All Financial Terms

1%/10 Net 30 is a common credit term that offers a 1% discount on invoice payments if paid within 10 days, otherwise the full amount is due within 30 days.

A 10-K is an annual report filed by publicly traded companies in the U.S., detailing their financial performance and operations over the past fiscal year.

The 10-Q SEC Form is a quarterly financial report that publicly traded companies must file with the Securities and Exchange Commission (SEC), providing a comprehensive overview of financial performance and operations.

A 10-Year US Treasury Note is a government debt security that pays interest every six months and returns the principal at maturity after ten years.

The 1040 IRS Form is the standard federal income tax form used by U.S. residents to file their annual income tax returns.

The 1040A Form, also known as the 'short form', was a simplified version of the federal income tax form used by U.S. taxpayers to file their annual income tax returns.

A 30-Year Treasury bond is a long-term U.S. government debt security with a maturity of 30 years, offering periodic interest payments and principal repayment at maturity.

A 401(a) plan is a type of employer-sponsored retirement plan that allows for contributions by both the employer and the employee, often used by government and nonprofit employers.

A 401(k) plan is a tax-advantaged retirement savings account offered by many employers in the United States, allowing employees to save and invest a portion of their paycheck before taxes are taken out.

A 403(b) plan is a tax-advantaged retirement savings plan available for public education organizations, some non-profit employers, and self-employed ministers.

A 457 plan is a type of tax-advantaged retirement savings plan available to certain public sector and non-profit employees.

A 5/1 Hybrid ARM is a type of mortgage that features a fixed interest rate for the first five years, followed by an adjustable rate that resets every year thereafter.

501(c)(3) organizations are nonprofit entities that are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. These organizations are typically charitable, religious, educational, or scientific in nature.

A 51% attack refers to a situation where a single entity or group gains control of more than half of the computing power on a blockchain network, allowing them to manipulate transactions and potentially double-spend coins.

The 52-week high/low refers to the highest and lowest prices at which a stock has traded during the previous 52 weeks.

A 529 Plan is a tax-advantaged savings plan designed to encourage saving for future education costs, primarily for a designated beneficiary.

The 80-20 Rule, also known as the Pareto Principle, states that roughly 80% of effects come from 20% of causes in many situations.

The 83(b) Election is a tax election made by employees or founders receiving restricted stock, allowing them to pay taxes on the total fair market value of the stock at the time of granting rather than as it vests.

Absolute advantage refers to the ability of a country, individual, or company to produce a good or service more efficiently than its competitors using fewer resources.

The accounting equation is a fundamental principle of financial accounting that represents the relationship between a company's assets, liabilities, and equity.

The Accounting Rate of Return (ARR) is a financial metric used to measure the expected profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

The Acid-Test Ratio, also known as the quick ratio, measures a company's ability to meet its short-term obligations with its most liquid assets without relying on inventory.

An acquisition is a corporate action where one company purchases most or all of another company's shares to gain control of that company.

Adverse selection refers to a situation where sellers have information that buyers do not, or vice versa, leading to transactions that favor the party with more information.

A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

The Balanced Scorecard is a strategic planning and management system used to align business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.

Bank Identification Numbers (BIN) are the initial four to six digits on a credit, debit, or other payment card, which identify the institution that issued the card.

Bankruptcy is a legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Bayes' Theorem is a mathematical formula used to update the probability estimate for an event based on new evidence.

A bear market refers to a period in which stock prices fall by 20% or more from recent highs, typically leading to widespread pessimism and negative investor sentiment.

Capital refers to the financial assets or resources that individuals or businesses possess, which can be used to fund operations, investments, or future growth.

The Capital Asset Pricing Model (CAPM) is a financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Capital expenditure (CapEx) refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Capitalism is an economic system where private individuals rather than the state own and control property and businesses, operating them for profit.

The Central Limit Theorem (CLT) is a statistical principle that states that the distribution of sample means approximates a normal distribution as the sample size becomes larger, regardless of the population's distribution.

The Chartered Financial Analyst (CFA) designation is a professional credential offered by the CFA Institute to investment and financial professionals who have passed three levels of exams covering areas such as investment management, financial analysis, stocks, bonds, and derivatives.

