): The DTCC is the world's largest securities depository, holding trillions of dollars in assets for th
Depreciation: Certain assets, such as buildings and equipment, depreciate, or decline in value, over time. You can
Depression: A depression is a severe and prolonged downturn in the economy. Prices fall, reducing purchasing pow
Derivative: Derivatives are financial products, such as futures contracts, options, and mortgage-backed securiti
Devaluation: Devaluation is a deliberate decision by a government or central bank to reduce the value of its own
Diamonds: A DIAMOND is an index-based unit investment trust (UIT) that holds the 30 stocks in the Dow Jones In
Diluted Earnings Per Share: In addition to reporting earnings per share, corporations must report diluted earnings per share. Th
Dilution: Dilution occurs when a company issues additional shares of stock, and as a result the earnings per s
Direct Deposit: Direct deposit is the electronic transfer of money from a payer, such as your employer or a governme
Direct Investment: You can make a direct investment in a company’s stock through dividend reinvestment plans (DRIPs)
Direct Purchase Plan (DPP): Some publicly held companies offer a direct purchase plan that lets you purchase their stock directl
Disclosure: A disclosure document explains how a financial product or offering works. It also details the terms
Discount: When bonds sell for less than their face value, they are said to be selling at a discount. Bonds sel
Discount Brokerage Firm: Discount brokerage firms charge lower commissions than full-service brokerage firms when they execut
Discount Point: Some lenders require you to prepay a portion of the interest due on your mortgage as a condition of
Discount Rate: The discount rate is the interest rate the Federal Reserve charges on loans it makes to banks and ot
Discretionary Account: A discretionary account is a type of brokerage account in which clients authorize their brokers to b
Disinflation: Disinflation is a slowdown in the rate of price increases that historically occurs during a recessio
Dispute Resolution: Dispute resolution — sometimes called alternative dispute resolution — refers to methods of reso
Distribution: A distribution is money a mutual fund pays its shareholders either from the dividends or interest it
Diversification: Diversification is an investment strategy in which you spread your investment dollars among differen
Dividend: Corporations may pay part of their earnings as dividends to you and other shareholders as a return o
Dividend Payout Ratio: You can calculate a dividend payout ratio by dividing the dividend a company pays per share by the c
Dividend Reinvestment Plan (DRIP): Many publicly held companies allow shareholders to reinvest dividends in company stock or buy additi
Dividend Yield: If you own dividend-paying stocks, you figure the current dividend yield on your investment by divid
Dogs Of The Dow: If you follow a Dogs of the Dow investment strategy, you buy the ten highest-yielding stocks in the
Dollar Cost Averaging: Dollar cost averaging means adding a fixed amount of money on a regular schedule to an investment ac
Domicile: Your domicile is your permanent residence, which you demonstrate by using it as your primary home, h
Domini Social Index 400: The Domini Social Index 400 is a market capitalization weighted index that tracks the performance of
Double Bottom: Double bottom is term that technical analysts use to describe a stock price pattern that, when depic
Double Top: Double top is term that technical analysts use to describe a stock price pattern that, when depicted
Dow Jones 65 Composite Average: This composite of three Dow Jones averages tracks the stock performance of 65 companies in two major
Dow Jones Industrial Average (DJIA): The Dow Jones Industrial Average (DJIA), sometimes referred to as the Dow, is the best-known and mos
Dow Jones Transportation Average: The Dow Jones Transportation Average tracks the performance of the stocks of 20 airlines, railroads,
Dow Jones Utility Average: The Dow Jones Utility Average tracks the performance of the stocks of 15 gas, electric, and power co
Dow Jones Wilshire 5000 Index: The Dow Jones Wilshire 5000 is a market capitalization weighted index of approximately 7,000 stocks.
Dow Theory: Dow theory maintains that major market trends depend on how the Dow Jones Industrial Average (DJIA)
Down Payment: A down payment is the amount, usually stated as a percentage, of the total cost of a property that y
Downtick: When a security sells at a lower price than its previous sale price, the drop in value is called a d
Duration: In simplified terms, a bond’s duration measures the effect that each 1% change in interest rates w
Dutch Auction: A Dutch auction opens at the highest price and drops gradually until there's a buyer willing to pay
Early Withdrawal: If you withdraw assets from a fixed-term investment, such as a certificate of deposit (CD), before i
Earned Income: Earned income is pay you receive for work you perform, including salaries, wages, tips, and professi
Earned Income Credit (EIC): The earned income tax credit (EIC) reduces the income tax of that certain low-income taxpayers would
Earnings: In the case of an individual, earnings include salary and other compensation for work you do, as wel
Earnings Estimate: Professional stock analysts use mathematical models that weigh companies' financial data to predict
Earnings Momentum: When a company's earnings per share grow from year to year at an ever-increasing rate, that pattern
Earnings Per Share (EPS): Earnings per share (EPS) is calculated by dividing a company's total earnings by the number of outst
Earnings Surprise: When a company's earnings report either exceeds or fails to meet analysts' estimates, it's called an
EBITDA: Earnings before interest, taxes, depreciation, and amortization are commonly shortened to EBITDA. EB
Economic Cycle: An economic cycle is a period during which a country’s economy moves from strength to weakness and
Economic Indicator: Economic indicators are statistical measurements of current business conditions. Changes in leading
Education Savings Account (ESA): You can put up to $2,000 a year into a Coverdell education savings account (ESA) that you establish
Effective Tax Rate: Your effective tax rate is the rate you actually pay on all of your taxable income. You find your an
Efficient Market: When the information that investors need to make investment decisions is widely available, thoroughl
Efficient Market Theory: Proponents of the efficient market theory believe that a stock's current price accurately reflects w
Electronic Benefits Transfer (EBT): Electronic benefits transfer, or EBT, is a system through which recipients of certain government ben
Electronic Bill Payment: If you have an electronic bill payment arrangement with your bank, your bills are sent to an account
Electronic Bill Presentment: If you pay bills online, you may be able to take advantage of electronic bill presentment, a paper-f
Electronic Check Conversion: Electronic check conversion is a payment process in which you give a payee a check, but the actual p
Electronic Data Gathering, Analysis, And Retrieval System (EDGAR): EDGAR is an electronic database that contains all the corporate financial reports filed with the Sec
Electronic Funds Transfer: Electronic funds transfer (EFT) is the means by which financial institutions exchange billions of do
Elimination Period: If you have disability insurance or long-term care insurance, there’s a waiting period, called the
Emergency Fund: An emergency fund is designed to provide financial back-up for unexpected expenses or for a period w
Emerging Market: Countries in the process of building market-based economies are broadly referred to as emerging mark
Emerging Markets Fund: Emerging markets mutual funds invest primarily in the securities of countries in the process of buil
Employee Retirement Income Security Act (ERISA): This comprehensive law, best known by the acronym ERISA, governs qualified retirement plans, includi
Employee Stock Ownership Plan (ESOP): An ESOP is a trust to which a company contributes shares of newly issued stock, shares the company h
Employer Sponsored Retirement Plan: Employers may offer their employees either defined benefit or defined contribution retirement plans,
Enhanced Index Fund: An enhanced index fund chooses selectively among the stocks in a particular index in order to produc
Equal Credit Opportunity Act (ECOA): The Equal Credit Opportunity Act (ECOA) is designed to ensure that all qualified people have access
Equity: In the broadest sense, equity means ownership. If you own stock, you have equity in, or own a portio
Equity Fund: Equity funds invest primarily in stock. The stock a fund buys — whether in small, up-and-coming co
Equivalent Taxable Yield: While taxable bonds normally pay higher interest rates than tax-exempt bonds, they sometimes provide
Escrow: When someone else holds assets of yours until the terms of a contract or an agreement are fulfilled,
Escrow Agent: An escrow agent is the person or group that holds certain of your assets in an escrow account while
Estate: Your estate is what you leave behind, financially speaking, when you die. To figure its worth, your
Estate Tax: Your estate owes federal estate tax on the value of your taxable estate if the estate is larger than
Euro: The euro is the common currency of the European Monetary Union (EMU). The national currencies of the
Eurobond: A eurobond is an international bond sold outside of the country in whose currency it is denominated,
Eurocurrency: Eurocurrency is any major currency that is deposited by a national government or corporation based o
Eurodollar: Eurodollars are US currency deposited in banks outside the US, usually, but not always in Europe. Ce
European Central Bank (ECB): The European Central Bank is the central bank of the European Monetary Union (EMU), whose member cou
European Style Option: A listed option that you can exercise only on the last trading day before the expiration date is cal
Ex-Dividend: You must own a security by the record date the company sets to be entitled to the dividend it will p
Excess Contribution: An excess contribution occurs when the salary deferrals or matching contributions of highly compensa
Exchange: Traditionally, an exchange has been a physical location for trading securities. Trading is handled,
Exchange Rate: The exchange rate is the price at which the currency of one country can be converted to the currency
Exchange Traded Notes: Exchange traded notes (ETNs) are debt securities issued by a financial institution, listed on a stoc
Exchange-Traded Fund (ETF): Exchange-traded funds (ETFs) are listed on a stock exchange and trade like stock. You can use tradit
Exclusion: Medical services that insurance companies do not pay for are called exclusions. A typical exclusion
Executor-Executrix: When you die, your executor administers your estate and follows the directions provided in your will
Exemption: An exemption is a fixed dollar amount that you can subtract from your adjusted gross income to reduc
Exercise: When you act on a buying or selling opportunity that you have been granted under the terms of a cont
Exercise Price: An option's exercise price, also called the strike price, is the price at which you can buy or sell
Expense Ratio: An expense ratio is the percentage of a mutual fund's or variable annuity's total assets deducted to
Expiration Cycle: Equity and index options expire on a predictable four-month schedule, two of which are determined by
