Financial Terms Glossary

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Number
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212
Number

Section 212 allows taxpayers to deduct miscellaneous itemized deductions as long as they meet the “ordinary and necessary” standard. For example, investors are allowed to write off investment fees, including financial advisor fees, under this tax rule

212
Section 212
529 plan
Number

A tax-advantaged savings plan designed to help families save money for future educational costs.There are two types of 529 plans: 529 prepaid tuition plans and 529 savings plans.

Stocks
529
529 prepaid tuition plan
Number

A type of 529 plan that allows families to pay tuition ahead of time for specific colleges or college systems at today’s tuition rates.

Investing
Stocks
College
Tuition
529 savings plan
Number

A type of 529 plan that allows you to invest your education savings in various types of investments, including mutual funds. Like a 401(k) or IRA retirement plan, your account could go up or down depending on market performance. This plan, also called an education savings plan, is typically sponsored by a state and may be available from a private investment firm. You also can use this plan to help pay tuition at public, private, or religious schools from kindergarten through 12th grade.

Investing
Stocks
Education
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A
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APR (Annual Percentage Rate)
A

The cost of borrowing money on a yearly basis, expressed as a percentage rate.

APR
ATM
A

Stands for "automated teller machine," a machine that lets bank customers perform basic transactions, such as deposits and withdrawals.

ATM
ATM balance inquiry fee
A

A fee you may be charged if you check your prepaid card balance at an ATM or if you call customer service to ask about your balance.

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Alert
A

Stock alerts are a type of trading alert which you can set to notify you of price action, technical conditions or economic results which could affect the value of underlying stocks.

Alert
Stock Alert
Analysis
A

Stock analysis is the evaluation of a particular trading instrument, an investment sector, or the market as a whole. Stock analysts attempt to determine the future activity of an instrument, sector, or market.

Stock Analysis
Annual return
A

The profit or loss on an investment over a one-year period.

Interest
Apple
A

Apple stock is traded on the NASDAQ Global Select Market under the ticker symbol AAPL.

Apple
AAPL
Asset
A

An item with economic value, such as stock or real estate.

Asset
Asset Allocation
A

Distribution of investment across various asset classes, such as stocks, bonds, and cash, to balance risk and return

Asset Allocation
Automatic or direct debit
A

A bill-paying method you set up with the merchant or service provider. You provide the merchant or service provider (for example, your cell phone provider or utility company) with your checking account information and they take the funds from your account each time the bill is due (for example, every month).

Direct debit
B
B
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Bachelor's degree
B

A degree usually awarded for at least four years of full-time academic study beyond high school.

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Bank
B

A financial institution and business that accepts deposits, makes loans, and handles other financial transactions.

Bank
Bear Market
B

A period in which stock prices fall and widespread pessimism leads to a prolonged decline.

Bear Market
Beneficiary
B

Beneficiary - Someone or something named to receive proceeds or benefits. In the insurance context, it’s the person, charity, trust, or estate designated by the policyholder to receive the policy's benefits or payments.

Beneficiary
Benefit
B

Something that an employer, the government, or an insurance company provides that’s often used only for a particular purpose, such as food or medical costs. Also: An advantage; something that is good.

Benefit
Bill-payment service
B

A service you set up with a bank, credit union, prepaid card account, or a business you owe money to that lets you pay bills online or through a mobile app.

Bills
Bimonthly (semi-monthly)
B

Twice a month.

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Binary
B

Binary options, a financial derivative that allows people to make all-or-nothing wagers on events and asset price changes, have surged in popularity in recent years. But critics, including U.S. regulators who have long cautioned against them, warn that these trades are more akin to gambling than investing and carry a high risk of fraud and losses for unwary consumers.

Binary Options
BitCoin
B

Virtual Currency

Bitcoin
Crypto
Blue Chip Stocks
B

Stocks of well-established companies with a history of reliable earnings and dividends.

Blue Chip
Bond
B

A type of debt. When you buy a bond, you’re lending to the issuer, which may be a government, municipality, or corporation. The issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal — also known as the bond’s face value or par value — when the bond "matures," or comes due after a set period.

Bond
Borrow
B

To receive something on loan with the understanding that you will return it.

Borrow
Borrower
B

A person or organization that borrows something, especially money from a bank or other financial institution.

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Broker
B

A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. Because securities exchanges only accept orders from individuals or firms who are members of that exchange, individual traders and investors need the services of exchange members.

Brokers provide that service and are compensated in various ways, either through commissions, fees, or through being paid by the exchange itself. Investopedia regularly reviews all the top brokers and maintains a list of the best online brokers and trading platforms to help investors make the decision about what broker is best for them.

Broker
Brokerage
B

A stockbroker is a financial professional who executes orders in the market on behalf of clients. A stockbroker may also be known as a registered representative (RR) or an investment advisor.

Brokerage
Budget
B

A plan that outlines what money you expect to earn or receive (your income) and how you will save it or spend it (your expenses) for a given period of time; also called a spending plan.

Budget
Bull Market
B

A period where stock prices are rising or expected to rise, often accompanied by investor optimism.