Days Payable Outstanding (DPO) measures the average number of days a company takes to pay its invoices from trade creditors and suppliers.

Days Sales Outstanding (DSO) is a financial metric that measures the average number of days a company takes to collect payment after a sale has been made.

A debenture is a type of debt instrument that is not secured by physical assets or collateral but is backed only by the general creditworthiness and reputation of the issuer.

Debt ratio is a financial metric that measures the proportion of a company's total liabilities to its total assets, indicating the extent of leverage and financial risk.

Debt-Service Coverage Ratio (DSCR) is a financial metric used to determine a borrower's ability to cover debt obligations with its operating income.

The Debt-to-Equity Ratio (D/E) is a financial metric used to measure a company's financial leverage by comparing its total liabilities to its shareholder equity.

Earnest money is a deposit made by a buyer to a seller, demonstrating commitment to a real estate transaction.

Earnings Before Interest and Taxes (EBIT) is a financial metric that calculates a company's profitability by excluding interest and tax expenses.

EBITDA is a financial metric used to evaluate a company's operating performance by excluding the effects of financing decisions, accounting decisions, and tax environments.

Earnings Per Share (EPS) is a financial metric used to measure the profitability of a company on a per-share basis, indicating how much money a company makes for each share of its stock.

EBITA stands for Earnings Before Interest, Taxes, and Amortization, a financial metric used to evaluate a company's operating performance without the effects of financial and accounting decisions.

Economic growth refers to the increase in the production of economic goods and services, compared from one period of time to another.

FAANG stocks refer to the shares of five prominent American technology companies: Facebook (Meta), Apple, Amazon, Netflix, and Google (Alphabet).

Factors of production are the resources used to create goods and services in an economy, typically categorized into land, labor, capital, and entrepreneurship.

FANG stocks refer to the shares of four prominent American technology companies: Facebook (now Meta), Amazon, Netflix, and Google (now Alphabet).

A feasibility study is an analysis used to determine the viability of a project or investment before significant resources are committed.

The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that insures deposits at banks and savings institutions, protecting depositors against the loss of their insured deposits if an FDIC-insured bank or savings institution fails.

The Federal Funds Rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight.

Game theory is a branch of mathematics that analyzes strategic interactions where the outcome for each participant depends on the actions of others.

Gamma is a measure of the rate of change in an option's delta for a one-point increase in the price of the underlying asset.

The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade, aimed at reducing tariffs and other trade barriers.

The General Data Protection Regulation (GDPR) is a legal framework that sets guidelines for the collection and processing of personal information from individuals who live in the European Union (EU).

A general ledger is a complete record of all financial transactions over the life of a company, organized by accounts.

Generally Accepted Accounting Principles (GAAP) are a set of rules and standards used in the United States for financial reporting and accounting. They ensure consistency, comparability, and transparency in financial statements.

Hard skills are specific, teachable abilities or skill sets that are easy to quantify and typically job-specific, such as proficiency in a foreign language, typing speed, or computer programming.

The harmonic mean is a type of average, calculated by dividing the number of observations by the sum of the reciprocals of the observations.

The Head and Shoulders pattern is a chart formation that predicts a bullish-to-bearish trend reversal. It is recognized by three peaks, with the middle peak (head) being the highest and the two outside peaks (shoulders) being lower and roughly equal in height.

Health Maintenance Organizations (HMOs) are a type of managed care organization that provide a wide range of healthcare services through a network of providers who agree to supply services to members.

A Health Savings Account (HSA) is a tax-advantaged account designed to help individuals save for medical expenses that high-deductible health plans don't cover.

A hedge is an investment strategy used to reduce the risk of adverse price movements in an asset by taking an offsetting position in a related asset.

IA-1092 SEC Release refers to a specific regulatory guideline issued by the U.S. Securities and Exchange Commission (SEC) that defines the activities that qualify an individual or entity as an investment adviser.

Income refers to the money or other forms of payment that an individual or business receives, typically in exchange for providing a product, service, or labor.