Expiration Date: The expiration date is the day on which an options contract expires and becomes worthless. Listed op
Face Value: Face value, or par value, is the dollar value of a bond or note, generally $1,000. That is the amoun
FACT Act (Fair And Accurate Credit Transactions Act): Designed to help consumers check their credit reports for accuracy and detect identity theft early,
Fair Housing Act: The Fair Housing Act makes it illegal to discriminate, in any phase of selling or renting real estat
Fair Market Value: Fair market value is the price you would have to pay to buy a particular asset or service on the ope
Fallen Angel: Corporate or municipal bonds that were investment-grade when they were issued but have been downgrad
Family Of Funds: Many large mutual fund companies offer a variety of stock, bond, and money market funds with differe
Fannie Mae: Fannie Mae has a dual role in the US mortgage market. Specifically, the corporation buys mortgages t
Fast Market: A fast market is one with heavy trading and rapidly changing prices in some but not necessarily all
Federal Deposit Insurance Corporation (FDIC): The Federal Deposit Insurance Corportion (FDIC) insures deposits in banks and thrift institutions, a
Federal Funds: When banks have more cash than they're required to in their reserve accounts, they can deposit the m
Federal Housing Administration (FHA): The Federal Housing Administration (FHA) was established by the federal government in 1937 to make h
Federal Housing Administration Mortgage: Federal Housing Administration (FHA) mortgages, which are made by private lenders, resemble conventi
Federal Insurance Contributions Act (FICA): The Federal Insurance Contribution Act (FICA) is the federal law that requires employers to withhold
Federal Open Market Committee (FOMC): The Open Market Committee (FOMC) of the Federal Reserve Board meets eight times a year to evaluate t
Federal Reserve Fedwire: Fedwire is an electronic transfer system owned and operated by the 12 Federal Reserve Banks that ena
Federal Reserve System: The Federal Reserve System, sometimes known as the Fed, is the central bank of the United States. Th
Fee-For-Service: When you’re covered by fee-for-service health insurance, you pay your medical bills and file a cla
FICO Score: Created by the Fair Isaac Corporation, FICO® is the best-known credit scoring system in the US. Bas
Fiduciary: A fiduciary is an individual or organization legally responsible for holding or investing assets on
Fill Or Kill (FOK): If an investor places an FOK order, it means the broker must cancel the order if it can't be filled
Finance Charge: The finance charge, or total dollar amount you pay to borrow, includes the interest you pay plus any
Financial Accounting Standards Board (FASB): The Financial Accounting Standards Board (FASB) is an independent, self-regulatory board that establ
Financial Future: When a futures contract is linked to a financial product, such as a stock index, Treasury notes, or
Financial Institution: Any institution that collects money and puts it into assets such as stocks, bonds, bank deposits, or
Financial Instrument: A financial instrument is a physical or electronic document that has intrinsic monetary value or tra
Financial Plan: A financial plan is a document that describes your current financial status, your financial goals an
Financial Planner: A financial planner evaluates your personal finances and helps you develop a financial plan to meet
Financial Pyramid: Many investors structure their portfolios in the form of a financial pyramid. The base of the pyrami
Firm Quote: A firm quote includes a bid and ask price at which a market maker is willing to trade a specific qua
Fixed Annuity: A fixed annuity is a contract that allows you to accumulate earnings at a fixed rate during a build-
Fixed-Income Investment: Fixed-income investments typically pay interest or dividends on a regular schedule and may promise t
Fixed-Rate Mortgage: A fixed-rate mortgage is a long-term loan that you use to finance a real estate purchase, typically
Flat Tax: A flat tax, also known as a regressive tax, applies to everyone at the same rate, as a sales tax doe
Flexible Spending Account: Some employers offer flexible spending accounts (FSA), sometimes called cafeteria plans, as part of
Float: In investment terms, a float is the number of outstanding shares a corporation has available for tra
Floating An Issue: When a corporation or public agency offers new stocks or bonds to the public, making the offering is
Floating Rate: A debt security or corporate preferred stock whose interest rate is adjusted periodically to reflect
Floating Shares: Floating shares are shares of a public corporation that are available for trading in a stock market.
Floor Broker: Floor brokers at a securities or commodities exchange handle client orders to buy or sell through a
Floor Trader: Unlike floor brokers who fill client orders, floor traders buy and sell stocks or commodities for th
Foreclosure: Foreclosure occurs when your lender repossesses your home because you have defaulted on your mortgag
Foreign Exchange (FOREX): Any type of financial instrument that is used to make payments between countries is considered forei
Form ADV: All investment advisory firms must register by filing a Form ADV either with the Securities and Exch
Formula Investing: When you invest on a set schedule, you're using a technique known as formula investing. You're formu
Forward Contract: A forward contract is similar to a futures contract, in the sense that both types of contracts cover
Forward Price-To-Earnings Ratio: Stock analysts calculate a forward price-to-earnings ratio, or forward P/E, by dividing a stock's cu
Fourth Market: Institutional investors, including mutual fund companies and pension funds, who trade large blocks o
Fractional Share: If you reinvest your dividends or invest a fixed dollar amount in a stock dividend reinvestment plan
Freddie Mac: Freddie Mac is a shareholder-owned corporation that was chartered in 1970 to increase the supply of
Free Cash Flow: A business's free cash flow statement may differ significantly from its cash flow statement. The cas
Front-End Load: The load, or sales charge, that you pay when you purchase shares of a mutual fund or annuity is call
Frontrunning: If you trade stock or other investments because you know that an upcoming transaction by a third par
Full Faith And Credit: Federal and municipal governments can promise repayment of debt securities they issue because they c
Full-Service Brokerage Firm: Full-service brokerage firms usually offer their clients a range of services in addition to executin
Fund Family: A fund family, or family of funds, is a group of mutual funds controlled by a single investment comp
Fund Network: Fund networks, sometimes called fund supermarkets, offer access to thousands of different mutual fun
Fund Of Funds (FOF): A fund of funds is a pooled investment, such as a mutual fund or a hedge fund, whose underlying inve
Fundamental Analysis: Fundamental analysis is one of two primary methods for analyzing a stock's potential return. It invo
Fungible: When two or more things are interchangeable, can be substituted for each other, or are of equal valu
Futures Commission Merchant (FCM): A futures commission merchant (FCM) is a person or a firm that acts as an agent to execute buy or se
Futures Contract: Futures contracts, when they trade on regulated futures exchanges, obligate you to buy or sell a spe
Futures Exchange: Traditionally, futures contracts and options on those contracts have been bought and sold on a futur
Gainer: Stocks that increase in value over the course of the trading day are described as gainers or advance
General Account: A general account is a deposit account. In the insurance industry, a general account is the account
General Agreement On Tariffs And Trade (GATT): A General Agreement on Tariffs and Trade was signed in 1947 to provide an international forum to enc
General Obligation (GO) Bond: State and local governments issue general obligation (GO) municipal bonds and pay the interest and r
Gift Tax: A gift tax is a tax on the combined total value of the taxable gifts you make that exceed your lifet
Gilt-Edged Security: When the term gilt-edged is applied to bonds, it's the equivalent of describing a stock as a blue ch
Global Depositary Receipt (GDR): To raise money in more than one market, some corporations use global depositary receipts (GDRs) to s
Global Fund: Global, or world, mutual funds invest in US securities as well as those of other countries. In that
Go Long: When you go long, you buy a security or other financial product that you intend to hold for a period
Go Public: A corporation goes public when it issues shares of its stock in the open market for the first time,
Go Short: When you enter a futures contract that commits you to sell or deliver the underlying product, you go
Gold Standard: The gold standard is a monetary system that measures the relative value of a currency against a spec
Good Faith Deposit: A good faith deposit is a sum of money provided by a buyer to a seller, which demonstrates the buyer
Good Faith Estimate: A good faith estimate is a written summary provided by your mortgage lender. It shows the amount you
Good Til Canceled (GTC): If you want to buy or sell a security at a specific price, you can ask your broker to issue a good '
Good Will: When the term good will is used in connection with evaluating a company, it covers the intangible va
Government Bond: The term government bond is used to describe the debt securities issued by the federal government, s
Government National Mortgage Association (Ginnie Mae): The Government National Mortgage Association, known as Ginnie Mae, guarantees mortgage-backed securi
Grace Period: A grace period is the number of days between the date a credit card issuer calculates your new balan
Green Fund: A mutual fund that selects investments based on a commitment to environmental principles may be desc
Green Shoe Clause: A green shoe clause allows the group of investment banks that underwrite an initial public offering
Gross Domestic Product (GDP): The total value of all the goods and services produced within a country's borders is described as it
Gross Margin: Gross margin, sometimes called gross profit, is the percentage by which profits exceed production co
Gross National Product (GNP): The gross national product is a measure of a country’s economic output — the total value of all
Gross Spread: In an initial public offering (IPO), the gross spread is the difference between what the underwriter
Growth: Growth is an increase in the value of an investment over time. Unlike investments that produce incom
Growth And Income Fund: Growth and income mutual funds invest in securities that provide, as their name suggests, a combinat
Growth Rate: A growth rate measures the percentage increase in the value of a variety of markets, companies, or o
Guaranteed Investment Contract (GIC): A guaranteed investment contract, or GIC (pronounced gick), promises to preserve your principal and
Guaranteed Renewable Policy: Your insurance company can’t cancel a guaranteed renewable life insurance policy as long as you pa
Guarantor: If lenders are concerned about your income, your credit history, or other risk factors when you appl
Guardian: A guardian is someone you designate to be legally responsible for your minor children or other depen
Haircut: A haircut, in the financial industry, is a percentage discount that’s applied informally to the ma
Hard Assets: Hard assets are the tangible property of a company or partnership, such as the buildings, furniture,
