Financial Terms Glossary

A group of young people studying about financial terms.

FTable of Contents


Accounts Payable: The amount of money owed by a company to its suppliers or creditors for goods or services received but not yet paid for.

Accounts Receivable: The amount of money owed to a company by its customers for goods or services provided on credit.

Accredited Investor: An individual or entity that meets certain criteria and is allowed to invest in securities not registered with regulatory authorities, typically due to their higher level of financial sophistication or net worth.

Accrual: The recognition of income or expenses in the accounting records before cash is received or paid.

Accrued Interest: The amount of interest that has accumulated on a bond or loan since the last interest payment.

Acquisition: The purchase or takeover of one company by another, either through buying its shares or assets.

Adjusted Gross Income (AGI): The total income earned by an individual or entity after certain deductions and adjustments have been made.

After-Hours Trading: Trading activity in the financial markets that occurs outside the regular trading hours of the exchange.

Agency Bonds: Bonds issued by government-sponsored entities or agencies, such as Fannie Mae or Freddie Mac, with the implicit guarantee of the issuing agency.

Alpha Generation: The process of actively managing investments to generate excess returns above a benchmark index.

Alpha: A measure of an investment's performance relative to a benchmark index, indicating the excess return generated by the investment.

Alternative Investments: Investments that fall outside the traditional categories of stocks, bonds, and cash, such as private equity, hedge funds, or real estate.

Amortization: The process of gradually paying off a debt or loan through regular payments, which include both principal and interest.

Annual Percentage Rate (APR): The annualized interest rate charged on a loan or credit card, which includes both the interest and any associated fees.

Annual Report: A comprehensive report prepared by a company at the end of its fiscal year, containing financial statements, management discussions, and analysis of performance.

Annualized Return: The calculated average rate of return over a period of one year, taking into account the compounding effect.

Annualized Volatility: A measure of the fluctuation in the price or value of an investment over time, annualized to provide a comparable metric.

Appreciation: The increase in value of an asset over time.

Arbitrage: The practice of taking advantage of price differences in different markets to make a profit with minimal risk.

Arrears: Unpaid or overdue debt or obligations.

Ask Price: The price at which a seller is willing to sell a security or asset.

Asset Allocation: The distribution of investments across different asset classes, such as stocks, bonds, and cash, to achieve diversification and manage risk.

Asset Management: The professional management of investments, including portfolio selection, analysis, and monitoring, to optimize returns for clients.

Asset Turnover Ratio: A financial ratio that measures a company's efficiency in generating sales revenue relative to its total assets.

Assets: Economic resources owned by an individual, company, or organization, which have measurable value and can be used to generate future benefits.

Audit: An examination of financial records, statements, and transactions to ensure accuracy, compliance, and reliability.

Average Cost Method: A method of inventory valuation where the cost of goods sold and ending inventory is calculated based on the average cost of all units in stock.

Averaging Down: The strategy of buying additional shares of a stock at a lower price to reduce the average cost per share.


Backtesting: A technique used to assess the hypothetical performance of an investment strategy or trading system by applying it to historical data to evaluate hypothetical returns.

Balance Sheet: A financial statement that provides a snapshot of a company's assets, liabilities, and shareholder's equity at a specific point in time.

Balance Transfer: The process of moving an existing debt from one credit card or loan account to another, often done to take advantage of lower interest rates or better terms.

Bank Statement: A periodic statement provided by a bank to its account holders, summarizing account activity, including deposits, withdrawals, and balances.

Bankruptcy: A legal process in which an individual or company declares inability to repay debts and seeks relief from creditors, typically resulting in the liquidation or reorganization of assets.

Basis Point: A unit of measure used in finance to represent a change of 0.01% in interest rates or other financial percentages.

Basis Risk: The risk that the price or value of a financial instrument used for hedging does not move in the opposite direction of the underlying exposure being hedged.

Bear Market Rally: A temporary upward movement in stock prices within an overall bear market, often driven by short-term buying activity but not indicative of a long-term trend reversal.

Bear Market: A market condition characterized by falling prices and pessimism among investors, typically associated with a weak economy and negative investor sentiment.

Beta: A measure of a security's volatility or systematic risk in relation to the overall market, used in assessing the risk-return profile of an investment.

Bid Price: The price at which a buyer is willing to purchase a security or asset.

Blue Chip Stocks: Shares of well-established, financially stable companies with a history of reliable performance and typically considered less risky investments.

Bond: A debt security in which an investor lends money to an issuer (such as a government or corporation) for a defined period of time, earning interest over the life of the bond.

Book Value: The value of an asset or company's equity as shown on its balance sheet, calculated by subtracting liabilities from assets.

Bottom Line: A colloquial term used to refer to a company's net income or profit after all expenses, taxes, and deductions have been accounted for.

Break-even Point: The level of sales or revenue at which total costs are equal to total income, resulting in neither profit nor loss.

Breakout: A technical analysis term that refers to a security's price movement above a significant resistance level or below a significant support level, often accompanied by increased volume.

Broker: An individual or firm that acts as an intermediary between buyers and sellers in financial transactions, earning a commission or fee for their services.

Brokerage: A financial firm or intermediary that facilitates the buying and selling of financial securities, such as stocks, bonds, or commodities, on behalf of clients.

Budget: A financial plan that estimates income and expenses over a specific period, providing guidance on spending and saving.

Bull Market: A market condition characterized by rising prices and optimism among investors, typically associated with a strong economy and positive investor sentiment.

Business Cycle: The natural fluctuation of economic activity between periods of expansion (growth) and contraction (recession) in an economy.

Buy Limit Order: An instruction to a broker or exchange to buy a security at or below a specified price.

Buy-and-Hold: An investment strategy where an investor buys securities with the intention of holding onto them for an extended period, often years or decades.


Capital Expenditure: Money spent by a company to acquire or upgrade physical assets, such as property, equipment, or infrastructure.

Capital Gains: Profits realized from the sale of an asset, such as stocks, real estate, or investments.

Capital Market: The market where long-term securities, such as stocks and bonds, are bought and sold by investors and institutions.

Capital Structure: The mix of debt and equity financing used by a company to fund its operations and investments.

Capital: Financial assets or resources used to generate income or wealth.

Cash Flow Statement: A financial statement that summarizes the inflows and outflows of cash within a business during a specific period.

Cash Flow: The movement of money in and out of a business or individual's accounts.

Cash Value Life Insurance: A type of life insurance policy that combines a death benefit with a savings component. A portion of the premium paid accumulates as cash value, which can be withdrawn or borrowed against during the policyholder's lifetime.

Catch-Up Contributions: Additional contributions allowed by retirement savings plans, such as 401(k) plans or IRAs, for individuals aged 50 or older. These contributions are designed to help individuals "catch up" on their retirement savings.

Certificate of Deposit (CD): A time deposit offered by banks or financial institutions with a fixed term and a fixed interest rate.

Charitable Gift Annuity: A charitable giving arrangement in which an individual donates assets to a charitable organization in exchange for a fixed income stream for a specified period. The donor receives a tax deduction for the donation, and the charity benefits from the donated assets.

Charitable Trust: A legal arrangement in which assets are transferred to a trust to be managed for the benefit of a charitable organization or purpose. The trust generates income or distributes assets to the charity while providing potential tax benefits to the donor.

Collateral: An asset or property that is used as security for a loan, which can be claimed by the lender if the borrower fails to repay the loan.

Commodity: A basic raw material or primary agricultural product that can be bought and sold, such as oil, gold, wheat, or coffee.

Compound Interest: Interest that is calculated on the initial principal as well as the accumulated interest of previous periods.

Consumer Price Index (CPI): A measure of inflation that tracks the average change in prices of a basket of goods and services over time.

Contingent Beneficiary: The individual or entity designated to receive the benefits of a financial asset, such as a life insurance policy or retirement account, if the primary beneficiary is deceased or unable to receive the benefits.

Convertible Term Life Insurance: A type of term life insurance policy that allows the policyholder to convert the coverage into a permanent life insurance policy, such as whole life or universal life, without the need for additional underwriting or a medical exam.

Corporate Bond: A debt security issued by a corporation to raise capital, usually with a fixed interest rate and a defined maturity date.