An income statement is a financial document that summarizes a company's revenues, expenses, and profits over a specific period, showing how the revenue is transformed into the net income.

Indemnity is a comprehensive form of protection that compensates an insured party for certain losses or damages specified in an insurance policy.

Indemnity insurance is a type of insurance policy that compensates the insured for losses or damages up to a certain limit, providing financial protection against claims or legal actions.

An index fund is a type of mutual fund or exchange-traded fund (ETF) designed to replicate the performance of a specific market index.

The J-Curve is a graphical representation that shows an initial decline followed by a significant improvement over time.

The January Effect is a seasonal increase in stock prices during the month of January, often attributed to the increase in buying which follows the sell-off for tax purposes at the end of the year.

Japanese Government Bonds (JGBs) are debt securities issued by the government of Japan to finance its fiscal deficits and manage public financial needs.

Jensen's Measure, also known as Jensen's Alpha, is a performance metric that evaluates the excess return of an investment portfolio over the predicted return by the Capital Asset Pricing Model (CAPM).

The job market refers to the availability of employment and the demand for labor as determined by employers.

John Maynard Keynes was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Kaizen is a Japanese business philosophy that focuses on continuous improvement in all aspects of operations, often applied to enhance efficiency and reduce waste.

Karl Marx was a 19th-century philosopher, economist, and political theorist whose ideas and writings laid the foundation for modern socialism and communism.

Keltner Channel is a technical analysis indicator used to identify trend direction and volatility in the price of an asset by creating bands around an exponential moving average.

A Keogh plan is a tax-deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.

Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a company is achieving key business objectives.

Key person insurance is a type of life insurance policy taken out by a business to compensate for financial losses that may arise from the death or extended incapacity of an important member of the business.

Laissez-faire is an economic philosophy advocating minimal government intervention in the market and the economy.

The Law of Demand states that, all else being equal, as the price of a product decreases, the quantity demanded increases, and vice versa.

The law of supply states that, all else being equal, an increase in price results in an increase in the quantity supplied.

The law of supply and demand is a fundamental economic principle stating that the price of a good or service is determined by the quantity available (supply) and the desire of buyers for it (demand).

Leadership in finance refers to the ability of individuals or groups to guide financial strategies and manage financial resources effectively to achieve organizational goals.

A Letter of Intent (LOI) is a document outlining the preliminary agreements between two parties before a formal contract is finalized. It is commonly used in real estate and business transactions to clarify the terms of a deal.

Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole, focusing on aggregate changes in the economy such as GDP, unemployment rates, and inflation.

Magna cum laude is a Latin term used to denote a level of academic distinction awarded to students upon graduation, signifying 'with great honor'.

Management by Objectives (MBO) is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed upon by both management and employees.

A margin call occurs when the value of an investor's margin account falls below the broker's required amount, prompting the investor to add funds or securities to meet the minimum margin requirement.

Margin in investing refers to borrowing money from a broker to purchase stock, allowing investors to buy more shares than they could with just their available funds.

Market share refers to the percentage of an industry's total sales that is earned by a particular company over a specific time period.

Nasdaq is a global electronic marketplace for buying and selling securities, primarily known for its focus on technology and internet-related stocks.

Nash Equilibrium is a concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged.

Negative correlation refers to a relationship between two variables where one variable increases as the other decreases.

Neoliberalism is an economic and political ideology that emphasizes free-market capitalism, deregulation of industries, and reduction in government spending on social services.

Net Asset Value (NAV) is the total value of a fund's assets minus its liabilities, expressed on a per-share basis.

Net Income (NI) is the total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.

In finance, an offset refers to the process of canceling or nullifying the impact of one asset or liability by using another. It is commonly used to manage risk or reduce exposure.

OASDI is a federal program in the United States that provides financial benefits to retired workers, their families, and disabled individuals.

An oligopoly is a market structure characterized by a small number of firms that dominate the market, leading to limited competition.

An onerous contract is a contract where the costs to fulfill the obligations exceed the economic benefits expected to be received.

Online banking, also known as internet banking, allows users to manage their bank accounts and perform financial transactions digitally via their bank's website or mobile app.