Hardship Withdrawal: A hardship withdrawal, also known as a hardship distribution, occurs when you take money out of your
Head Of Household: Head of household is an IRS filing status that you can use if you are unmarried or considered unmarr
Health Insurance: Health insurance covers some or all of the cost of treating an insured person’s illnesses or injur
Health Savings Account (HSA): A health savings account is designed to accumulate tax-free assets to pay current and future healthc
Hedge Fund: Hedge funds are private investment partnerships open to institutions and wealthy individual investor
Hedger: Hedgers in the futures market try to offset potential price changes in the spot market by buying or
Hedging: Hedging is an investment technique designed to offset a potential loss on one investment by purchasi
High Deductible Health Plan (HDHP): A high deductible health plan (HDHP) requires substantially higher than average out-of-pocket expens
High-Yield Bond: High-yield bonds are bonds whose ratings from independent rating services are below investment grade
Highly Compensated Employees: Highly compensated employees are people whose on-the-job earnings are higher than the level the gove
Hold: A securities analyst’s recommendation to hold appears to take a middle ground between encouraging
Holding Company: By acquiring enough voting stock in another company, a holding company, also called a parent company
Holding Period: A holding period is the length of time you keep an investment. In some cases, a specific holding per
Home Equity Line Of Credit (HELOC): Sometimes referred to as a HELOC, a home equity line of credit lets you borrow against the equity yo
Home Equity Loan: A home equity loan, sometimes called a second mortgage, is secured by the equity in your home. You r
Homeowners Insurance: Homeowners insurance is a contract between an insurance company and a homeowner to cover certain typ
Hope Scholarship Credit: You may qualify for a Hope scholarship tax credit for money you spend on qualified educational expen
Hot Issue: If a newly issued security rises steeply in price after its initial public offering (IPO) because of
Hybrid Annuity: With a hybrid annuity, you allocate part of your annuity’s assets to providing fixed income paymen
Hybrid Mortgage: Sometimes called an intermediate ARM, a fixed-period ARM, or a multiyear mortgage, a hybrid mortgage
Hypothecation: Hypothecation means pledging an asset as collateral for a loan. If you use a margin account to buy o
Identity Theft: Identity theft is the unauthorized use of your personal information, such as your name, address, Soc
Immediate Annuity: You buy an immediate annuity contract with a lump-sum purchase. You begin receiving income from the
Imputed Interest: Imputed interest is interest you are assumed to have collected even if that interest was not paid. F
In-The-Money: An option is in-the-money at any point up to expiration if the exercise price is below the market pr
Incentive Stock Option (ISO): Corporate executives may be granted incentive stock options (ISOs), also called qualifying stock opt
Income Annuity: An income annuity, sometimes called an immediate annuity, pays an annual income, usually in monthly
Income Fund: Income funds are mutual funds whose investment objective is to produce current income rather than lo
Income In Respect Of A Decedent: Any income your beneficiary receives after your death that would have gone to you if you were still
Income Statement: An income statement, also called a profit and loss statement, shows the revenues from business opera
Income Stock: Stock that pays income in the form of regular dividends over an extended period is often described a
Incorporation: When a business incorporates, it receives a state or federal charter to operate as a corporation. A
Indemnity Insurance: An indemnity insurance policy pays up to a fixed amount when you make a claim, often on a per day ba
Indenture: An indenture is a written contract between a bond issuer and bond holder that is proof of the bond i
Independent 401(K): The independent 401(k) — also known as a solo 401(k), indy-k, or uni-k — is a variation of the 4
Index: An index reports changes up or down, usually expressed as points and as a percentage, in a specific
Index Fund: An index fund is designed to mirror the performance of a stock or bond index, such as Standard & Poo
Index Of Leading Economic Indicators: This monthly composite of ten economic measurements was developed to track and help forecast changin
Index Option: Index options are puts and calls on a stock index rather than on an individual stock. They give inve
Indexed Annuity: An indexed annuity is a deferred annuity whose return is tied to the performance of a particular equ
Individual Retirement Account (IRA): Individual retirement accounts (IRAs) provide tax incentives to encourage people who earn income to
Individual Retirement Annuity: An individual retirement annuity is one type of individual retirement arrangement. It resembles the
Individual Retirement Arrangement (IRA): An individual retirement arrangement (IRA), which may be set up as either an account or an annuity,
Inefficient Market: In an inefficient market, investors may not have enough information about the securities in that mar
Inflation: Inflation is a persistent increase in prices, often triggered when demand for goods is greater than
Inflation Rate: The inflation rate is a measure of changing prices, typically calculated on a month-to-month and yea
Inflation-Adjusted Return: Inflation-adjusted return is what you earn on an investment after accounting for the impact of infla
Inflation-Protected Security (TIPS): US Treasury inflation-protected securities (TIPS) adust the principal twice a year to reflect inflat
Inherited IRA: An inherited IRA is an IRA that passes to a beneficiary at the death of the IRA owner. If you name y
Initial Public Offering (IPO): When a company reaches a certain stage in its growth, it may decide to issue stock, or go public, wi
Insider Trading: If management of a publicly held company, members of its board of directors, or anyone who holds mor
Instinet: Instinet is the world's largest agency brokerage firm. As an agency firm, it doesn't trade stock for
Institutional Fund: An institutional fund is a mutual fund that’s available to large investors, such as pension funds
Institutional Investor: Institutional investors buy and sell securities in large volume, typically 10,000 or more shares of
Insufficient Funds: If you don’t have enough money available in your checking account to cover the checks you’ve wri
Insurance Trust: You set up an insurance trust to own a life insurance policy on your life. When you die, the face va
Insured Bond: An insured bond is a municipal bond whose interest and principal payments are guaranteed by a triple
Integrated Pension Plan: In an integrated pension plan, your employer counts part of your Social Security benefit in the defi
Interest: Interest is what you pay to borrow money using a loan, credit card, or line of credit. It is calcula
Interest Rate: Interest rate is the percentage of the face value of a bond or the balance in a deposit account that
Interest-Only Mortgage: With an interest-only mortgage loan, you pay only the interest portion of each scheduled payment for
Interest-Rate Risk: Interest-rate risk describes the impact that a change in current interest rates is likely to have on
Intermediate-Term Bond: Intermediate-term bonds mature in two to ten years from the date of issue. Typically, the interest o
Internalization: Internalization occurs when a securities trade is executed within a brokerage firm rather than thoug
International Fund: This type of mutual fund invests in stocks, bonds, or cash equivalents that are traded in overseas m
International Monetary Fund (IMF): The IMF was set up as a result of the United Nations Bretton Woods Agreement of 1944 to help stabili
Intestate: A person who dies without a will is said to have died intestate. In this case, the probate court in
Intrinsic Value: A company’s intrinsic value, or underlying value, is used to calculate its projected worth. You de
Introducing Broker (IB): An introducing broker (IB) is a person or firm that takes orders to buy or sell futures contracts fr
Investment Bank: An investment bank is a financial institution that helps companies take new bond or stock issues to
Investment Club: If you're part of an investment club, you and the other members jointly choose the investments the c
Investment Company: An investment company is a firm that offers open-end funds, called mutual funds, closed-end funds, s
Investment Grade: When a bond is rated investment grade, its issuer is considered able to meet its obligations, exposi
Investment Horizon: Your investment horizon is the point in time when you hope to achieve a particular investment goal.
Investment Income: Investment income — sometimes called unearned income — is the money that you collect from your i
Investment Objective: An investment objective is a financial goal that helps determine the type of investments you make. F
IRA Rollover: If you move assets from an existing individual retirement account (IRA) or an employer sponsored ret
Irrevocable Trust: An irrevocable trust is a legal agreement whose terms cannot be changed by the creator or grantor wh
Issue: When a corporation offers a stock or bond for sale, or a government offers a bond, the security is k
Issuer: An issuer is a corporation, government, agency, or investment trust that sells securities, such as s
January Effect: Each year, the stock market tends to increase slightly in value between December 31 and the end of t
Jumbo CD: Jumbo CDs are large-denomination certificates of deposit with balances of at least $100,000, and som
Junior Security: In the world of bonds, the term junior means having less claim to repayment. If you own a junior sec
Junk Bond: Junk bonds carry a higher-than-average risk of default, which means that the bond issuer may not be
Keogh Plan: A group of qualified retirement plans, including profit sharing and money purchase defined contribut
Laddering: Laddering is an investment strategy that calls for establishing a pattern of rolling maturity dates
Lapse: A lapse causes a policy, right, or privilege to end because the person or institution that would ben
Large-Capitalization (Large-Cap) Stock: The stock of companies with market capitalizations of $10 billion or more is known as large-cap stoc
Last Trading Day: The last trading day is the final day on which an order to buy or sell an options contract or future
Lead Underwriter: When a company wants to raise capital by selling securities to investors, it partners with an invest
Lease: A lease is a legal agreement that provides for the use of something — typically real estate or equ
Level Load: Some load mutual funds impose a recurring sales charge, called a level load, each year you own the f
Level Term Insurance: With a level term life insurance policy, your annual premium remains the same for the term, which ma
Level Yield Curve: A level yield curve results when the interest rate on short-term US Treasury issues is essentially t
Leverage: Leverage is an investment technique in which you use a small amount of your own money to make an inv
Leveraged Buyout: A leveraged buyout occurs when a group of investors using borrowed money, often raised with high yie
Liability: In personal finance, liabilities are the amounts you owe to creditors, or the people and organizatio
Lien: A lien is a document that shows you owe money to a lender on a particular vehicle or other asset, su