Cost of Goods Sold (COGS): The direct expenses incurred in the production or acquisition of goods sold by a business.

Cost of Living Adjustment (COLA): An adjustment made to wages, benefits, or retirement income to account for changes in the cost of living. COLAs are typically tied to an inflation index to ensure that purchasing power is maintained over time.

Cost-Benefit Analysis: A technique used to assess the potential benefits and costs of a project or decision to determine its feasibility or profitability.

Counterparty: The other party involved in a financial transaction, such as a trade or a contract.

Credit Rating: An assessment of the creditworthiness of an individual or entity, assigned by credit rating agencies based on various factors like financial history and risk analysis.

Credit: The ability to borrow money or obtain goods or services before payment, based on trust that payment will be made in the future.

Currency: The system of money used in a particular country or region.

Current Ratio: A financial metric that compares a company's current assets to its current liabilities, used to assess its short-term liquidity.

Custodial IRA: An Individual Retirement Account (IRA) established for a minor, managed by a custodian (usually a parent or legal guardian) until the minor reaches the age of majority. The custodian oversees the investments and administration of the IRA on behalf of the minor.


Data Breach: The unauthorized access or release of sensitive or confidential information, such as personal or financial data.

Day Trading: The practice of buying and selling financial instruments within the same trading day to profit from short-term price fluctuations.

Dead Cat Bounce: A temporary recovery or increase in the price of a declining stock or market, followed by a further decline.

Debt Ceiling: The maximum amount of debt that a government is legally allowed to borrow.

Debt Consolidation: Combining multiple debts into a single loan or payment to simplify repayment and potentially lower interest rates.

Debt Service Coverage Ratio: A financial ratio that measures a company's ability to cover its debt obligations with its operating income.

Debt: Money owed by an individual, company, or government to another party.

Debtor: An individual, company, or government that owes money to another party.

Debt-to-Equity Ratio: A financial metric that compares a company's total debt to its shareholders' equity, indicating its leverage and financial risk.

Default: The failure to meet the financial obligations or repayments of a loan or debt.

Deferred Annuity: A type of annuity contract where the income payments are postponed to a future date. During the deferral period, the annuity accumulates interest and grows tax-deferred until the annuitant chooses to begin receiving income payments, usually during retirement.

Deficit: The amount by which a government's spending exceeds its revenue in a given period, resulting in negative net cash flow.

Deflation: A sustained decrease in the general price level of goods and services in an economy, resulting in the increase in purchasing power of money.

Depreciation: The decrease in value of an asset over time due to wear and tear, obsolescence, or other factors.

Derivative: A financial contract or instrument whose value is derived from an underlying asset, such as stocks, bonds, or commodities.

Dilution: The reduction in the ownership percentage of existing shareholders in a company due to the issuance of additional shares.

Direct Deposit: The electronic transfer of funds directly into a recipient's bank account.

Direct Investment: The purchase of a controlling or significant stake in a company by an investor or another company.

Discount Broker: A brokerage firm that executes buy and sell orders on behalf of clients at a lower commission or fee compared to full-service brokers.

Discount Rate: The interest rate used to calculate the present value of future cash flows or to determine the value of an investment.

Diversification: Spreading investments across different assets or securities to reduce risk.

Divestment: The sale or disposal of assets, investments, or business units by a company or individual.

Dividend Paying Whole Life Insurance: A type of permanent life insurance policy that combines a death benefit with a savings component. Dividend-paying whole life insurance policies are issued by mutual insurance companies, and the policyholders may receive dividends based on the insurer's financial performance.

Dividend Payout Ratio: The proportion of a company's earnings that is paid out as dividends to shareholders.

Dividend Reinvestment Plan (DRIP): A program offered by companies that allows shareholders to automatically reinvest their cash dividends to purchase additional shares.

Dividend Yield: The annual dividend payment of a share of stock or other dividend-paying asset, expressed as a percentage of its current market price.

Dividend: A portion of a company's profits distributed to its shareholders as a return on their investment.

Dual Listing: The listing of a company's shares on multiple stock exchanges.

Due Diligence: The process of investigating and evaluating the financial and operational condition of a company before making an investment or entering into a transaction.

Duration: A measure of the sensitivity of the price of a fixed-income investment, such as a bond, to changes in interest rates.


Early Withdrawal: The withdrawal of funds from an investment or account before its intended maturity or withdrawal date, often resulting in penalties or fees.

Earnings Announcement: A public statement by a company reporting its financial results for a specific period, including revenue, earnings, and other key metrics.

Earnings: The profits or net income generated by a company from its operations.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance, indicating its profitability before non-operating expenses.

Economic Indicator: A statistical measure that provides insights into the overall health and direction of an economy, such as GDP, unemployment rate, or consumer price index.

Effective Interest Rate: The true or actual interest rate paid or earned on a loan or investment, taking into account compounding periods and fees.

Emergency Fund: A sum of money set aside specifically for unforeseen expenses or financial emergencies. An emergency fund acts as a financial safety net and is typically used to cover unexpected costs such as medical bills, car repairs, or job loss, without having to rely on credit or take on debt.

Emerging Market: A developing country with a growing economy, characterized by rapid industrialization and increasing integration into the global economy.

EPS (Earnings per Share): A financial metric that represents the portion of a company's earnings allocated to each outstanding share of common stock.

Equity Capital: The funds invested in a company by its shareholders, representing their ownership stake.

Equity Financing: Raising capital for a company by issuing and selling shares of stock to investors.

Equity Index: A benchmark or measure of the performance of a specific group of stocks or the overall stock market.

Equity Market: The market where stocks and other equity securities are bought and sold.

Equity Research: The analysis and evaluation of stocks and companies to provide investment recommendations to clients.

Equity Swap: A financial derivative contract in which two parties agree to exchange cash flows based on the returns of an underlying equity instrument.

Equity: The ownership interest or residual claim of shareholders in a company's assets after deducting liabilities.

Escrow: The holding of funds or assets by a neutral third party until certain conditions are met or a transaction is completed.

Estate Executor: An individual appointed in a will or by a court to oversee the administration and distribution of a deceased person's estate. The estate executor's responsibilities typically include locating and managing assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries according to the terms of the will or applicable laws.

ETF (Exchange-Traded Fund): A type of investment fund that trades on stock exchanges, representing a diversified portfolio of assets.

Eurobond: A bond issued and traded outside the country of its currency denomination.

Exchange Rate: The rate at which one currency can be exchanged for another currency.

Exchange: A marketplace or platform where securities, commodities, or other financial instruments are bought and sold.

Exchange-Traded Option: A standardized contract that grants the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific time period.

Ex-Dividend: The period of time after the declaration of a dividend, during which new investors purchasing the stock are not entitled to receive the upcoming dividend payment.

Execution Risk: The risk that a trade or transaction may not be completed as intended, resulting in unfavorable outcomes or losses.

Execution: The completion or fulfillment of a financial transaction, such as the purchase or sale of a security.

Expected Return: The anticipated or estimated return on an investment, calculated based on the probability of different outcomes and their associated returns.

Expense Management: The process of controlling and reducing expenses within a company or personal financial situation to improve profitability or savings.

Expense Ratio: The percentage of a mutual fund's assets that is used to cover operating expenses, including management fees, administrative costs, and other operating expenses.

Expense: The costs incurred by a company or individual in the process of generating revenue.

Expiry Date: The date at which an option contract or futures contract ceases to be valid or exercisable.


Face Value: The nominal value or original value of a financial instrument, such as a bond or stock, as stated on the instrument itself.

Fair Value: The estimated or calculated value of an asset or liability, reflecting its current market price or the price it would fetch in an orderly transaction.

Federal Reserve (Fed): The central banking system of the United States, responsible for conducting monetary policy, regulating banks, and stabilizing the economy.

Financial Health: The overall state or condition of an individual's or organization's financial well-being. It refers to the ability to meet financial obligations, manage expenses, save for the future, and make informed financial decisions.

Financial Institution: A company or organization that provides various financial services, such as banks, credit unions, insurance companies, and investment firms.

Financial Leverage: The use of borrowed funds or debt to finance investments, aiming to magnify potential returns but also increasing the risk of losses.

Financial Planner: A professional who provides advice and assistance in managing personal or business finances, investments, and financial goals.

