Business / Taxes Glossary

Back-Up Withholding: Back-up withholding is triggered when a bank, brokerage firm, or other institution pays interest, dividends, or other income that must be reported on IRS Form 1099 to a payee who does not pr . . . View Full Definition

Balance Of Trade: The difference between the value of a country's imports and exports during a specific period of time is called the balance of trade. If a country exports more than it imports, it has a surpl . . . View Full Definition

Balance Sheet: A balance sheet is a statement of a company’s financial position at a particular moment in time. This financial report shows the two sides of a company’s financial situation — what it owns a . . . View Full Definition

Balanced Fund: Balanced funds are mutual funds that invest in a portfolio of common stocks, preferred stocks, and bonds to meet their investment goal of seeking a strong return while moderating risk. Balan . . . View Full Definition

Balloon Mortgage: With a balloon mortgage, you make monthly payments over the mortgage term, which is typically five, seven, or ten years, and a final installment, or balloon payment, that is significantly la . . . View Full Definition

Bankruptcy: Bankruptcy means being insolvent, or unable to pay your debts. In that case, you can file a bankruptcy petition to seek a legal resolution. Chapter 7 bankruptcy, which allows you to discharg . . . View Full Definition

Barbell Strategy: When you use a barbell strategy you invest equivalent amounts in short-term and long-term bonds, creating the shape that gives the strategy its name. The goal is to earn more interest than i . . . View Full Definition

Basis: Basis is the total cost of buying an investment or other asset, including the price, commissions, and other charges. If you sell the asset, you subtract your basis from the selling price to . . . View Full Definition

Basis Point: Yields on bonds, notes, and other fixed-income investments fluctuate regularly, typically changing only a few hundredths of a percentage point. These small variations are measured in basis p . . . View Full Definition

Basis Price: When you sell a security, such as a stock or bond, or real estate, the price you use to calculate your capital gains is known as your basis price. In the case of a security, it includes the . . . View Full Definition

Bear Market: A bear market is sometimes described as a period of falling securities prices and sometimes, more specifically, as a market where prices have fallen 20% or more from the most recent high. A . . . View Full Definition

Bear Spread: A bear spread is an options strategy that you use when you anticipate a decline in the price of the underlying instrument, such as a stock or an index. As in any spread, you purchase one opt . . . View Full Definition

Bearer Bond: A bearer bond is a certificate that states the security's par value, the rate at which interest will be paid, and the name of the bond's owner. In the past, bearer bonds came with detachable . . . View Full Definition

Bearer Form: When securities are issued as paper certificates and the issuing corporation has no record of the owner, the securities are in bearer form. The bearer, or holder, of the certificate is consi . . . View Full Definition

Behavioral Finance: Behavioral finance combines psychology and economics to explain why and how investors act and to analyze how that behavior affects the market. Behavioral finance theorists point to the marke . . . View Full Definition

Beige Book: Beige book is the colloquial name for the Federal report that is formally titled Summary of Commentary on Current Economic Conditions by Federal Reserve District. The Beige Book is prepared . . . View Full Definition

Bellwether: A market bellwether is a security whose changing price is considered a signal that the market is changing direction. It gets its name from the wether, or castrated ram, that walks at the hea . . . View Full Definition

Benchmark: An investment benchmark is a standard against which the performance of an individual security or group of securities is measured. For example, the average annual performance of a class of se . . . View Full Definition

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