Lienholder: A lienholder is the bank, finance company, credit union, other financial institution, or individual
Life Expectancy: Your life expectancy is the age to which you can expect to live. Actuarial tables establish your off
Life Insurance: Life insurance is a contract you sign with an insurance company, obligating it to pay a death benefi
Life Settlement: If you are over age 70 and no longer need your life insurance policy, you may be able to sell it to
Lifecycle Fund: A lifecycle fund, which is a fund of funds, invests in individual mutual funds that a fund company p
Lifeline Account: A lifeline account is a basic checking account with low or no minimum deposit and balance requiremen
Lifetime Learning Credit: You may qualify to claim a lifetime learning tax credit of up to $2,000 each year for qualified high
Limit Order: A limit order sets the maximum you will pay for a security or the minimum you are willing to accept
Limit Price: A limit price is the specific price at which you tell your stockbroker to execute a buy or sell orde
Limited Liability Company: Organizing a business enterprise as a limited liability company (LLC) under the laws of the state wh
Limited Partner: A limited partner is a member of a partnership whose only financial risk is the amount he or she has
Limited Partnership: A limited partnership is a financial affiliation that includes at least one general partner and a nu
Line Of Credit: A line of credit, sometimes called a bank line, is the most you can borrow under a revolving credit
Lipper, Inc: Lipper provides financial data and performance analysis for more than 30,000 open- and closed-end mu
Liquid Asset: Liquid assets are accounts or securities that can be easily converted to cash at little or no loss o
Liquidity: If you can convert an asset to cash easily and quickly, with little or no loss of value, the asset h
Listed Security: A listed security is a stock, bond, options contract, or similar product that is traded on an organi
Listing Requirement: Listing requirements are the standards a corporation must meet to have its stock or bonds traded on
Living Will: A living will is a legal document that describes the type of medical treatment you want—or don’t
Load: If you buy a mutual fund through a broker or other financial professional, you pay a sales charge or
Load Fund: Some mutual funds charge a load, or sales commission, when you buy or sell shares or, in some cases,
Loan Note: A loan note is a promissory agreement describing the terms of a loan and committing the person or in
Lock-Up Period: A lock-up period is the time during which you cannot sell an investment that you own. You are most l
Logarithmic Scale: On a logarithmic scale or graph, comparable percentage changes in the value of an investment, index,
Long Bond: Thirty-year bonds issued by the US Treasury are referred to as long bonds. The interest rate on the
Long Position: Having a long position in a stock means you own the security. You have the right to collect the divi
Long-Term Capital Gain (Or Loss): When you sell a capital asset that you have owned for more than a year at a higher price than you pa
Long-Term Care Insurance: Long-term care insurance is a policy designed to cover at least some of your expenses if you have a
Long-Term Equity Anticipation Securities (LEAPS): These long-term options on stocks have expiration dates of up to three years rather than the shorter
Loose Credit: In order to combat a sluggish economy, the Open Market Committee of the Federal Reserve (the Fed) ma
Loser: Stocks whose market prices drop the most during the trading day are described, rather bluntly, as lo
Lump Sum: A lump sum is an amount of money you pay or receive all at once rather than in increments over a per
Lump-Sum Distribution: When you retire, you may have the option of taking the value of your pension, salary reduction, or p
Make A Market: A dealer who specializes in a specific security, such as a bond or stock, is said to make a market i
Managed Account: A managed account is a portfolio of stocks or bonds chosen and managed by a professional investment
Management Fee: A management fee is the percentage of your account value that an investment company or manager charg
Margin: Margin is the minimum amount of collateral — in either cash or securities — you must have in you
Margin Account: Margin accounts are brokerage accounts that allow you a much wider range of transactions than cash a
Margin Call: To protect the margin loans they make, brokers issue a margin call if your equity in your margin acc
Margin Requirement: The margin requirement is the minimum amount the Federal Reserve, in Regulation T, requires you to d
Marginal Tax Rate: Because the US income tax system is progressive, your tax rate rises as your taxable income rises th
Mark To The Market: When an investment is marked to the market, its value is adjusted to reflect the current market pric
Markdown: A markdown is the amount a broker-dealer earns on the sale of a fixed-income security and is the dif
Market: Traditionally, a securities market was a place — such as the New York Stock Exchange (NYSE) — wh
Market Capitalization: Market capitalization is a measure of the value of a company, calculated by multiplying the number o
Market Cycles: Market cycles are the recurrent patterns of expansion and contraction that characterize the securiti
Market Maker: A broker-dealer who is prepared to buy or sell a specific security — such as a bond or at least on
Market Order: When you tell your broker to buy or sell a security at the market, or current market price, you are
Market Price: A security's market price is the price at which it is currently trading in an organized market. A go
Market Risk: Market risk, also known as systematic risk, is risk that results from the characteristic behavior of
Market Timing: Market timing means trying to anticipate the point at which a market has hit, or is about to hit, a
Market Value: The market value of a stock or bond is the current price at which that security is trading. In a mor
Markup: When you buy securities from a broker-dealer or market maker, you pay a markup. The markup is either
Matching Contribution: A matching contribution is money your employer adds to your salary reduction retirement savings acco
Matrix Trading: Matrix trading occurs when the yield spread between two categories of bonds with different levels of
Maturity Date: A bond or other loan that must be repaid comes due on its maturity date. On that date, the full face
Mediation: Mediation is an informal, voluntary method of resolving disputes, in which the parties in conflict m
Medicaid: Medicaid is federal government program run by the individual states. It’s designed to provide assi
Medicare: Medicare is a federal government insurance program designed to provide healthcare coverage for peopl
Merger: When two or more companies consolidate by exchanging common stock, and the resulting single company
Micro-Cap Stock: A micro-cap stock is one with a smaller market capitalization — sometimes much smaller — than st
Mid-Capitalization (Mid-Cap) Stock: A mid-cap stock is one issued by a corporation whose market capitalization falls in a range between
Minimum Finance Charge: A minimum finance charge is a fee collected by a credit card issuer each billing period. It applies
Minimum Required Distribution (MRD): A minimum required distribution is the smallest amount you can take each year from your retirement s
Minority Interest: All shareholders whose combined shares represent less than half of the total outstanding shares issu
Modern Portfolio Theory: In making investment decisions, adherents of modern portfolio theory focuses on potential return in
Modified Adjusted Gross Income (MAGI): Your modified adjusted gross income (MAGI) is your adjusted gross income (AGI) plus deductions, such
Momentum Investing: A momentum investor focuses on stocks that are rising in value on increasing daily volume, and avoid
Monetary Policy: A country’s central bank is responsible for its monetary policy. In the United States, for example
Monetary Reserve: A government’s monetary reserve includes the foreign currency and precious metals that its central
Money Factor: A money factor, also called a lease factor, is the finance charge you pay on an automobile lease. Un
Money Manager: Registered money managers are paid professionals who are responsible for handling the securities por
Money Market: The money market isn't a place. It's the continual buying and selling of short-term liquid investmen
Money Market Account: These bank savings accounts normally pay interest at rates comparable to those offered by money mark
Money Market Fund: Money market mutual funds invest in stable, short-term debt securities, such as commercial paper, Tr
Money Order: A money order entitles the person named as payee on the order to receive the specific amount of cash
Money Purchase Plan: A money purchase plan is a defined contribution retirement plan that requires the employer to contri
Money Supply: The money supply is the total amount of liquid or near-liquid assets in the economy. The Federal Res
Monte Carlo Simulation: A Monte Carlo simulation can be used to analyze the return that an investment portfolio is capable o
Moodys Investors Service, Inc.: Moody's is a financial services company best known for rating investments. Moody's rates bonds, comm
Morgan Stanley Capital International Indexes: These indexes are computed by the investment firm Morgan Stanley's Capital International group (MSCI
Morningstar, Inc.: Morningstar, Inc., offers a broad range of investment information, research, and analysis online, in
Mortgage: A mortgage, or more precisely a mortgage loan, is a long-term loan used to finance the purchase of r
Mortgage-Backed Security: Mortgage-backed securities are created when the sponsor buys up mortgages from lenders, pools them,
Moving Average: A moving average of securities prices is an average that is recomputed regularly by adding the most
Multiple: A stock's multiple is its price-to-earnings ratio (P/E). It's figured by dividing the market price o
Municipal Bond (Muni): Municipal bonds are debt securities issued by state or local governments or their agencies to financ
Municipal Bond Fund: Municipal bond mutual funds invest in municipal bonds. Earnings from these funds are always free of
Mutual Company: A mutual company is a privately held company owned by its policyholders, depositors, or other custom
Mutual Fund: A mutual fund is a professionally managed investment product that sells shares to investors and pool
Naked Option: When you write, or sell, a call option but don't own the underlying instrument, such as a stock in t
Named Perils Policy: A named perils policy is a standard homeowners insurance policy that offers limited protection for d
NASD: NASD is the largest self-regulatory organization (SRO) in the United States. Formerly known as the N
NASDAQ: NASDAQ is the world's oldest electronic stock market and the largest stock exchange in the United St
NASDAQ Composite Index: The NASDAQ Composite index tracks the prices of all of the securities traded on the NASDAQ Stock Mar
NASDAQ Stock Market: The NASDAQ Stock Market is the world's oldest and largest electronic stock market and is now a natio
National Association Of Securities Dealers Automated Quotation System (NASDAQ): NASDAQ is a computerized stock trading network that allows brokers to access price quotations for st
National Bank: All banks in the United States are chartered by either a state government or the federal government.