Financial Representative: A professional who provides guidance and assistance to individuals or organizations in managing their finances.

Financial Risk: The potential for financial loss or negative impact on investments or operations due to factors such as market volatility, credit default, or economic conditions.

Financial Statement: A formal record of a company's financial activities, including the income statement, balance sheet, and cash flow statement.

Fiscal Year: A 12-month period that a company or government uses for financial reporting and budgeting purposes, not necessarily aligned with the calendar year.

Fixed Assets: Tangible or intangible assets that have a long-term useful life and are not intended for sale, such as buildings, machinery, or patents.

Fixed Cost: Expenses that do not change with the level of production or sales, such as rent, salaries, or insurance.

Fixed Income: Investments that provide a fixed stream of income, such as bonds or certificates of deposit (CDs).

Fixed Indexed Annuity: An insurance contract that offers a guaranteed minimum interest rate along with the opportunity to earn interest based on the performance of a specific market index, such as the S&P 500. Fixed indexed annuities provide a balance of protection against market downturns and the potential for growth.

Fixed Rate: An interest rate that remains constant for a specific period, without changing with market fluctuations.

Flexible Premium Deferred Annuity: An annuity contract that allows the owner to make multiple premium payments over time, rather than a single upfront premium. The premium payments accumulate on a tax-deferred basis until the annuity is annuitized or withdrawn, typically during retirement.

Float: The number of shares of a company's stock that are available for trading in the open market.

Foreclosure: The legal process through which a lender takes possession of a property due to the borrower's failure to meet mortgage obligations.

Foreign Exchange (Forex): The decentralized global market for trading currencies, where one currency is exchanged for another.

Forward Contract: A customized agreement between two parties to buy or sell an asset at a specified price on a future date.

Forward P/E Ratio: The price-to-earnings ratio calculated using estimated future earnings rather than historical earnings.

Franchise: A business model where an entrepreneur buys the rights to operate a proven business concept from a franchisor in exchange for fees or royalties.

Free Cash Flow: The amount of cash generated by a company's operations after deducting capital expenditures and working capital needs.

Free Look Period: A specified period of time, usually 10 to 30 days, during which an insurance policyholder can review the policy after purchase. During the free look period, the policyholder can cancel the policy and receive a full refund of premiums paid if they are not satisfied with the terms and conditions.

Fundamental Analysis: A method of evaluating securities by analyzing the underlying factors that may influence their value, such as financial statements, industry trends, and economic indicators.

Futures Contract: A standardized financial contract to buy or sell an asset at a future date and price, traded on a futures exchange.

Futures: Financial contracts that obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined price and date in the future.


General Ledger: The central accounting record that contains all financial transactions of a company, including assets, liabilities, revenue, and expenses.

Generation Skipping Transfer Tax: A tax imposed on transfers of assets to individuals who are two or more generations younger than the transferor, such as grandchildren or great-grandchildren. The purpose of this tax is to prevent individuals from avoiding estate taxes by transferring assets directly to younger generations.

Geopolitical Risk: The risk arising from political, social, or economic factors that may impact the stability of a country or region, potentially affecting financial markets and investments.

Going Public: The process through which a private company offers its shares to the public for the first time, typically by conducting an initial public offering (IPO).

Golden Parachute: A financial arrangement or severance package offered to top executives in the event of a change in control or acquisition of a company, providing substantial benefits.

Good 'Til Canceled (GTC): An order type in which a trade remains active until it is either executed or canceled by the investor.

Goodwill: An intangible asset that represents the premium paid for acquiring a company above its book value, reflecting the value of its reputation, customer base, and other factors.

Government Bond: Debt securities issued by a government entity to borrow money from investors, typically considered low-risk investments.

Government-Sponsored Enterprise (GSE): A financial institution created or supported by a government to provide specific services or support in areas such as housing finance or student loans.

Grant: Funds provided by a government, foundation, or organization to support a specific project or initiative, often requiring compliance with specific guidelines or reporting.

Grantor: The person or entity that creates a trust or transfers assets to another person or entity (the trustee) for the benefit of a third party (the beneficiary).

Green Bond: A bond issued to finance projects or initiatives that have environmental or climate benefits, such as renewable energy or energy-efficient infrastructure.

Grey Market: A market where goods or securities are traded outside official distribution channels, often before their official release or in unauthorized ways.

Gross Domestic Product (GDP): The total value of all goods and services produced within a country's borders during a specific period, serving as a measure of economic activity and growth.

Gross Income: The total income earned by an individual, company, or entity before deducting expenses or taxes.

Gross Margin Ratio: A financial ratio that expresses gross profit as a percentage of revenue, indicating the profitability of a company's core operations.

Gross Margin: The percentage of revenue remaining after subtracting the cost of goods sold, indicating a company's profitability on its products or services.

Gross Profit: The revenue generated by a company from its sales, minus the cost of goods sold.

Gross Settlement: The process of settling financial transactions on a gross basis, meaning each transaction is settled individually and not netted with other transactions.

Group Health Insurance: Health insurance coverage provided by an employer or organization to a group of individuals, such as employees or members.

Growth Fund: A type of mutual fund or investment vehicle that focuses on investing in stocks of companies with strong growth potential.

Growth Investing: An investment strategy that focuses on selecting stocks or assets with the potential for above-average growth in value, often emphasizing innovation and expansion.

Growth Rate: The percentage increase in a company's revenue, earnings, or other financial metrics over a specific period.

Growth Rate: The rate at which a specific variable, such as revenue, earnings, or market size, is growing over a particular period of time.

Growth Stock: Shares of a company that is expected to experience above-average growth in revenue, earnings, or market value compared to other companies in the market.

Guaranteed Insurability Rider: A provision or add-on to a life insurance policy that allows the policyholder to purchase additional coverage at specific intervals without the need for a medical exam or evidence of insurability. This rider ensures that the policyholder can increase their coverage as their needs change, regardless of any changes in health or medical condition.

Guaranteed Investment Certificate (GIC): A fixed-term investment offered by financial institutions, providing a guaranteed return of principal and often a fixed interest rate.


Hard Asset: Physical assets, such as real estate, commodities, or precious metals, that have intrinsic value and can be bought or sold.

Head and Shoulders Pattern: A technical chart pattern indicating a possible reversal in the price trend, characterized by three peaks, with the middle peak (the head) being higher than the other two (the shoulders).

Health Savings Account (HSA): A tax-advantaged savings account available to individuals with high-deductible health insurance plans, used to save for qualified medical expenses.

Hedge Fund: A private investment fund that pools capital from accredited individuals or institutional investors and employs various strategies to generate returns.

Hedge Ratio: The ratio of the size of a hedging position to the size of the underlying exposure, used to manage risk and offset potential losses.

Hedge: A strategy used to mitigate or offset potential losses in one investment by taking a position in another investment.

High-Frequency Economic Data: Economic data that are released frequently and in real-time, providing up-to-date information on economic indicators and trends.

High-Frequency Trading (HFT): Trading strategies that utilize advanced technology and algorithms to execute large volumes of trades at extremely fast speeds.

High-Yield Bond: A bond with a lower credit rating and higher risk of default, typically offering higher interest rates or yields to compensate investors.

Historical Volatility: The measure of price or return fluctuations of a financial instrument based on past market data, used to assess risk and predict future price movements.

Holding Company Discount: The difference between the market value of a holding company's shares and the combined market value of its underlying assets.

Holding Company: A company that owns a controlling interest in other companies, usually for the purpose of strategic investments or operating subsidiaries.

Holding Period Return: The total return earned by an investment over a specific holding period, taking into account price appreciation, dividends, and interest payments.

Holding Period Yield: The return earned on an investment over a specific holding period, expressed as a percentage and considering interest, dividends, and capital gains or losses.

Holding Period: The length of time an investor holds a particular investment before selling it.

Home Appraisal: An assessment of the value of a property conducted by a professional appraiser, used by lenders to determine the appropriate loan amount.

Home Equity Line of Credit (HELOC): A revolving line of credit secured by the borrower's home equity, allowing them to borrow funds as needed within a predetermined limit.

Home Equity: The value of a homeowner's interest in their property, calculated by subtracting the outstanding mortgage balance from the property's market value.

