Business / Taxes Glossary

Asset: Assets are everything you own that has any monetary value, plus any money you are owed. They include money in bank accounts, stocks, bonds, mutual funds, equity in real estate, the value of . . . View Full Definition

Asset Allocation: Asset allocation is a strategy, advocated by modern portfolio theory, for reducing risk in your investment portfolio in order to maximize return. Specifically, asset allocation means dividin . . . View Full Definition

Asset Class: Different categories of investments are described as asset classes. Stock, bonds, and cash — including cash equivalents — are major asset classes. So are real estate, derivative investments, . . . View Full Definition

Asset Management Account (AMA): All-in-one asset management accounts provide the financial advantages of an investment account combined with the convenience of an interest-bearing checking account. AMAs generally offer che . . . View Full Definition

Asset-Backed Bond: Asset-backed bonds, also known as asset-backed securities, are secured by loans or by money owed to a company for merchandise or services purchased on credit. For example, an asset-backed bo . . . View Full Definition

Assignment: Assignment occurs when someone who has written, or sold, a listed option receives a notice that the option has been exercised and he or she must fulfill the terms of the contract by buying t . . . View Full Definition

At-The-Money: At-the-money is another way of saying at the current price. Options whose exercise price is the same or almost the same as the current market price of the underlying stock or futures contrac . . . View Full Definition

Auction Market: Auction market trading, sometimes known as open outcry, is the way the major exchanges, such as the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME), have traditional . . . View Full Definition

Audit: An audit is a professional, independent examination of a company's financial statements and accounting documents following generally accepted accounting principles (GAAP). An IRS audit, in c . . . View Full Definition

Audit Committee: The corporate audit committee is the liaison between the company’s management, the board of directors, internal and external auditors, and any other accounting experts advising the company o . . . View Full Definition

Automatic Enrollment: Your employer has the right to sign you up for your company's 401(k) plan, in what's known as an automatic enrollment. If you don't want to participate, you must refuse, in writing, to be pa . . . View Full Definition

Automatic Exercise: If you hold a call option, automatic exercise may occur if the contract is in-the-money by a certain amount. In this case, an in-the-money contract is one where the strike price — the price . . . View Full Definition

Average: A stock market average is a mathematical way of reporting the composite change in prices of the stocks that the average includes. Each average is designed to reflect the general movement of . . . View Full Definition

Average Annual Yield: Average annual yield is the average yearly income on an investment, expressed as a percentage. You can calculate the average annual yield by adding all the income you received on an investme . . . View Full Definition

Average Daily Balance: The average daily balance method is one of the ways that the finance charge on your credit card may be calculated. The credit card company issuer divides the balance you owe each day by the . . . View Full Definition

Baby Bond: Bonds whose par values are less than $1,000 are often described as baby bonds, or, in the case of municipal bonds, as mini-munis. Small companies that may not be able to attract institutiona . . . View Full Definition

Baccalaureate Bond: Baccalaureate bonds are tax-free zero coupon bonds issued by certain states specifically to help families accumulate assets to meet college tuition costs. The bonds are usually sold in small . . . View Full Definition

Back-End Load: Some mutual funds impose a back-end load, or a contingent deferred sales charge, if you sell shares in the fund during the first six or seven years after you purchase them. The charge is a p . . . View Full Definition

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