National Credit Union Administration (NCUA): The National Credit Union Administration (NCUA) is an independent federal agency that authorizes the
National Debt: The total value of all outstanding Treasury bills, notes, and bonds that the federal government owes
National Market System (NMS): The National Market System (NMS) links all the major stock markets in the United States and was deve
Negative Amortization: When your loan principal increases rather than decreases because your monthly payment isn’t enough
Negative Yield Curve: A negative, or inverted, yield curve results when the interest rate on short-term US Treasury issues
Negotiable: A negotiable contract is one whose terms can be altered by agreement between the parties to the cont
Negotiable-Order-Of-Withdrawal Account: A negotiable-order-of-withdrawal (NOW) account is an interest-bearing checking account that pays int
Net Asset Value (NAV): The NAV is the dollar value of one share of a fund. It’s calculated by totaling the value of all t
Net Change: The difference between the closing price of a stock, bond, or mutual fund, or the last price of a co
Net Margin: A company’s net margin, typically expressed as a percentage, is its net profit divided by its net
Net Worth: A corporation's net worth is the retained earnings, or the amount left after dividends are paid, plu
Netting: Netting is a process the National Securities Clearing Corporation (NSCC) uses to streamline securiti
New Issue: When a stock or bond is offered for sale for the first time, it's considered a new issue. New issues
New York Stock Exchange (NYSE): The New York Stock Exchange (NYSE) is one of the two securities exchanges operated by the NYSE Group
New York Stock Exchange Composite Index: This New York Stock Exchange Composite Index measures the performance of the common stocks listed on
Nikkei Stock Average: The Nikkei Stock Average, sometimes call the Nikkei Index or simply the Nikkei, is a price-weighted
No-Load Mutual Fund: You buy a no-load mutual fund directly from the investment company that sponsors the fund. You pay n
Nominal Yield: Nominal yield is the annual income that you receive from a bond or other fixed-income security divid
Nominee Name: Nominee name is the name that a brokerage firm uses to register ownership of stocks or bonds it hold
Nonbank Banks: Nonbank banks, also called limited-service banks, offer some but not all of the services of a tradit
Noncallable: When a bond is noncallable, the issuer cannot redeem it before the stated maturity date. Some bonds
Noncompetitive Bid: Investors who can't or don't wish to meet the minimum purchase requirements for competitive bidding
Nondiscrimination Rule: All qualified retirement plans, including 401(k) plans, must follow nondiscrimination rules. Among o
Nonforfeiture Clause: If there is a nonforfeiture clause in your insurance policy contract, and you have let the policy la
Nonprofit: Charitable, cultural, and educational organizations that exist for reasons other than providing a pr
Nonqualified Annuity: An annuity you buy on your own, rather than through a qualified employer sponsored retirement plan o
Nonsystematic Risk: Nonsystematic risk results from unpredictable factors, such as poor management decisions, successful
Not-For-Profit: A not-for-profit organization pays taxes and may make a profit, but those profits are not distribute
Note: A note is a debt security that promises to pay interest during the term that the issuer has use of t
NYSE Arca: NYSE Arca, one of the two securities exchanges operated by the NYSE Group, Inc., is the first open,
Odd Lot: The purchase or sale of securities in quantities of fewer than the standard trading lot — 100 shar
Off-Board: Transactions in New York Stock Exchange (NYSE) listed securities that aren’t executed on a nationa
Offer: The offer is the price at which someone who owns a security is willing to sell it. It’s also known
Offering Date: The offering date is the first day on which a stock or bond is publicly available for purchase. For
Offering Price: A security's offering price is the price at which it is taken to market at the time of issue. It may
Offset: You offset an options or futures position by taking a second position in a contract with identical t
Offshore Fund: An offshore fund is a mutual fund that’s sponsored by a financial institution that’s based outsi
Online Brokerage Firm: To buy and sell securities online, you set up an account with an online brokerage firm. The firm exe
Online Trading: If you trade online, you use a computer and an Internet connection to place your buy and sell orders
Open Interest: Open interest is a record of the total number of open contracts in any particular commodity or optio
Open Market: In an open market, any investor with the money to pay for securities is able to buy those securities
Open Order: An order that remains on the books until it is either executed or canceled is known as an open order
Open Outcry: When exchange-based commodities traders shout out their buy and sell orders or use a combination of
Open-End Mutual Fund: Most mutual funds are open-end funds. This means they issue and redeem shares on a continuous basis,
Open-Market Operations: Open-market operations allow the Fed to implement its monetary policy and regulate the money supply.
Opening: The first transaction in each security or commodity when trading begins for the day occurs at what's
Opportunity Cost: When you make an investment decision, there is often a next best alternative that you decided not to
Option: Buying an option gives you the right to buy or sell a specific financial instrument at a specific pr
Option Premium: When you buy an option, you pay the seller a nonrefundable amount, known as the option premium, for
Options Chain: Options chains are charts showing all the options currently available on a particular underlying ins
Options Class: An options class includes all the calls or all the puts on a single underlying instrument that share
Options Clearing Corporation (OCC): The Options Clearing Corporation issues all exchange-listed securities options in the United States
Options Series: An options series includes all the contracts within an options class that have identical terms, incl
Order Imbalance: An order imbalance occurs when there are substantially more buy orders in a particular security than
Order Protection Rule: The order protection rule, part of Regulation NMS — for National Market System — adopted by the
Original Issue Discount: A bond or other debt security that is issued at less than par but can be redeemed for full par value
Origination Fee: An origination fee is an amount, usually calculated as a percentage of a mortgage loan or home equit
OTC Bulletin Board (OTCBB): During the trading day, the electronic OTC bulletin board (OTCBB) provides continuously updated real
Out-Of-The-Money: An option is out-of-the-money when the market price of an instrument on which you hold an option is
Outstanding Shares: The shares of stock that a corporation has issued and not reacquired are described as its outstandin
Over-The-Counter (OTC): Securities that trade over-the-counter (OTC) are not listed on an organized stock exchange, such as
Overbought: When a stock or entire securities market rises so steeply in price that technical analysts think tha
Overdraft: An overdraft is a withdrawal from a bank account that exceeds the funds you have available. If you o
Overdraft Protection: Overdraft protection is a bank line of credit. It’s activated if you have insufficient funds to co
Oversold: A stock, a market sector, or an entire market may be described as oversold if it suddenly drops shar
Oversubscribed: An initial public offering (IPO) is oversubscribed when investor demand for the shares is greater th
Overvaluation: A stock whose price seems unjustifiably high based on standard measures, such as its earnings histor
Overweighted: When you own more of a security, an asset class, or a subclass than your target asset allocation cal
Own-Occupation Policy: If you purchase an own-occupation disability insurance policy, you are entitled to receive benefits
Paid-Up Policy: A paid-up policy is a whole life insurance policy for which no additional premium payments are requi
Paper: Short-term, unsecured debt securities that a corporation issues are often referred to as paper — f
Paper Profit (Or Loss): If you own an asset that increases in value, any increase in value is a paper profit, or unrealized
Par Value: Par value is the face value, or named value, of a stock or bond. With stocks, the par value, which i
Participating Policy: When policyholders have what is called a participating policy from a mutual insurance company, they
Pass-Through Security: When a corporation or government agency buys loans from lenders to pool and package as securities fo
Passive Income: You collect passive income from certain businesses in which you aren't an active participant. They m
Passive Losses: You have passive losses from businesses in which you aren't an active participant. These include lim
Passively Managed: An index mutual fund or exchange traded fund is described as passively managed because the securitie
Payable-On-Death: A bank account titled payable-on-death (POD) lets you name one or more beneficiaries to whom the ass
Payout Ratio: A payout ratio, expressed as a percentage, is the rate at which a company distributes earnings to it
Penny Stock: Stocks that trade for less than $1 a share are often described as penny stocks. Penny stocks change
Pension: A pension is an employer plan that’s designed to provide retirement income to employees who have v
Pension Benefit Guaranty Corporation (PBGC): The PBGC was created to ensure that participants in defined benefit pension plans under its jurisdic
Pension Maximization: Pension maximization is a strategy that begins with selecting a single life annuity for income to be
Per Capita: Per capita is the legal term for one of the ways that assets being transferred by your will can be d
Per Stirpes: Per stirpes is the legal term for transferring the assets of your estate to your children and their
Periodic Interest Rate: The periodic interest rate, sometimes called the nominal rate, is the interest rate a lender charges
Permanent Insurance: Permanent insurance is a life insurance policy that provides a death benefit as long as you live, or
Personal Identification Number (PIN): A personal identification number is a combination of numbers, letters, or both that you use to acces
Phantom Gains: Phantom gains are capital gains on which you owe tax even if your actual return on the investment is
Phishing: Phishing is one way that identity thieves use the Internet to retrieve your personal information, su
Piggyback: A broker who piggybacks acts illegally by buying or selling a security for his or her own account af
Pink Sheets: Pink Sheets LLC is a centralized financial information network. It provides current prices and other
PITI: PITI is an acronym for principal, interest, taxes, and insurance — the four elements of a monthly
Plan Administrator: A plan administrator is the person or company your employer selects to manage its retirement savings
Plan Participant: If you’re enrolled in an employee retirement plan, such as a 401(k) or pension plan, you’re a pl
Plan Provider: The plan provider of a retirement savings plan, such as a 401(k), 403(b), or 457 plan is the mutual
Plan Sponsor: The plan sponsor of a retirement savings plan is an employer who offers a retirement savings plan to
Points: The term points can mean different things in different contexts. With regard to stock, a point repre
Policyholder Or Policy Owner: If you own an insurance contract or policy, you are a policyholder, also known as the policy owner.
Portable Benefits: Benefits or accumulated assets that you can take with you when you leave your employer or switch job
Portfolio: If you own more than one security, you have an investment portfolio. You build your portfolio by buy
Portfolio Manager: A portfolio manager is responsible for overseeing a collection of investments, either for an institu
Portfolio Turnover: Portfolio turnover is the rate at which a mutual fund manager buys or sells securities in a fund, or
Positive Yield Curve: A positive yield curve results when the interest rate on long-term US Treasury bonds is higher than
Post-Trade Processing: Each securities transaction goes through post-trade processing during which the details of the trade
Power Of Attorney: A power of attorney is a written document that gives someone the legal authority to act for you as y
Pre-Existing Condition: A pre-existing condition is a health problem that you already have when you apply for insurance. If
Preapproval: When you’re preapproved for a mortgage, the lender guarantees in advance the maximum you can borro
Preferred Provider Organization (PPO): A preferred provider organization (PP0) is a network of doctors and other healthcare providers that
Preferred Stock: Some corporations issue preferred as well as common stock. Preferred stock can be an attractive inve
Premium: A premium is the purchase price of an insurance policy or an annuity contract. You may pay the premi
Prepayment Penalty: Most lenders allow you to prepay the outstanding balance of a loan at any time without a fee, but so
Prequalification: When you prequalify for a mortgage, the lender calculates the approximate amount you’d be able to
Prerefunding: Prerefunding may occur when a corporation plans to redeem a callable bond before its maturity date.