Homeowners Insurance: Insurance coverage that protects homeowners against potential losses or damages to their property and provides liability protection.

Horizontal Merger: A merger between companies operating in the same industry or offering similar products or services.

Hostile Takeover: The acquisition of a target company by another company without the approval or consent of the target company's management or board of directors.

House Price Index: An indicator that tracks changes in residential property prices within a specific geographic area or market.

Hybrid Mutual Fund: an investment fund that combines characteristics of both equity (stock) funds and fixed-income (bond) funds. It aims to provide investors with a diversified portfolio by investing in a mix of stocks, bonds, and sometimes other asset classes like cash or alternative investments.

Hybrid Securities: Financial instruments that possess characteristics of both debt and equity, such as convertible bonds or preferred stock.

Hypothetical Performance: Hypothetical or simulated performance of an investment strategy or portfolio, often used for illustrative purposes and not based on actual results.


Immediate Annuity: An annuity contract that provides a stream of income payments that start immediately or shortly after the annuity is purchased. With an immediate annuity, the annuitant pays a lump sum to an insurance company and, in return, receives regular income payments for a specified period or for the rest of their life.

Income Replacement Insurance: An insurance policy designed to replace a portion of an individual's income in the event of a disability or inability to work. Income replacement insurance can help provide financial support and cover living expenses when an individual is unable to earn their regular income due to a covered disability or illness.

Income Rider: An optional feature or add-on to an insurance or annuity contract that provides a guaranteed income stream in addition to the base policy benefits. Income riders typically offer income growth or payout options to enhance the policyholder's retirement income.

Income Statement: A financial statement that shows a company's revenue, expenses, and net income over a specific period, providing insights into its profitability.

Income Tax: A tax imposed on an individual's or corporation's income, typically based on a progressive tax rate system.

Index Fund: A type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific market index, such as the S&P 500.

Index: A statistical measure of the performance of a specific market or sector, representing a hypothetical portfolio of securities.

Inflation Rate: The percentage increase in the general level of prices for goods and services over a specific period.

Inflation: The rate at which the general level of prices for goods and services is rising and, consequently, purchasing power is falling.

Inheritance Tax: A tax levied on the assets or properties inherited by an individual after the death of the original owner.

Inheritance: The transfer of assets, properties, or rights from one individual to another upon the death of the original owner.

Initial Investment: The initial amount of money or capital contributed to start an investment or business venture.

Initial Margin Requirement: The minimum percentage of the total value of a futures contract or derivative that must be deposited as collateral to initiate a position.

Initial Margin: The minimum amount of funds or collateral required to be deposited by an investor when trading futures contracts or engaging in margin trading.

Initial Public Offering (IPO): The first sale of a company's stock to the public, allowing it to raise capital and become publicly traded.

Insider Trading: The illegal practice of trading stocks or other securities based on material, non-public information that gives an individual an unfair advantage.

Institutional Investor: Large financial institutions, such as pension funds, mutual funds, or insurance companies, that invest on behalf of their clients or shareholders.

Interest Expense: The cost incurred by a borrower for using borrowed funds, such as interest payments on loans, bonds, or credit card debt.

Interest Rate: The cost of borrowing money or the return earned on an investment, expressed as a percentage of the principal amount.

International Monetary Fund (IMF): An international organization that aims to promote global monetary cooperation, financial stability, and economic growth.

In-the-Money: An option contract where the strike price is lower (for call options) or higher (for put options) than the current market price of the underlying asset.

Intraday Trading: The practice of buying and selling financial instruments within the same trading day, taking advantage of short-term price movements.

Intrinsic Value: The perceived or calculated value of an asset based on its underlying characteristics, independent of its market price.

Investment Bank: A financial institution that offers a range of financial services, including underwriting securities, facilitating mergers and acquisitions, and advising clients on capital raising.

Investment: The purchase of financial assets, such as stocks, bonds, or real estate, with the expectation of generating income or capital appreciation.

Investor: An individual or entity that allocates capital with the expectation of gaining a return on the investment, either through income or capital appreciation.

IPO Prospectus: A legal document that provides detailed information about a company's business, financials, and risks, filed with the regulatory authorities in preparation for an IPO.

IPO Underwriting: The process through which investment banks assist a company in preparing and issuing its initial public offering, including pricing and distribution.

IRA Contribution Limits: The maximum amount that an individual can contribute to their Individual Retirement Account (IRA) in a given tax year. Contribution limits are set by the IRS and may vary based on factors such as the type of IRA, age, and income level.


J-Curve: A graphical representation of the initial decline followed by a subsequent improvement in the financial performance or investment returns of a project or venture.

Job Costing: A costing method used to track and allocate costs to specific jobs or projects, providing insights into profitability and performance.

Job Loss Insurance: Insurance coverage that provides financial protection or income replacement in the event of job loss, typically offering temporary assistance.

Job Market Volatility: Fluctuations or uncertainty in job availability, demand, or hiring patterns, often influenced by economic conditions or industry trends.

Job Market: The overall demand and supply of labor in an economy, including job opportunities, employment rates, and wage levels.

Job Satisfaction: The level of fulfillment, contentment, or happiness an individual experiences in their job or work environment.

Jobber: A trader or broker who buys and sells securities, commodities, or other financial instruments on behalf of others, typically on a short-term basis.

Jobless Claims: The number of individuals who have filed for unemployment benefits, indicating the level of joblessness in an economy.

Joint Account: A bank or investment account held by two or more individuals with shared ownership and access to the funds.

Joint and Several Liability: A legal concept where multiple parties can be held individually responsible for a debt, obligation, or damages, with each party being liable for the full amount.

Joint Annuitant: Refers to an individual named in an annuity contract alongside the primary annuitant. Both the primary annuitant and joint annuitant have the right to receive income payments from the annuity. In the event of the primary annuitant's death, the joint annuitant typically continues to receive the remaining income payments for the duration specified in the contract.

Joint Ownership: A form of ownership in which two or more individuals or entities have equal rights and responsibilities in a property, asset, or investment.

Joint Tenancy: A form of property ownership in which two or more individuals have equal rights to the property, with the right of survivorship.

Joint Venture: A business arrangement in which two or more parties join forces to undertake a specific project or business activity, sharing risks, costs, and profits.

Journal Entry: A record of a transaction or event in the accounting books, typically including the date, accounts involved, and monetary amounts.

Judgment Lien: A legal claim against a property or asset as a result of a court judgment, typically used to enforce the payment of a debt.

Jumbo Loan: A loan that exceeds the limits set by government-sponsored enterprises like Fannie Mae and Freddie Mac, typically used for high-value properties.

Jumbo Mortgage: A mortgage loan that exceeds the conforming loan limits established by government-sponsored enterprises, often used for high-value residential properties.

Jumpstart Our Business Startups (JOBS) Act: A U.S. legislation enacted in 2012 to facilitate access to capital for small businesses and startups through crowdfunding and other means.

Junior Debt: Debt securities that have a lower priority of repayment in the event of bankruptcy or default compared to senior debt, often carrying higher interest rates.

Junk Bond: A high-risk, high-yield bond issued by companies with low credit ratings, often offering higher interest rates to compensate for the increased risk.

Junk Fee: A hidden or unnecessary fee charged by a lender, financial institution, or service provider, often without providing commensurate value.

Junk Fees: Hidden or excessive fees charged to investors or borrowers, often associated with financial transactions or services.

Jurisdiction Risk: The risk associated with the legal and regulatory environment of a particular jurisdiction, including the potential impact on investments or business operations.

Just-in-Time (JIT): A production and inventory management strategy that aims to minimize inventory levels by receiving materials or components just before they are needed.


Kaizen: A Japanese term referring to continuous improvement in business processes, operations, and productivity, with a focus on small incremental changes over time.

Keepwell Agreement: A contractual arrangement where a parent company provides a guarantee or commitment to support the obligations of its subsidiary or affiliated entity.

Keltner Channel: A technical analysis indicator used in charting to identify potential trend reversals or breakouts in stock prices by plotting bands around a moving average.

Keogh Plan: A tax-deferred retirement plan designed for self-employed individuals or small business owners, similar to an Individual Retirement Account (IRA).

Key Man Insurance: An insurance policy taken out by a company to provide financial protection in the event of the disability or death of a key employee or executive.