Bull Market
Buy
B

Buying a Stock Investment: Stock purchases are when investors buy ownership of the shares of a company. The investor's purchase price is called the cost basis. The goal is to sell the stock at a higher price and realize a profit. A buy order is an instruction to a stockbroker to buy a security.

Buy
Buying plan
B

A plan people use to identify and consider factors like cost, features, and choices as they prepare to make a purchase.

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Buying power
B

Also called purchasing power, it is the amount of goods and services that can be purchased by a given unit of currency, taking into account the effect of inflation.

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C
C
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Capital gain
C

The profit that comes from selling an investment for more than you paid for it.

Capital Gain
Capital loss
C

The loss that comes from selling an investment for less than you paid for it.

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Cash
C

Paper or coin money.

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Certificate of deposit (CD)
C

A savings tool from a bank or credit union that has a fixed maturity date and a fixed interest rate.

CD
Charts
C

Stock chart patterns often signal transitions between rising and falling trends. A price pattern is a recognizable configuration of price movement identified using a series of trendlines and/or curves.

When a price pattern signals a change in trend direction, it is known as a reversal pattern; a continuation pattern occurs when the trend continues in its existing direction following a brief pause. There are many patterns used by traders—here is how patterns are made and some of the most popular ones.

Stock Chart
Checking account
C

An account at a bank (sometimes called a share draft account at a credit union) that allows you to make deposits, pay bills, and make withdrawals.

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Closed-loop prepaid card
C

This type of card can only be used at certain locations. For example, a closed-loop card might be good only at a specific store or group of stores or on your public transportation system.

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Coinsurance
C

Coinsurance in insurance, is the splitting or spreading of risk among multiple parties. In the U.S. insurance market, coinsurance is the joint assumption of risk between the insurer and the insured. In health insurance, coinsurance is sometimes used synonymously with copayment, but copayment is really fixed while coinsurance is a percentage that the insurer pays after the insurance policy's deductible is exceeded up to the policy's stop loss.

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Collateral
C

An asset that secures a loan or other debt that a lender can take if you don't repay the money you borrow. For example, if you get a home loan, the bank's collateral is typically your house.

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Commission
C

An amount of money someone earns for selling something.

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Compound interest
C

When you earn interest on both the money you save and the interest you earn.

Compound Interest
Consumer Price Index (CPI)
C

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas.

CPI
Cosigner
C

An individual who signs a loan, credit account, or promissory note of another person as support for the credit of the primary signer and who becomes responsible for the debt obligation.

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Cost
C

The amount of money that is needed to pay for or buy something.

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Credit
C

Borrowing money, or having the right to borrow money, to buy something. Usually it means you’re using a credit card, but it might also mean that you got a loan.

Credit
Credit Report
C

A summary of your credit activity and current credit situation such as loan paying history and the status of your credit accounts. Lenders use these reports to help them decide if they will loan you money and what interest rates they will offer you. Other businesses might use your credit reports to determine whether to offer you insurance; rent a house or apartment to you; or provide you with cable TV, Internet, utility, or cell phone service. If you agree to let an employer look at your credit report, it may also be used to make employment decisions about you.

Credit Report
Credit card
C

An open-ended loan that allows you to borrow money up to a certain limit and carry over an unpaid balance from month to month. There is no fixed time to repay the loan as long as you make the minimum payment due each month. You pay interest on any outstanding credit card loan balance.

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Credit card statement
C

A summary of how you've used your credit card for a billing period.

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Credit limit
C

A limit set by the credit card company on how much you can charge on the card it issued to you. You can use your credit card to make purchases up to your credit limit.

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Credit score
C

A number created from a scoring model that uses information from your credit history.

Credit Score
Credit union
C

A cooperative financial institution that is chartered by the National Credit Union Administration (a federal independent agency) or a state government and is owned by its individual members.

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Credit utilization ratio
C

The amount of credit a person has compared with the amount they've used.

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Creditworthy
C

Financially sound enough to justify the extension of credit.

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D
D
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Dark Pool
D

A dark pool is a private financial forum or exchange for trading securities that operates outside of traditional public stock exchanges

Dark Pool
Data breach
D

The unauthorized movement or disclosure of sensitive information to a party, usually outside the organization, that is not authorized to have or see the information. Someone who gets the data might use it for identity theft.

Data Breach
Day Trading
D

FINRA rules define a “day trade” as the purchase and sale, or the sale and purchase, of the same security on the same day in a margin account.  This definition encompasses any security, including options.  Selling short and purchasing to cover a position in the same security on the same day is also considered a day trade.

Exceptions to this definition include:

  • a long security position held overnight and sold the next day prior to any new purchase of the same security; or
  • a short security position held overnight and purchased the next day prior to any new sale of the same security.

Day Trading
Debit card
D

A card used to make purchases at businesses (like grocery stores and gas stations) with money in your checking account.

Debit Card
Debt
D

Money you owe another person or a business.

Debt
Debt consolidation
D

Consolidation means that your various debts, whether they are credit card bills or loan payments, are rolled into a new loan with one monthly payment. If you have multiple credit card accounts or loans, consolidation may be a way to simplify or lower payments. But a debt consolidation loan does not erase your debt. You might also end up paying more by consolidating debt into another type of loan.