Present Value: The present value of a future payment, or the time value of money, is what money is worth now in rel
Pretax Contribution: A pretax contribution is money that you agree to have subtracted from your salary and put into a ret
Pretax Income: Pretax income, sometimes described as pretax dollars, is your gross income before income taxes are w
Price Improvement: Price improvement occurs when you pay less or receive more on a securities transaction than the bid
Price-To-Book Ratio: Some financial analysts use price-to-book ratios to identify stocks they consider to be overvalued o
Price-To-Cash Flow: You find a company's price-to-cash flow ratio by dividing the market price of its stock by its cash
Price-To-Earnings Ratio (P-E): The price-to-earnings ratio (P-E) is the relationship between a company's earnings and its share pri
Price-To-Sales Ratio: A price-to-sales ratio, or a stock's market price per share divided by the revenue generated by sale
Primary Market: If you buy stocks or bonds when they are initially offered for sale, and the money you spend goes to
Prime Rate: The prime rate is a benchmark for interest rates on business and consumer loans. For example, a bank
Principal: Principal can refer to an amount of money you invest, the face amount of a bond, or the balance you
Private Equity: Private equity is an umbrella term for large amounts of money raised directly from accredited indivi
Private Letter Ruling: A private letter ruling explains a position the Internal Revenue Service (IRS) has taken on a specif
Private Mortgage Insurance (PMI): When you buy a home with a down payment of less than 20% of the purchase price, your lender may requ
Private Placement: If securities are sold directly to an institutional investor, such as a corporation or bank, the tra
Privatization: Privatization is the conversion of a government-run enterprise to one that is privately owned and op
Probate: Probate is the process of authenticating, or verifying, your will so that your executor can carry ou
Probate Estate: Your probate estate includes all of the assets that will pass to your heirs through your will. It do
Profit: Profit, which is also called net income or earnings, is the money a business has left after it pays
Profit Margin: A company's profit margin is derived by dividing its net earnings, after taxes, by its gross earning
Profit Sharing: A profit-sharing plan is a type of defined contribution retirement plan that employers may establish
Profit Taking: Profit taking is the sale of securities after a rapid price increase to cash in on gains. Profit tak
Program Trading: Program trading is the purchase or sale of a basket, or group, of 15 or more stocks with the combine
Progressive Tax: In a progressive, or graduated, income tax system, taxpayers with higher incomes are taxed at higher
Proprietary Fund: Proprietary mutual funds are offered for sale by the financial institution — such as a bank, inves
Prospectus: A prospectus is a formal written offer to sell stock to the public. It is created by an investment b
Proxy: If you own common stock in a US corporation, you have the right to vote on certain company policies
Proxy Statement: The Securities and Exchange Commission (SEC) requires that all publicly traded companies provide a p
Prudent Man Rule: The prudent man rule is the basic standard a fiduciary, who is responsible for other people’s mone
Public Company: The stock of a public company is owned and traded by individual and institutional investors. In cont
Pump And Dump: In a pump and dump scheme, a scam artist manipulates the stock market by buying shares of a low-cost
Put Option: Buying a put option gives you the right to sell the specific financial instrument underlying the opt
Put-Call Ratio: Since investors buy put options when they expect the market to fall, and call options when they expe
Quadruple Witching Day: Once every quarter — on the third Friday of March, June, September, and December — stock options
Qualified Domestic Trust (QDOT): If your spouse isn’t a US citizen and your estate is large enough to risk being vulnerable to esta
Qualified Retirement Plan: A qualified retirement plan is an employer sponsored plan that meets the requirements established by
Qualitative Analysis: When a securities analyst evaluates intangible factors, such as the integrity and experience of a co
Quantitative Analysis: When a securities analyst focuses on a corporation's financial data in order to project potential fu
Quarter: The financial world splits up its calendar into four quarters, each three months long. If January to
Quasi-Public Corporation: In the United States, quasi-public corporations have links to the federal government although they a
Qubes: The NASDAQ Stock Market sells shares in a unit investment trust (UIT) that tracks the NASDAQ 100 Sto
Quotation (Quote): On a stock market, a quotation combines the highest bid to buy and the lowest offer to sell a stock.
R-Squared: R-squared is a statistical measurement that determines the proportion of a security’s return, or t
Rally: A rally is a significant short-term recovery in the price of a stock or commodity, or of a market in
Random Walk Theory: The random walk theory holds that it is futile to try to predict changes in stock prices. Advocates
Ranking: Ranking is a method of assigning a value to an investment in relation to comparable investments by u
Rate Of Return: Rate of return is income you collect on an investment expressed as a percentage of the investment’
Rating: Rating means evaluating a company, security, or investment product to determine how well it meets a
Rating Service: A rating service, such as A.M. Best, Moody's Investors Service, or Standard & Poor's, evaluates bond
Real Estate Investment Trust (REIT): REITs are publicly traded companies that pool investors' capital to invest in a variety of real esta
Real Interest Rate: Your real interest rate is the interest rate you earn on an investment minus the rate of inflation.
Real Property: Real property is what's more commonly known as real estate, or realty. A piece of real property incl
Real Property Tax: A real property tax is a local tax on the value of real estate. The property may be assessed at full
Real Rate Of Return: You find the real rate of return on an investment by subtracting the rate of inflation from the nomi
Real Time: When an event is reported as it happens — such as a quick jump in a stock's price or the constantl
Realized Gain: When you sell an investment for more than you paid, you have a realized gain. For example, if you bu
Recapture: When you recapture assets, you regain them, usually because of the provisions of a contract or legal
Recession: Broadly defined, a recession is a downturn in a nation's economic activity. The consequences typical
Recharacterization: When you have converted one type of individual retirement account (IRA) to another type — such as
Record Date: To be paid a stock dividend, you must own the stock on the day that the corporation's board of direc
Red Herring: When a security is offered to the public for the first time, the underwriter prepares a preliminary
Redemption: When a fixed-income investment matures, and you get your investment amount back, the repayment is kn
Redemption Fee: Some open-end mutual funds impose a redemption fee when you sell shares in the fund, often during a
Refinancing: Refinancing is the process of paying off an existing loan by taking a new loan and using the same pr
Regional Exchange: Stock exchanges in cities other than New York are called regional exchanges. They list both regional
Registered Bond: When a bond is registered, the name of the owner and the particulars of the bond are recorded by the
Registered Investment Adviser (RIA): Investment advisers who register with the Securities and Exchange Commission (SEC) and agree to be r
Registered Representative: Registered representatives are licensed to act on investors' orders to buy and sell and to provide a
Regressive Tax: A regressive or flat income tax system taxes everyone at the same rate, as sales tax does. Advocates
Regulation D: Both the Securities and Exchange Commission (SEC) and the Federal Reserve have regulations known as
Regulation T: Regulation T is the Federal Reserve Board rule that governs how much you can borrow through your mar
Regulation Z: Under Regulation Z, a Federal Reserve Board rule covering provisions of the Consumer Credit Protecti
Rehypothecation: Rehypothecation occurs when your broker, to whom you have hypothecated — or pledged — securities
Reinvestment: When you own certain stocks and most mutual funds, you can reinvest the dividends or distributions t
Reinvestment Risk: Reinvestment risk occurs when you have money from a maturing fixed-income investment, such as a cert
Renewable Term: A renewable term life insurance policy allows you to extend your coverage for an additional period w
Required Beginning Date (RBD): Your required beginning date is the date by which you must take your first minimum required distribu
Reserve Requirement: The Federal Reserve requires its member banks to keep a certain percentage of their customer deposit
Restricted Security: Restricted securities are stocks or warrants that you acquire privately, through stock options or a
Retained Earnings: Retained earnings, also known as retained surplus, are the portion of a company’s profits that it
Return: Your return is the profit or loss you have on your investments, including income and change in value
Return On Equity: Return on equity (ROE) measures how much a company earns within a specific period in relation to the
Return On Investment: Your return on investment (ROI) is the profit you make on the sale of a security or other asset divi
Revenue: Revenue is the money you collect for providing a product or service. Revenue is different from earni
Revenue Bond: Revenue bonds are municipal bonds issued to finance public projects, such as airports and roadways.
Reverse Merger: In a reverse merger, a privately held company purchases a publicly held company and, as part of the
Reverse Mortgage: A reverse mortgage is a loan available to a homeowner 62 or older who may be eligible to borrow agai
Reverse Stock Split: If a company's stock is trading at a low price, the company may decide to reduce the number of exist
Revocable Trust: A revocable trust is a living trust that can be modified or revoked by the grantor, or person who es
Revolving Credit: A revolving credit arrangement allows you to borrow up to your credit limit without having to reappl
Rider: A rider is a modification to an insurance policy that typically adds a new coverage or higher covera
Rights Of Survivorship: If two or more people own property jointly with rights of survivorship and one of the owners should
Rights Offering: In a rights offering, also known as a subscription right, a company offers existing shareholders the
Risk: According to modern investment theory, the greater the risk you take in making an investment, the gr
Risk Premium: A risk premium is one way to measure the risk you'd take in buying a specific investment. Some analy
Risk Ratio: Some investors and financial analysts try to estimate the risk an investment poses by speculating on
Risk Tolerance: Risk tolerance is the extent to which you as an investor are comfortable with the risk of losing mon
Risk-Adjusted Performance: When you evaluate an investment's risk-adjusted performance, you aren't looking simply at its straig
Risk-Free Return: When you buy a US Treasury bill that matures in 13 weeks, you're making a risk-free investment in th
Rollover: If you move your assets from one investment to another, it's called a rollover. For example, if you
Rollover IRA: A rollover IRA is an individual retirement annuity you create with tax-deferred assets you move from
Roth 401(K): The Roth 401(k) retirement plan, which was introduced in 2006, allows you to make after-tax contribu
Roth IRA: A Roth IRA is a variation on a traditional individual retirement account (IRA). Because contribution
Round Lot: A round lot is the normal trading unit for stocks and bonds on an organized securities exchange or m
Rule Of 78: A practice, called the Rule of 78, means that lenders front-load the interest they charge on a short
Russell 1000 Index: This capitalization-weighted index, published by the Frank Russell Company of Tacoma, Washington, tr
Russell 2000 Index: The Russell 2000 Index, published by the Frank Russell Company of Tacoma, Washington, tracks the sto
Safekeeping: Safekeeping occurs when a broker-dealer holds securities for a client that are registered in the cli
Salary Reduction Plan: A salary reduction plan is a type of employer-sponsored retirement savings plan. Typical examples ar
Sale-Leaseback: In a sale-leaseback arrangement — also known as a leaseback — an owner sells his or her property
Sales Charge: A sales charge is the fee you pay to buy shares of a load mutual fund or other investment purchased
Sales Tax: A sales tax is a tax imposed by state and local governments on transactions that occur within their
Sallie Mae: This corporation purchases student loans from various lenders, such as banks, and packages the loans
Sarbanes-Oxley Act Of 2002: Named after its main Congressional sponsors, Senator Paul Sarbanes and Representative Michael Oxley,
Savings Account: A savings account is a deposit account in a bank or credit union that pays interest on your balance
Savings Bonds: The US government issues two types of savings bonds: Series EE and Series I. You buy electronic Seri
Screen: A screen is a set of criteria against which you measure stocks or other investments to find those th
Scrip: Scrip is a certificate or receipt that represents something of value but has no intrinsic value. Wha
Scripophily: Scripophily is the practice of collecting antique stocks, bonds, and other securities. The most valu
Secondary Market: When investors buy and sell securities through a brokerage account, the transactions occur on what's
Secondary Offering: The most common form of secondary offering occurs when an investor, usually a corporation, but somet
Sector: A sector is a segment of the economy that shares distinctive characteristics, such as telecommunicat
Sector Fund: Sector mutual funds, also called specialty or specialized funds, concentrate their investments in a
Secular Market: A secular market is one that moves in the same direction — up or down — for an extended period.