Key Money: A cash payment or bonus given by a tenant to a landlord to secure or maintain a lease agreement, often prevalent in commercial real estate transactions.

Key Performance Indicators (KPIs): Quantifiable metrics used to measure and evaluate the performance and progress of a company or specific business activities.

Key Rate Duration: A measure of the sensitivity of the price of a bond or fixed-income security to changes in the yield of a specific key interest rate.

Kickback: An illegal or unethical payment or commission given to someone in exchange for preferential treatment or business advantages.

Kicker Loan: A loan that includes a contingent repayment provision, allowing the lender to request additional payments or higher interest rates based on specific trigger events.

Kicker: An additional feature or provision added to a financial transaction, such as a loan or investment, to enhance its value or increase potential returns.

Kiting: A fraudulent practice of creating artificial transactions or inflating bank balances by transferring funds between accounts with insufficient funds to cover the transactions.

Knock-in Option: An option contract that becomes activated or "knocked in" only if the price of the underlying asset reaches a predetermined barrier level.

Knock-out Option: An option contract that becomes null and void or "knocked out" if the price of the underlying asset reaches a predetermined barrier level.

Know-how: Intellectual property or proprietary knowledge and expertise possessed by a company or individual that provides them with a competitive advantage.

Knowledge Economy: An economy where knowledge, skills, and information are considered crucial factors for economic growth and competitiveness, with a focus on innovation and intellectual capital.

Kondratieff Waves: Long-term economic cycles proposed by economist Nikolai Kondratieff, suggesting periods of expansion and contraction lasting around 50 to 60 years.

Korean Composite Stock Price Index (KOSPI): The primary stock market index of South Korea, which tracks the performance of listed companies on the Korean Exchange.

K-Shape Recovery: A term used to describe an economic recovery where certain sectors or groups experience significant growth or improvement while others continue to decline or struggle.

K-Shares: A class of shares issued by Chinese companies listed on mainland China stock exchanges that are denominated in Renminbi (RMB) currency.

KYC (Know Your Customer): The process through which financial institutions verify the identity of their customers to comply with anti-money laundering (AML) regulations and prevent fraud.


Leverage: The use of borrowed funds or debt to finance investments or business operations, with the aim of magnifying potential returns.

Liability: A financial obligation or debt owed by an individual, company, or entity, which must be repaid or fulfilled in the future.

LIBOR (London Interbank Offered Rate): The benchmark interest rate at which banks offer short-term loans to one another in the London wholesale money market.

Life Insurance Rider: An additional provision or feature added to a life insurance policy that provides an extra benefit, for example, an additional payment  to the beneficiary upon the accidental death of the insured, or upon . The death benefit rider can enhance the coverage by offering additional payouts in specific circumstances, such as accidental death or terminal illness.

Limited Liability Company (LLC): A legal business structure that combines elements of both a corporation and a partnership, providing limited liability protection to its owners.

Line of Credit: A flexible form of borrowing that allows individuals or businesses to access funds up to a predetermined limit, with interest charged only on the amount borrowed.

Liquidity: The ease with which an asset or security can be bought or sold in the market without causing significant price changes or disruptions.

Listed Company: A company whose shares are traded on a stock exchange, allowing the general public to buy and sell its stocks.

Listing Requirements: The specific criteria and standards that companies must meet to be listed on a stock exchange, ensuring transparency and investor protection.

Living Trust: A legal arrangement in which an individual (the grantor or settlor) transfers their assets into a trust during their lifetime. The grantor retains control and can make changes or revoke the trust as long as they are alive and competent.

Loan-to-Value Ratio (LTV): The ratio of the loan amount to the appraised value or purchase price of an asset, typically used in mortgage lending to assess risk.

Lock-Up Period: A predetermined period during which certain shareholders or insiders are restricted from selling their shares after an initial public offering (IPO) or merger.

Long Position: The ownership or holding of a financial asset, such as stocks or bonds, with the expectation that its value will increase over time.

Long-Term Investment: A long-term investment refers to an investment strategy or financial product that is held for an extended period, typically with the expectation of capital appreciation or income generation over time. Long-term investments are generally held for more than one year.

Loss Aversion: The psychological bias or tendency of individuals to strongly prefer avoiding losses over acquiring equivalent gains, often leading to risk-averse behavior.


Maintenance Margin: The minimum amount of equity that an investor must maintain in a margin account to continue holding positions or avoid margin calls.

Managerial Accounting: The branch of accounting that focuses on providing financial information and analysis to help internal management make informed business decisions.

Margin Call: A demand by a broker or lender for additional funds or collateral from an investor who has borrowed money to buy securities, usually due to declining market value.

Margin Trading: A strategy that involves borrowing funds from a broker to buy securities, using the investment as collateral, with the aim of amplifying potential returns.

Margin: The borrowed funds or collateral required by a broker from an investor to trade securities, usually a percentage of the total trade value.

Market Capitalization: The total value of a company's outstanding shares, calculated by multiplying the current stock price by the number of shares.

Market Efficiency: The degree to which prices in the financial markets reflect all available information and adjust quickly to new information.

Market Maker: A financial institution or individual that stands ready to buy and sell securities at quoted prices in order to provide liquidity to the market.

Market Order: An order to buy or sell a security at the best available price in the market at the time the order is placed.

Market Risk: The risk associated with the overall market conditions or systematic factors that can affect the value or performance of investments.

Market Segmentation: The process of dividing a market into distinct groups of consumers or businesses based on characteristics such as demographics, needs, or buying behavior.

Market Value: The current price at which an asset, security, or investment can be bought or sold in the market.

Markup: The amount added to the cost of a product or service to determine its selling price, often expressed as a percentage.

Maturity Date: The date on which a financial instrument, such as a bond or certificate of deposit (CD), becomes due and the principal amount is repaid to the investor.

Merger: The combining of two or more companies into a single entity, typically with the aim of creating synergies, increasing market share, or improving efficiency.

Microfinance: Financial services, such as small loans and savings accounts, provided to individuals or small businesses in low-income or underserved communities.

Mid-Cap: A term used to describe companies with a market capitalization between that of large-cap and small-cap companies.

Modified Endowment Contract (MEC): a specific type of life insurance policy that fails to meet certain requirements set by the Internal Revenue Service (IRS) for favorable tax treatment. When a life insurance policy exceeds certain premium limits within a specified time frame, it becomes classified as a MEC. The primary characteristic of a MEC is that it loses the certain tax advantages typically associated with life insurance policies.

Money Laundering: The illegal process of disguising the origins of illegally obtained money or assets to make them appear legitimate.

Money Market Account: A type of savings account that typically offers higher interest rates than regular savings accounts, with limited check-writing and withdrawal privileges.

Money Market: A segment of the financial market where short-term debt securities and instruments with high liquidity and low risk are traded.

Money Supply: The total amount of money available in the economy, including cash, bank deposits, and other liquid instruments.

Mortgage: A loan secured by real estate, typically used to purchase property, with the property serving as collateral for the loan.

Mortgage-backed Security (MBS): A type of investment product that represents a claim on the cash flows from a pool of mortgage loans, typically bundled together and sold to investors.

Municipal Bond: A debt security issued by a state or local government entity to raise funds for public infrastructure projects, typically offering tax advantages to investors.

Mutual Fund: An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.


Naked Option: An option contract that is sold or written without the seller holding the underlying asset or a corresponding position to cover potential obligations.

NASDAQ: An electronic stock exchange where many technology and growth companies are listed.

National Debt: The total amount of money owed by a government resulting from borrowing to fund budget deficits over time.

Negative Cash Flow: A situation in which a company or individual's cash outflows exceed their cash inflows during a specific period.

Negative Equity: A situation in which the market value of an asset, such as a property or investment, is less than the outstanding balance of the loan or debt secured by that asset.

Negotiable Instrument: A written document, such as a check or promissory note, that is freely transferable and represents a legal obligation to pay a specific amount.

Negotiable Order of Withdrawal (NOW) Account: A type of interest-bearing deposit account offered by banks and credit unions that allows check-writing privileges.

Net Asset Value (NAV): The value of a mutual fund's or investment company's assets minus its liabilities, divided by the number of shares outstanding.