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Demand
D

A measure of how popular or necessary an item is and how many consumers want to buy it.

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Demo
D

Demo Trading - Some online trading platforms offer potential investors a demo trading account funded with 'fake' money in which they can execute trades to practice trading before going ahead with actual market trades.

Demo Trading
Depository institution
D

A financial institution like a bank or credit union that is authorized to accept checking and saving deposits.

Depository institution
Direct deposit
D

Money electronically sent to your bank account, credit union account, or prepaid card.

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Diversification
D

Spreading investments across various financial instruments or sectors to reduce risk.

Diversification
Dividend
D

A dividend is the distribution of a company's earnings to its shareholders and is determined by the company's board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock.

Dividend
E
E
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E
E

Series E funding is the fifth major round of fundraising that a startup might go through. This round occurs late in the fundraising process, and usually takes place shortly before a company plans its initial public offering (IPO).

E
Series E
Funding
ETF (Exchange-Traded Fund)
E

ETFs or "exchange-traded funds" are exactly as the name implies: funds that trade on exchanges, generally tracking a specific index. When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours—potentially lowering your risk and exposure, while helping to diversify your portfolio.

ETF
Exchange-Traded Fund
Earn
E

To receive money in exchange for goods or services.

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Earned income
E

Money made from working for someone who pays you or from running a business or farm. This includes all the income, wages, and tips you get from working.

Earned Income
Earnings releases
E

Earnings releases are public disclosures that provide investors and analysts with important financial information about a company's performance

Earnings Releases
Emergency fund
E

A cash reserve that's specifically set aside for unplanned expenses or financial emergencies. Some common examples include car repairs, home repairs, medical bills, or a loss of income.

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Entrepreneur
E

Someone who organizes, manages, and assumes the risks of a business or enterprise.

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Equity
E

Ownership interest in a corporation, typically represented by owning shares.

Equity
Estate tax
E

A tax on the value of property you own at your death. It considers everything you own or have certain interests in at the date of death. There is a federal estate tax, and some states have their own estate taxes.

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Events
S

Stock Event means a stock split, stock combination, reclassification, payment of stock dividend, recapitalization or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or small number of shares.

Stock Event
Exchange rate
E

A number that is used to compare the value of money in two different countries. For example, you would use an exchange rate to figure out how many pesos or euros you could get for one U.S. dollar.

Exchange rate
Exness
E

Exness is an authorized Forex trading platform

Exness
Expected family contribution
E

The index number schools use to determine your eligibility for federal financial aid. This number results from the financial information you provide in your Free Application for Federal Student Aid (FAFSA) form. Your EFC index number is reported to you on your Student Aid Report. It is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. It is a number your school uses to calculate the amount of federal student aid you are eligible to receive.

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F
F
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FAFSA
F

The Free Application for Federal Student Aid form is used to determine how much a student and his or her family are eligible to receive in federal financial aid. The FAFSA may also be used to determine a student’s eligibility for state and school-based aid and also may influence how much private aid a student receives.

FAFSA
Federal Insurance Contributions Act (FICA)
F

A law that requires taxes to be deducted from your pay to contribute to Social Security and Medicare; your employer contributes the same amount on your behalf.

FICA
Federal income tax
F

The federal government collects taxes based on the earnings of individuals and businesses, called an income tax. The federal income tax pays for national programs such as defense, foreign affairs, law enforcement, and interest on the national debt.

Income Tax
Federal minimum wage
F

The lowest national wage as established by law in the Fair Labor Standards Act (FLSA).

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Financial capability
F

The ability to manage financial resources effectively, understand and apply financial knowledge, demonstrate healthy money habits, and successfully complete financial tasks as planned.

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Financial emergencies
F

Expenses that come up unexpectedly, are very important, and need attention right away.

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Financial well-being
F

The ability to meet all financial needs, today and over time; feel secure in the financial future; absorb a financial shock; and have the financial freedom to make choices to enjoy life.

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Fixed Income
F

Investments that pay a fixed interest or dividend, such as bonds

Fixed Income
Fixed expenses
F

Expenses, like bills, that must be paid each month and generally cost the same amount. Some fixed expenses, like a utility bill, may also be variable because the amount changes each month depending on usage.

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Foreign transaction fee
F

A fee your card provider charges when you use your prepaid card in a foreign country or to pay in a foreign currency. This fee is usually a percentage of your purchase, withdrawal, or other transaction, rather than a flat fee. This fee is also called a currency conversion fee. Not all cards can be used outside the United States, so check your cardholder agreement before you travel.

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Forex
F

Forex (FX) refers to the global electronic marketplace for trading international currencies and currency derivatives. It has no central physical location, yet the forex market is the largest, most liquid market in the world by trading volume, with trillions of dollars changing hands every day. Most of the trading is done through banks, brokers, and financial institutions.

Each options contract will have a specific expiration date by which the holder must exercise their option. The stated price on an option is known as the strike price. Options are typically bought and sold through online or retail brokers.

Forex
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