Secured Bond: The issuer of a bond or other debt security may guarantee, or secure, the bond by pledging, or assig
Secured Credit Card: A secured credit card is linked to a savings account you open with the bank or other financial insti
Secured Loan: A secured loan is a loan that’s guaranteed with collateral, such as a home or car. If you default
Securities And Exchange Commission (SEC): The Securities and Exchange Commission (SEC) is an independent federal agency that oversees and regu
Securities Investor Protection Corporation (SIPC): The Securities Investor Protection Corporation (SIPC) is a nonprofit corporation created by Congress
Securitization: Securitization is the process of pooling various types of debt — mortgages, car loans, or credit c
Security: Traditionally, a security was a physical document, such as stock or bond certificate, that represent
Self-Amortizing Loan: A self-amortizing loan is one that’s paid off over a specific period of time as the borrower makes
Self-Directed Retirement Plan: If you participate in a salary reduction retirement plan, such as a 401(k) or a 403(b), you usually
Self-Regulatory Organization (SRO): All securities and commodities exchanges in the United States are self-regulatory organizations (SRO
Sell Short: Selling short is a trading strategy that's designed to take advantage of an anticipated drop in a st
Sell Side: Brokerage firms and other financial services companies that buy and sell investments as agents for r
Sell-Off: A sell-off is a period of intense selling of securities and commodities triggered by declining price
Senior Bond: Senior bonds offer slightly lower interest rates than subordinated or junior bonds because they are
Separate Account: An insurance company’s separate account is established to hold the premiums you use to purchase fu
Separate Account Fund: Each variable annuity contract offers a number of separate account funds. Each of those funds owns a
Series 6: The Series 6 is a licensing examination that you must pass to be entitled to sell mutual funds and v
Series 63: The Series 63 is a licensing examination that most states require for anyone who wants to sell secur
Series 7: To be licensed to sell securities to individual investors, brokers must pass the Series 7 exam, also
Settlement Agent: In some states, a settlement agent, or closing agent, handles the real estate transaction when you b
Settlement Date: The settlement date is the date by which a securities transaction must be finalized. By that date th
Share: A share is a unit of ownership in a corporation or mutual fund, or an interest in a general or limit
Share Class: Some stocks and certain mutual funds subdivide their shares into classes or groups to designate thei
Shareholder: If you own stock in a corporation, you are a shareholder of that corporation. You're considered a ma
Sharpe Ratio: Using the Sharpe ratio is one way to compare the relationship of risk and reward in following differ
Short Interest: Short interest is the total number of shares of a particular stock that investors have sold short in
Short Position: If you sell stock short and have not yet repurchased shares to replace the ones you borrowed, you ar
SIMPLE: A SIMPLE, also known as a SIMPLE IRA, is short for Savings Incentive Match Plans for Employees, an e
Simple Interest: If you earn simple interest on money you deposit in a bank or use to purchase a certificate of depos
Simplified Employee Pension Plan (SEP): An SEP is a qualified retirement plan set up as an individual retirement annuity (IRA) in an employe
Sinking Fund: To ensure there’s money on hand to redeem a bond or preferred stock issue, a corporation may estab
Slow Market: A slow market is one with sluggish trading and static prices. In this environment, it may be difficu
Small Order Execution System (SOES): The small order execution system automatically routes, executes, reports, and compares market and li
Small-Capitalization Stock: Shares of relatively small publicly traded corporations with a total market capitalization of less t
Social Security: Social Security is a federal government program designed to provide income for qualifying retired pe
Socially Responsible Fund: When socially responsible mutual funds, also known as green funds or conscience funds, select securi
Soft Dollars: Soft dollars are amounts that money managers, including mutual fund managers, pay out of their clien
Soft Market: A soft market, also known as a buyer's market, is one in which there is inactive trading in an indiv
Sole Proprietor: A sole proprietor is the owner and operator of a business that isn’t registered as either a corpor
Special Situation: An undervalued stock that one or more analysts expects to increase in price in the very near future
Specialist: A specialist or specialist unit is a member of a securities exchange responsible for maintaining a f
Specialists Display Book: A display book was traditionally a written chronological record of all limit, stop, and short sale o
Speculator: When you make a financial commitment because you believe something will happen in the market where y
Spending Plan: A spending plan can help you manage your money more effectively, live within your income limits, red
Spin-Off: In a spin-off, a company sets up one of its existing subsidiaries or divisions as a separate company
Split-Funded Annuity: A split-funded annuity lets you begin receiving income from a portion of your principal immediately,
Spoofing: Some market analysts maintain that the increased volatility in stock markets may be the result of an
Spot Market: Commodities and foreign currencies are traded for immediate delivery and payment on the spot market,
Spot Price: The spot, or cash, price is the price of commodities and foreign currencies that are being sold for
Spread: In the most general sense, a spread is the difference between two similar measures. In the stock mar
Standard and Poors 500 Index (S and P 500): The benchmark Standard & Poor’s 500 Index, widely referred to as the S&P 500, tracks the performan
Standard and Poors (S and P): Standard & Poor's (S&P) is an investment services company that rates bonds, stock, commercial paper,
Standard and Poors Depositary Receipt (SPDR): When you buy SPDRs — pronounced spiders — you're buying shares in a unit investment trust (UIT)
Standard and Poors-BARRA Growth And Value Indexes: Some investors favor growth stocks while others favor value stocks. Since 1992, results of those inv
Standard Deviation: Standard deviation is a statistical measurement of how far a variable quantity, such as the price of
Startup: While any new company could be considered a start-up, the description is usually applied to aggressi
State Guaranty Funds: State guaranty funds, which are offered in every state, protect contract owners against the insolven
Statutory Voting: When shareholders vote for candidates nominated to serve on a company's board of directors, they usu
Step-Up In Basis: When you inherit assets, such as securities or property, they are stepped-up in basis. That means th
Stochastic Modeling: Stochastic modeling is a statistical process that uses probability and random variables to predict a
Stock: Stock is an equity investment that represents part ownership in a corporation and entitles you to pa
Stock Certificate: A stock certificate is a paper document that represents ownership in a corporation. In the past, whe
Stock Market: A stock market may be a physical place, sometimes known as a stock exchange, where brokers gather to
Stock Option: A stock option, or equity option, is a contract that gives its buyer the right to buy or sell a spec
Stock Split: When a company wants to make its shares more attractive and affordable to a greater number of invest
Stop Order: You can issue a stop order, which instructs your broker to buy or sell a security once it trades at
Stop Price: When you give an order to buy or sell a stock or other security once it has reached a certain price,
Stop-Limit Order: A stop-limit is a combination order that instructs your broker to buy or sell a stock once its price
Straddle: A straddle is hedging strategy that involves buying or selling a put and a call option on the same u
Straight Life: A straight life insurance policy is a type of permanent insurance that provides a guaranteed death b
Strangle: A strangle is hedging strategy in which you buy or sell a put and a call option on the same underlyi
Street Name: Street name is a way to identify stock that is registered in a broker-dealer’s name rather than in
Strike Price: The strike price, also called the exercise price, is the price at which you as an options holder can
STRIPS: STRIPS, an acronym for separate trading of registered interest and principal of securities, are spec
Structured Product: Financial institutions create investment products, known generically as structured products, that tr
Stub Stock: When a company has a negative net worth as a result of being bought out or going bankrupt, it may co
Subaccount: The separate account funds to which you allocate your variable annuity premiums are sometimes called
Subclass: Each asset class — stock, bonds, and cash equivalents, for example — is made up of a number of d
Subordinated Debt: Subordinated debt generally refers to debt securities that have a secondary or lesser claim to the i
Subscription Price: The subscription price is the discounted price at which a current shareholder can buy additional sha
Subscription Right: If a corporation’s charter has a preemptive rights clause, before the company offers a new issue o
Substitute Check: Substitute checks are digital copies of the fronts and backs of paper checks that provide the same l
Suitability Rules: Self regulatory organizations (SROs), such as NASD, securities exchanges, and individual brokerage f
Surrender Fee: A surrender fee is the penalty you owe if you withdraw money from an annuity or mutual fund within a
Survivorship Life: Survivorship life insurance, also known as a second-to-die policy, is permanent insurance that cover
Suspended Trading: Suspended trading means that an exchange has temporarily stopped trading in a particular stock or ot
Swap: When you swap or exchange securities, you sell one security and buy a comparable one almost simultan
Sweep Account: A brokerage firm or bank may automatically transfer — or sweep — a client’s uninvested or surp
Syndicate: When a group of investment banks works together to underwrite and distribute a new security issue, t
Synthetic Investment: A synthetic investment simulates the return of an actual investment, but the return is actually crea
Systematic Risk: Systematic risk, also called market risk, is risk that’s characteristic of an entire market, a spe
Systematic Withdrawal: Systematic withdrawal is a method of receiving income in regular installments from your mutual fund
Tailgating: When a broker places your order for a security, and then immediately places an order for his or her
Target Date Fund: A target date fund is a fund of funds that allows you to link your investment portfolio to a particu
Target Risk Fund: A target risk fund is a fund of funds that maintains a specific asset allocation in order to provide
Tax Bracket: A tax bracket is a range of income that is taxed at a specific rate. In the United States there are
Tax Credit: A tax credit is an amount you can subtract from the tax you would otherwise owe. Unlike a deduction
Tax Deferred: A tax-deferred account allows you to postpone income tax that would otherwise be due on employment o
Tax Exempt: Some investments are tax exempt, which means you don't have to pay income tax on the earnings they p
Tax-Efficient Funds: When a mutual fund minimizes the income earnings and capital gains it distributes to its shareholder
Teaser Rate: A teaser rate is a low introductory interest rate on a credit card or an adjustable rate mortgage (A
Technical Analysis: Technical analysts track price movements and trading volumes in various securities to identify patte
Tenancy-In-Common: When two or more people own property as tenants-in-common (TIC), they share in the property’s tax