Net Income: The total income or profit earned by a company or individual after deducting expenses, taxes, and other costs.

Net Present Value (NPV): A financial calculation that determines the current value of expected future cash flows by discounting them at a specified rate of return.

Net Worth: The value of an individual's or company's assets minus liabilities, representing their overall financial position or wealth.

New York Stock Exchange (NYSE): The largest stock exchange in the United States, located on Wall Street in New York City.

Niche Market: A specialized segment of the market that caters to a specific group of customers with particular needs or preferences.

No-Load Fund: A mutual fund that does not charge a sales fee or commission when buying or selling shares.

Nominal Interest Rate: The stated interest rate on a loan or investment without considering inflation or compounding.

Non-Compete Agreement: A contractual agreement between parties that restricts one party from engaging in similar business activities or competing with another party for a specific period and within a defined geographic area.

Non-Disclosure Agreement (NDA): A legal contract that establishes confidentiality between parties and prevents the disclosure of sensitive information.

Non-Operating Income: Income generated by a company from activities outside its core operations, such as investment gains or interest income.

Non-Performing Loan (NPL): A loan that is in default or on which the borrower has stopped making payments.

Non-Recourse Loan: A loan that is secured by collateral, typically a specific asset, but for which the lender cannot seek additional repayment beyond the value of the collateral.

Notional Value: The theoretical value of a derivative contract, representing the underlying asset's value or the total amount of an investment.


Off-Balance Sheet: Activities, assets, or liabilities that are not recorded on a company's balance sheet but may impact its financial position or risk profile.

Offering Memorandum: A legal document that provides detailed information about an investment opportunity, typically used for private placements or raising capital.

Offshore: Activities or entities located outside the jurisdiction of one's home country, often associated with tax advantages or legal flexibility.

Open-End Fund: A type of mutual fund that continuously issues and redeems shares based on investor demand, with the fund's value determined by the net asset value (NAV).

Operating Expense: The ongoing costs incurred by a business to maintain its regular operations, such as rent, salaries, utilities, and supplies.

Operating Income: The profit generated by a company's core operations before interest, taxes, depreciation, and amortization (EBITDA).

Operating Margin: A financial metric that represents the percentage of revenue remaining after deducting operating expenses, indicating a company's operational efficiency and profitability.

Option Agreement: A legally binding contract between a buyer and seller that grants the buyer the right, but not the obligation, to purchase or sell an underlying asset at a specified price within a defined period.

Option Chain: A list of all available options contracts for a specific security, including strike prices, expiration dates, and option premiums.

Option Premium: The price paid by the buyer to the seller for the right to buy or sell an underlying asset in an options contract.

Option Spread: The simultaneous purchase and sale of options contracts with different strike prices or expiration dates, aiming to profit from price differentials.

Options: Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified period.

Order Book: A record of all buy and sell orders for a particular security or financial instrument, showing the current bid and ask prices.

Order Execution: The process of completing a buy or sell order in the financial markets, including price determination and trade settlement.

Order Flow: The process of receiving and executing buy and sell orders in the financial markets, often used to assess market liquidity and trading activity.

Outflow: The movement of funds or assets out of an account, investment, or country, such as withdrawals, payments, or capital outflows.

Outperform: An investment or security that generates higher returns compared to a specific benchmark or market average.

Outstanding Shares: The total number of shares issued by a company that are held by shareholders, including both institutional and individual investors.

Overbought: A technical analysis term indicating that a security's price has risen too far or too fast and may be due for a downward correction.

Overdraft: A banking facility that allows an account holder to withdraw more money than is available in their account, subject to a specified limit and associated fees.

Overhead: The fixed costs or expenses incurred by a business to support its operations, such as rent, utilities, salaries, and administrative costs.

Over-the-Counter (OTC): A decentralized market where securities are traded directly between parties without a centralized exchange.

Overvaluation: The condition in which the market price of a security or asset exceeds its intrinsic or fundamental value, potentially indicating an inflated price.

Owner's Equity: The residual interest in the assets of a company after deducting liabilities, representing the shareholders' ownership stake in the business.


Payment Terms: The agreed-upon conditions and timeframe for making payments for goods or services.

Payroll: The total amount of money paid by a company to its employees for a specific period.

Payroll Deductions: The amounts subtracted from an employee's salary or wages by their employer to cover various purposes. These deductions can include taxes (such as income tax, Social Security tax, and Medicare tax), retirement contributions, health insurance premiums, and other authorized deductions like union dues or charitable contributions.

Pension: A retirement plan that provides regular income to employees after they retire.

Permanent Life Insurance: A type of life insurance policy that provides coverage for the entire lifetime of the insured, as long as the premiums are paid. It includes a death benefit payout to beneficiaries upon the insured's death, as well as a savings or investment component known as the cash value, which accumulates over time and can be accessed or borrowed against during the insured's lifetime.

Perpetuity: A financial instrument or investment that provides a fixed payment indefinitely, without a specific maturity date.

Personal Finance: The management of an individual's financial resources, including budgeting, saving, investing, and retirement planning.

Portfolio: A collection of financial investments such as stocks, bonds, and mutual funds held by an individual or organization.

Power of Attorney: A legal document that grants someone (referred to as the "attorney-in-fact" or "agent") the authority to act on behalf of another person (referred to as the "principal") in legal, financial, or health matters.

Preferred Stock: A class of stock that typically grants its holders certain privileges, such as preference in dividend payments and liquidation proceeds, over common stockholders.

Premiums: The periodic payments made by an individual or entity to an insurance company in exchange for insurance coverage. In the context of life insurance, premiums are paid to keep the policy in force, and the amount is typically based on factors such as the insured's age, health, and coverage amount.

Pre-Paid Funeral: A financial arrangement made in advance to cover the costs associated with one's funeral and burial or cremation services. It typically involves pre-paying for funeral expenses, such as the casket, funeral home services, cemetery plot, and other related costs.

Prepayment: The early repayment of a debt or loan, typically before the scheduled maturity date.

Price Ceiling: A maximum price set by a government or regulatory body to prevent prices from rising above a certain level.

Price Floor: A minimum price set by a government or regulatory body to prevent prices from falling below a certain level.

Price Index: A measure that tracks the average changes in prices for a basket of goods and services over time, used to gauge inflation or deflation.

Price Volatility: The degree of fluctuation in the price of a financial instrument, indicating its risk or instability.

Price-to-Earnings Ratio (P/E Ratio): A valuation ratio that compares the current market price of a company's stock to its earnings per share, indicating the relative value of the stock.

Prime Rate: The interest rate at which commercial banks lend to their most creditworthy customers, often used as a benchmark for various financial products.

Principal: The initial amount of money invested or loaned, excluding any interest or earnings.

Private Equity: Investments made in private companies or ownership stakes in companies that are not publicly traded.

Probate: The legal process through which a deceased person's estate is administered and distributed according to their will or applicable laws if there is no will.

Profit Margin: The ratio of net profit to total revenue, indicating the percentage of each dollar of revenue that is retained as profit.

Profit: The financial gain made when the revenue from a business or investment exceeds the expenses or costs.

Property Tax: A tax imposed by a local government on the value of real estate or property owned by individuals or businesses.

Provision: An amount set aside from profits to cover anticipated expenses or losses.

Proxy Statement: A document that provides information about matters to be voted upon at a company's shareholder meeting and allows shareholders to vote in absentia.

Public Company: A company that has issued securities and is available for trading on a stock exchange.

Public Offering: The sale of securities to the public by a company, allowing individuals to invest in the company and become shareholders.

Purchasing Power: The ability of money or income to buy goods and services, influenced by inflation or deflation.

Put Option: A financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a specified price within a certain period.


Rainy Day Fund: A savings account or reserve of money set aside to cover unexpected expenses or financial emergencies. It acts as a financial cushion to provide security and help individuals or households cope with unexpected events such as medical expenses, car repairs, or temporary job loss.

Rate of Return: The gain or loss on an investment expressed as a percentage of the initial investment amount.

Ratio Analysis: The examination of various financial ratios to evaluate a company's performance, liquidity, profitability, and other aspects.

Real Estate Investment Trust (REIT): A company that owns and operates income-generating real estate properties and allows investors to buy shares and earn dividends.

Rebalancing: The process of adjusting the allocation of investments within a portfolio to maintain the desired asset mix or risk profile.

Recession: A significant decline in economic activity characterized by a contraction in GDP, lower employment rates, and reduced consumer spending.

Regulatory Compliance: The adherence to laws, regulations, and guidelines established by regulatory authorities governing specific industries or financial activities.

Reinvestment: The process of using earnings or dividends from an investment to purchase additional shares or assets.

Reserve: Funds set aside by a company or financial institution for specific purposes, such as covering potential losses or meeting regulatory requirements.

Residual Value: The estimated value of an asset at the end of its useful life or lease term.

Retirement Account: A financial account specifically designed to hold funds for retirement, such as a 401(k) or an Individual Retirement Account (IRA).

Retirement Community: A residential community or housing complex designed specifically for older adults who are typically retired or nearing retirement age. These communities offer various services, amenities, and social activities tailored to the needs and preferences of retirees.

Return on Assets (ROA): A financial ratio that measures a company's efficiency in generating profit relative to its total assets.

Return on Capital (ROC): A financial ratio that measures the efficiency and profitability of a company's capital investments.

Return on Equity (ROE): A financial ratio that measures a company's profitability by calculating the return generated on shareholder's equity investment.

Return on Investment (ROI): A measure of profitability that calculates the percentage of return relative to the initial investment.

Revenge Spending: Refers to a phenomenon where individuals engage in excessive or lavish spending as a way to seek pleasure or retaliate after experiencing a period of deprivation or restraint. It often occurs after a period of financial constraint, stress, or self-imposed frugality, and can be a means of indulging or rewarding oneself.

Revenue Growth: The percentage increase in a company's revenue over a specific period, indicating its ability to expand sales.

Revenue Recognition: The process of recording and reporting revenue in a company's financial statements, adhering to accounting standards.

Revenue: The total amount of money generated from the sale of goods or services.

Revocable Beneficiary: An individual or entity designated to receive the proceeds of a life insurance policy or retirement account upon the death of the account holder or policyholder. The designation can be changed or revoked by the policyholder or account holder during their lifetime, allowing flexibility in determining the ultimate recipient of the funds.

Rights Issue: A method through which a company offers its existing shareholders the opportunity to buy additional shares at a discounted price.

Risk Management: The process of identifying, assessing, and mitigating potential risks to minimize their impact on business operations or investments.

Risk Tolerance: An investor's willingness to accept and handle the uncertainties and potential losses associated with different investment strategies.

Risk: The potential for financial loss or uncertainty associated with an investment or business decision.

Risk-Adjusted Return: The calculation of investment returns adjusted for the level of risk undertaken to achieve those returns.

Risk-Free Rate: The theoretical interest rate on an investment with no risk, often used as a benchmark to evaluate the performance of other investments.

Roth IRA: An individual retirement account that allows individuals to contribute after-tax income, meaning contributions are made with money that has already been taxed. The main advantage of a Roth IRA is that qualified withdrawals, including earnings, are tax-free in retirement. It offers potential tax benefits and flexibility for retirement savings.

Rule of 72: A quick approximation to estimate the number of years it takes to double an investment based on a fixed annual interest rate.

Run Rate: A projection of a company's financial performance based on its current financial information, assuming the trend continues.


Sarbanes-Oxley Act (SOX): A U.S. law enacted to protect investors by enhancing corporate governance, improving financial disclosures, and increasing accountability and transparency.

Savings Account: A deposit account offered by banks that earns interest on the deposited funds.

Secured Loan: A loan that is backed by collateral, such as real estate or a car, which can be seized by the lender in the event of default.

Securities and Exchange Commission (SEC): A regulatory agency in the United States responsible for overseeing and enforcing securities laws to protect investors and ensure fair markets.

Securities Fraud: The illegal practice of deceiving investors or manipulating financial markets for personal gain.

Securities: Financial instruments, such as stocks, bonds, or derivatives, which are traded and have monetary value.

SEP Account: also known as a Simplified Employee Pension account, is a type of retirement plan for self-employed individuals or small business owners. It allows them to contribute a percentage of their income (up to a specified limit) into individual retirement accounts (IRAs) established for themselves and their eligible employees.

Settlement: The process of transferring funds or delivering securities to complete a transaction.

Shareholder: An individual or entity that owns shares of stock in a company and has certain rights and privileges.

Short Selling: The practice of selling borrowed securities with the expectation of buying them back at a lower price in the future to profit from the price decline.

Short-Term Investment: An investment vehicle or strategy that is designed to be held for a relatively brief period, typically less than one year.

Single Premium Immediate Annuity (SPIA): An annuity contract purchased with a lump sum payment, which provides a guaranteed income stream that begins immediately. With an SPIA, the annuitant pays a one-time premium to an insurance company, and in return, receives regular income payments that can be fixed or variable for a specified period or for the rest of their life.

Small-Cap: Refers to companies with a relatively small market capitalization, typically ranging from a few hundred million to a few billion dollars.

Solvency: The ability of an individual or company to meet its financial obligations and pay off debts.

Speculation: Engaging in risky financial transactions or investments with the hope of making substantial profits, often involving uncertainty and volatility.

Speculative Investment: An investment that carries a higher risk in anticipation of higher returns, often involving volatile assets or markets.

Spendthrift Trust: A trust established for the benefit of a beneficiary who may not be capable of managing or preserving their own assets. The trust is designed to protect the assets from the beneficiary's creditors or from being squandered irresponsibly.

Spot Market: A market where financial instruments and commodities are bought and sold for immediate delivery and settlement.

Spousal IRA: An individual retirement account that allows a spouse with little or no earned income to contribute to an IRA based on the earned income of their spouse.

Stock Buyback: A corporate action in which a company repurchases its own shares from the market, reducing the number of outstanding shares.

Stock Dividend: A dividend paid to shareholders in the form of additional shares of stock, rather than cash.

Stock Exchange: A regulated marketplace where buyers and sellers trade stocks and other securities.

Stock Index: A statistical measure that represents a particular section of the stock market, typically used to track the performance of a specific group of stocks.

Stock Market: A marketplace where stocks and other securities are bought and sold.

Stock Option: A contract that gives the holder the right to buy or sell a specific number of shares of stock at a predetermined price within a specified period.

Stock Split: A corporate action in which a company divides its existing shares into multiple shares, resulting in a decrease in the stock price.

Stock: A share of ownership in a company, representing a claim on its assets and earnings.

Stockbroker: A licensed professional who buys and sells securities on behalf of investors in exchange for a commission or fee.

Stockholder's Equity: The residual interest in the assets of a company after deducting liabilities, representing the shareholders' ownership.

Systemic Risk: The risk that an event or failure in one part of the financial system can spread and cause disruptions throughout the entire system.


Takeover: The acquisition of one company by another, often through the purchase of its shares.

Target Date Fund: Also known as a lifecycle fund or age-based fund, is an investment fund that is designed to align with an investor's expected retirement date. The fund automatically adjusts its asset allocation over time, gradually shifting from a more aggressive investment mix to a more conservative one as the target date approaches.

Target Price: The projected price at which an analyst or investor expects a security to reach in the future.

Tax Deduction: A reduction in taxable income that reduces the amount of tax owed, typically resulting from expenses or contributions.

Tax Shelter: A legal strategy or investment that helps reduce an individual's or company's taxable income or liability.

Taxation: The levying and collection of taxes by governments on individuals and entities to fund public expenditures.

Technical Analysis: The evaluation of historical price and volume data to forecast future price movements in financial markets.

Term Loan: A loan that is repaid in regular installments over a specified period, usually with a fixed interest rate.

Term Structure of Interest Rates: The relationship between the maturity of debt securities and their corresponding interest rates.

Terminal Value: The estimated future value of an investment or business at the end of a specified period.

Ticker Symbol: An abbreviation used to uniquely identify publicly traded companies on stock exchanges.

Time Value of Money: The concept that money today is worth more than the same amount in the future due to its potential earning capacity.

Total Expense Ratio (TER): The percentage of a mutual fund's or ETF's assets used to cover operating expenses, including management fees.

Total Return: The overall gain or loss on an investment, including both capital appreciation and income generated.