Tender Offer: When a corporation or other investor offers to buy a large portion of outstanding shares of another
Term: A term is the length of time between when a fixed-income security, such as a bond or note, is offere
Term Insurance: A term life insurance policy provides a guaranteed death benefit for a set period of time, such as f
Thin Market: A thin market is one where securities trade infrequently. The term can refer to an entire securities
Thinly Traded: A particular stock, sector, or market is said to be thinly traded if transactions occur only infrequ
Third Market: Exchange-listed securities, such as those that are traded on the New York Stock Exchange (NYSE) or t
Tick: A tick is the minimum movement by which the price of a security, option, or index changes. With stoc
Ticker (Tape): While the stock markets are in session, there is a running record of trading activity in each indivi
Ticker Symbol: A ticker symbol, also known as a stock symbol, is a unique string of letters that identifies a parti
Time Deposit: When you put money into a bank or savings and loan account with a fixed term, such as a certificate
Time Value Of Money: The time value of money is money's potential to grow in value over time. Because of this potential,
Title: A title is a legal document proving ownership of a piece of property. If you are buying real estate
Title Insurance: Title insurance protects your lender’s interest in your home and real property in case its ownersh
Title Search: A title search is an examination of property records by a title company or attorney to ensure that t
Toehold Purchase: A toehold purchase is one in which an individual investor or investment firm caps holdings in a pote
Total Return: Total return is your annual gain or loss on an equity or debt investment. It includes dividends or i
Total Return Index: A total return index is an equity market index that’s calculated using the assumption that all of
Tracking Stock: Some corporations issue tracking stock, a type of common stock whose value is linked to the performa
Trade Date: The trade date is the day on which you buy or sell a security, option, or futures contract. The sett
Trader: Traders who are dealers or market makers select the securities in which they will specialize and pro
Trading Floor: The trading floor is the active trading area of a stock exchange, such as the New York Stock Exchang
Trading Range: A trading range means different things on different types of markets. On a stock exchange or over-th
Trading Symbol: All companies listed on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), or t
Trading Volume: Trading volume is the quantity of stocks, bonds, futures contracts, options, or other investments th
Tranche: Certain securities, such as collateralized mortgage obligations (CMOs), are made up of a number of c
Transfer: In a transfer, a 401(k) or IRA custodian or trustee moves the assets in your existing account direct
Transfer Agent: A transfer agent is responsible to a corporation for keeping track of who owns the corporation’s s
Transferable-On-Death: A securities or brokerage account titled transferable-on-death (TOD) lets you name one or more benef
Transparency: Transparency is a measure of how much information you have about the markets where you invest, the c
Treasury Bill (T-Bill): Treasury bills are the shortest-term government debt securities. They are issued with a maturity dat
Treasury Bond: Treasury bonds are long-term government debt securities with a maturity date of 30 years that are is
Treasury Direct: Treasury Direct is a direct investment system, offered through the US Department of the Treasury, le
Treasury Inflation-Protected Securities (TIPS): TIPS, or Treasury inflation-protected securities, are inflation-indexed Treasury bonds and notes. Th
Treasury Note: Like US Treasury bills, Treasury notes are debt securities issued by the US government and backed by
Treasury Stock: Treasury stock is stock that an issuing company repurchases from its shareholders. A company may buy
Trust: When you create a trust, you transfer money or other assets to the trust. You give up ownership of t
Trustee: A trustee is a person or institution appointed to manage assets for someone else's benefit. For exam
Truth-In-Lending Act: The Truth-in-Lending Act requires every lender to provide a complete and clear disclosure of the key
Turnover Ratio: A mutual fund's turnover ratio measures the percentage of holdings that the fund sells, or turns ove
Uncovered Option: An uncovered option, also known as a naked option, is an option that is not backed by another positi
Underlying Instrument: An underlying instrument is a security, such as a stock, a commodity, or other type of financial pro
Underlying Investment: The investments a variable annuity’s separate account fund, a mutual fund, or other fund makes are
Undervaluation: Any stock that trades at a lower price than the issuing company's reputation, earnings outlook, or f
Underwater: You’re underwater when your employee stock options are out-of-the-money and so currently worthless
Underweighted: When you own less of a security, an asset class, or a subclass than your target asset allocation cal
Underwriter: An underwriter, typically an investment banker, buys an entire new securities issue from the company
Underwriting: Underwriting means insuring. An insurance company underwrites your policy when it agrees to take the
Uniform Gifts To Minors Act (UGMA): Under the UGMA, you as an adult can set up a custodial account for a minor and put assets such as ca
Uniform Transfers To Minors Act (UTMA): The UTMA allows you as an adult to set up a custodial account for a minor, who owns any assets place
Unit Investment Trust (UIT): A UIT may be a fixed portfolio of bonds with specific maturity dates, a portfolio of income-producin
Unit Of Trading: When you buy stocks, bonds, options and commodities futures, it's typical to buy in a particular vol
Unit Trust: The category of investment known as a mutual fund in the US is called a unit trust in other parts of
Universal Life Insurance: Universal life insurance is a type of permanent insurance that offers flexible premiums and a flexib
Universe: In the world of investments, the word universe refers to a specific group or category of investments
Unlisted Security: A security, such as a stock, is unlisted when it does not meet the listing requirements or pay the l
Unrealized Gain: If you own an investment that has increased in value, your gain is unrealized until you sell and tak
Unrealized Loss: If the market price of a security you own drops below the amount you paid for it, you have an unreal
Unsecured Bond: When a bond isn't backed by collateral or security of some kind, such as a mortgage, that can be use
Uptick: An uptick is the smallest possible incremental increase in a security's price, which, for stocks, is
US Savings Bond: The US government issues two types of savings bonds: Series EE and Series I. You buy electronic Seri
US Treasury Bond: US Treasury bonds are long-term government debt securities, typically issued with 30-year terms. New
Valuation: Valuation is the process of estimating the value, or worth, of an asset or investment. Sometimes it
Value Fund: When a mutual fund manager buys primarily undervalued stocks for the fund's portfolio with the expec
Value Line Composite Index: Value Line, an independent investment research service, tracks the performance of approximately 1,70
Value Line, Inc.: Value Line is an investment research company that provides detailed analysis on a range of stocks, m
Value Stock: Value stocks, also known as undervalued stocks, trade at a lower price than the company's reputation
Variable Annuity: A variable annuity is an insurance company product designed to allow you to accumulate retirement sa
Variable Life Insurance: Variable life insurance policies are cash-value policies that allow you to choose how your premium i
Venture Capital (VC): Venture capital is financing provided by wealthy independent investors, banks, and partnerships to h
Vesting: If you are part of an employer pension plan or participate in an employer sponsored retirement plan,
Viatical Settlement: Technically speaking, a viatical settlement occurs when the holder of a life insurance policy sells
Virtual Bank: A virtual bank offers some or all of the same types of accounts and services that traditional bricks
Volatility: The term volatility indicates how much and how quickly the value of an investment, market, or market
Volume: Volume is the number of shares traded in a company's stock or in an entire market over a specified p
Voting Right: Investors who own shares of a common stock or shares in a mutual fund typically have voting rights,
Vulture Fund: Like the scavenging bird of prey that lends its name to the fund, a vulture fund seeks out depressed
Waiver Of Premium: If you have a waiver of premium provision in your long-term care or disability insurance policy, you
Warrant: Corporations may issue warrants that allow you to buy a company's stock at a fixed price during a sp
Wash Sale: When you purchase and then sell or sell and then repurchase the same security or a substantially sim
Weather Derivative: A weather derivative is a futures contract — or options on that futures contract — where the und
Weighted Stock Index: In weighted stock indexes, price changes in some stocks have a much greater impact than price change
Whisper Number: A whisper number is an unofficial earnings estimate for a particular company that a stock analyst sh
White Knight: A corporation that is the target of a hostile takeover sometimes seeks out a white knight that comes
Whole Life Insurance: A whole life insurance policy is a type of permanent insurance that provides a guaranteed death bene
Will: A will is a legal document you use to transfer assets you have accumulated during your lifetime to t
Wire House: National brokerage firms with multiple branches were, in the past, linked by private telephone or ot
Wire Room: When brokerage firm orders to buy and sell were handled manually, the back office of the firm was ca
Withdrawal: A withdrawal is money you take out of your banking, brokerage firm, or other accounts. If you withdr
Withholding: Withholding is the amount that employers subtract from their employees’ gross pay for a variety of
Working Capital: Working capital is the money that allows a corporation to function by providing cash to pay the bill
World Bank: Formally known as the International Bank for Reconstruction and Development (IBRD), the World Bank w
World Fund: US-based mutual funds that invest in securities from a number of countries, including the US, are kn
World Trade Organization (WTO): The WTO was formed in 1995 to enforce the regulations established by the General Agreement on Tariff
Wrap Account: A wrap account is a professionally managed investment plan in which all expenses, including brokerag
Writer: In the options market, a writer is someone who sells put or call options, an activity known as writi
Xenocurrency: Xenocurrency is currency that trades outside of its own borders.
Yankee Bond: Yankee bonds are bonds issued in dollars in the United States by overseas companies and governments.
Yield: Yield is the rate of return on an investment expressed as a percent. Yield is usually calculated by
Yield Curve: A yield curve shows the relationship between the yields on short-term and long-term bonds of the sam
Yield To Maturity (YTM): Yield to maturity is the most precise measure of a bond's anticipated return and determines its curr
Zacks Investment Research: This Chicago-based company tracks changes in earnings estimates, as well as buy, sell, and hold reco
Zero Sum: A zero-sum market is one in which one investor's profit mirrors another investor's loss. For every d
Zero-Coupon Bond: Zero-coupon bonds, sometimes known as zeros, are issued at a deep discount to par value and pay no i
Zero-Coupon Convertible Bond: A zero-coupon convertible bond, like other convertible bonds, can be converted into stock in the iss