Trade Balance: The difference between a country's exports and imports of goods and services.

Trade Credit: The credit extended by suppliers to customers, allowing them to purchase goods or services on account and pay later.

Trade: The buying and selling of goods or services, often involving monetary transactions.

Trader: An individual or entity engaged in buying and selling financial instruments in financial markets for short-term gains.

Trading Volume: The total number of shares or contracts traded in a particular security or market during a given period.

Traditional IRA: A type of retirement savings account that allows individuals to contribute pre-tax income, meaning contributions are made with money that has not yet been taxed. The contributions and any earnings within the account grow tax-deferred until withdrawal during retirement.

Transaction: A financial activity or operation involving the exchange of goods, services, or assets between parties.

Treasury Bill (T-Bill): A short-term debt security issued by the government with a maturity of one year or less, often considered low-risk.

Treasury Bond: A long-term debt security issued by the government to finance its expenditures, with a fixed interest rate and maturity.

Treasury Note: A medium- to long-term debt security issued by the government with a maturity between one and ten years.

Treasury Stock: The shares of a company's own stock that it has repurchased and held in its own treasury.

Trust: A legal arrangement in which a person or entity holds and manages assets on behalf of beneficiaries.

Trustee: A person or entity appointed to manage assets held in a trust for the benefit of beneficiaries.


Underperform: When an investment or asset produces returns that are below expectations or below a benchmark.

Underwriting: The process in which an individual or institution evaluates and assumes the risk of another party's financial obligation or investment.

Unemployment Rate: The percentage of the labor force that is unemployed and actively seeking employment, used as an indicator of economic health.

Uniform Transfers to Minors Act (UTMA): A state law that allows adults to gift assets to minors without the need for a formal trust, with the assets managed by a custodian until the minor reaches adulthood.

Unit Cost: The average cost of producing one unit of a product or delivering a service, calculated by dividing the total cost by the number of units.

Unit Trust: A type of collective investment scheme where investors pool their money to invest in a portfolio of assets managed by a professional fund manager.

Unrealized Gain/Loss: The increase or decrease in the value of an investment that has not been sold or realized.

Unsecured Loan: A loan that is not backed by collateral or specific assets, relying solely on the borrower's creditworthiness and promise to repay.

Uptick Rule: A regulation that restricts the short selling of a stock to only occur on an uptick or when the stock's price increases from the previous trade.

Usury: The illegal act of charging an excessive interest rate on a loan, typically above the legal limits set by regulatory authorities.


Valuation: The process of determining the worth or fair value of an asset, company, or investment.

Value at Risk (VaR): A statistical measure used to estimate the potential loss that an investment or portfolio may experience due to adverse market movements, within a specified time frame and confidence level.

Value Investing: An investment strategy that involves selecting undervalued securities based on their intrinsic value, often focusing on fundamentals and long-term prospects.

Variable Annuity: A type of annuity contract that allows individuals to invest in a variety of investment options, such as mutual funds, within the annuity. The value of the annuity fluctuates based on the performance of the chosen investments. Variable annuities offer the potential for growth but also come with investment risks.

Variable Interest Rate: An interest rate that can fluctuate over time based on changes in an underlying reference rate, such as the prime rate or a benchmark interest rate.

Vendor: A person or company that supplies goods or services to another business or organization.

Venture Capital: Financing provided to early-stage, high-potential companies with growth potential in exchange for an ownership stake.

Venture Debt: Debt financing provided to startup companies or high-growth companies that have limited operating history and may not qualify for traditional bank loans.

Vested 401(k): Refers to the ownership of funds in a 401(k) retirement account. When an employee is fully vested, it means they have the right to take full ownership of the employer's contributions to their 401(k) account. The vesting schedule determines the percentage of employer contributions that the employee is entitled to based on their length of service.

Volatility: The degree of variation or fluctuation in the price or value of a financial instrument, indicating its level of risk and uncertainty.

Volume: The number of shares, contracts, or units of a financial instrument traded during a given period, often used to gauge market activity and liquidity.

Voluntary Liquidation: The process in which a company or organization chooses to wind up its operations and sell its assets voluntarily.


Wage Garnishment: A legal process in which a portion of an individual's wages is withheld by an employer to satisfy a debt owed to a creditor.

Wage: Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or monthly basis.

Waiver of Premium Rider: An optional add-on feature or rider that can be attached to a life insurance policy. This rider provides an additional layer of financial protection by waiving the premium payments required to keep the policy in force under certain circumstances such as disability, critical illness, or death.

Wall Street: A street in Lower Manhattan, New York City, synonymous with the U.S. financial markets and serves as the headquarters for many financial institutions and stock exchanges.

Warrant: A financial instrument that gives the holder the right, but not the obligation, to buy a specific number of shares of stock at a predetermined price within a certain time frame.

Wealth Effect: The theory that individuals tend to spend more when they perceive their wealth to have increased, such as through rising asset values or stock market gains.

Wealth Management: A professional service that provides comprehensive financial planning and investment management to individuals with high net worth.

Will: A legal document that outlines an individual's wishes regarding the distribution of their assets after their death. It specifies how the person's property, possessions, and other assets should be distributed among beneficiaries. A will also appoints an executor who will be responsible for carrying out the instructions outlined in the document.

Wholesale Banking: Banking services provided to large corporations, institutions, and other financial intermediaries, including lending, treasury services, and advisory services.

Withholding: The amount of income or taxes that an employer deducts from an employee's paycheck and remits to the government on their behalf.

Working Capital: The difference between a company's current assets and current liabilities, representing the funds available for day-to-day operations.

Write-Off: The process of removing an asset or liability from a company's balance sheet when it is determined to have no recoverable value.


Year-End Bonus: A year-end bonus is a monetary reward or additional compensation given to employees at the end of a calendar or fiscal year, usually as a recognition of their performance or as an incentive to encourage retention.

Year-to-Date (YTD): Year-to-date refers to the period from the beginning of the current year up to the present date. It is often used to evaluate the performance of investments or financial metrics within a specific time frame.

Yen: Yen is the currency of Japan. It is one of the major currencies in the global foreign exchange market and is abbreviated as JPY.

Yield Curve: The yield curve is a graphical representation of the interest rates for debt securities of different maturities. It plots the relationship between the yields (interest rates) and the time to maturity of bonds, helping to gauge market expectations of future interest rates.

Yield Management: Yield management is a pricing strategy employed by businesses, especially in the hospitality and travel industries, to optimize revenue and profitability by adjusting prices based on demand fluctuations.

Yield on Cost: Yield on cost is a measure of the dividend yield earned on an investment relative to the original cost of the investment. It is calculated by dividing the annual dividend payment by the initial investment amount.

Yield Spread: Yield spread refers to the difference in yields between two similar financial instruments, such as bonds or loans. It is often used as an indicator of market or credit risk.

Yield to Maturity (YTM): Yield to maturity is the total return anticipated on a bond if held until its maturity date. It takes into account the bond's price, coupon rate, time to maturity, and any discount or premium.

Yield: Yield refers to the return on an investment, typically expressed as a percentage. It represents the income generated from an investment relative to its cost.


Zero Coupon Bond: A zero coupon bond is a type of bond that is sold at a discount from its face value and does not pay periodic interest (coupon). Instead, the bondholder receives the full face value of the bond at maturity.

Zone of Support/Resistance: In technical analysis, the zone of support and resistance refers to specific price levels or ranges at which a financial instrument (such as a stock or index) is expected to encounter buying or selling pressure, respectively.


401(k): A 401(k) is a retirement savings plan sponsored by an employer in the United States. It allows employees to contribute a portion of their pre-tax income to the plan, with the contributions and any investment gains being tax-deferred until withdrawal during retirement.

401(k) Rollover: A 401(k) rollover refers to the transfer of funds from a former employer's 401(k) plan into another retirement account, such as an Individual Retirement Account (IRA). It allows individuals to maintain the tax-deferred status of their retirement savings and provides greater control over investment choices.

529 College Savings Plan: A 529 college savings plan is a tax-advantaged investment account designed to save and invest for future education expenses. These plans are sponsored by states, state agencies, or educational institutions. Contributions grow tax-free, and withdrawals are also tax-free when used for qualified education expenses, making it an attractive option for saving for higher education costs.

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