Open market operations (OMO) refer to the buying and selling of government securities in the open market by a central bank to control the money supply and influence interest rates.

The p-value is a statistical measure that helps determine the significance of the results obtained from a data set, indicating the probability of observing results at least as extreme as those measured when the null hypothesis is true.

A partnership is a legal arrangement where two or more parties, known as partners, agree to cooperate to advance their mutual interests.

Penny stocks refer to shares of small companies that trade for less than $5 per share, often characterized by high volatility and low market capitalization.

Per Capita GDP measures the average economic output per person in a specific area, typically a country, by dividing the total GDP by the population.

Perfect competition is a market structure where numerous small firms compete against each other, and none can influence market prices due to their size.

The Phillips Curve is an economic concept that illustrates an inverse relationship between the rate of unemployment and the rate of inflation within an economy.

The Q Ratio, or Tobin's Q, is a financial metric that compares the market value of a company's assets to their replacement cost.

Quadruple Witching refers to a day when stock index futures, stock index options, stock options, and single stock futures all expire simultaneously, typically leading to increased trading volume and market volatility.

A qualified dividend is a type of dividend that meets specific criteria set by the IRS and is taxed at the lower capital gains tax rates rather than ordinary income tax rates.

A Qualified Institutional Buyer (QIB) is an entity that is legally recognized to invest in securities that may not be registered with financial authorities, typically due to their financial sophistication and capacity.

Qualified Institutional Placement (QIP) is a capital-raising tool whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible to equity shares to a qualified institutional buyer.

A Qualified Longevity Annuity Contract (QLAC) is a type of deferred annuity funded with an investment from a qualified retirement plan or IRA that provides a guaranteed income later in life, typically starting after age 85.

R-Squared is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index.

R-Squared is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index.

Racketeering refers to the act of engaging in criminal activity as a structured group, often to earn illegal income or extort money through coercion, fraud, or theft.

Rate of Return (RoR) is a financial metric used to measure the gain or loss on an investment relative to its cost.

Rational Choice Theory is an economic principle that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Real estate refers to land along with any permanent improvements attached to the land, whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges.

The S&P 500 Index is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

The Sarbanes-Oxley Act of 2002 (SOX) is a U.S. federal law that established sweeping auditing and financial regulations for public companies to protect investors from fraudulent financial reporting.

The Securities and Exchange Commission (SEC) is a U.S. government agency responsible for regulating the securities markets and protecting investors.

In finance, a security is a tradable financial asset that holds some type of monetary value, which can be in the form of stocks, bonds, or options.

Series 63, also known as the Uniform Securities Agent State Law Examination, is a professional exam for securities agents in the United States, required by most states to sell securities.

The Series 7 is a license issued by the Financial Industry Regulatory Authority (FINRA) that allows individuals to sell a broad range of securities.

A T-test is a type of inferential statistic used to determine if there is a significant difference between the means of two groups, which may be related in certain features.

A tariff is a tax imposed by a government on goods and services imported from other countries, used to restrict trade, raise government revenue, or protect domestic industries.

Technical analysis is a method used to evaluate and predict future prices of securities based on historical price and volume data.

Tenancy in Common (TIC) is a form of property ownership where two or more individuals co-own real estate with individual, undivided interests that can be of unequal size and can be freely transferred.

Term life insurance is a type of life insurance policy that provides coverage at a fixed rate of payments for a limited period of time, after which it expires without value.

Terminal Value (TV) is the estimated future value of a business or cash flows beyond a specific forecast period, used in financial modeling to assess long-term performance.

In finance, 'free' refers to services or products provided without any direct cost to the consumer, often used as a marketing strategy to attract customers or promote other paid services.

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.

Generation X (Gen X) refers to the demographic cohort born between the early 1960s and early 1980s, known for its unique financial behaviors and challenges.

A government shutdown occurs when non-essential federal offices cease operations due to a lack of approved funding by Congress.

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power over time.

A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources.

Limited government is a political system where legal limits are placed on the power of the government, typically through a constitution, to protect individual and property rights.

Personal finance refers to the management of an individual's or family's financial activities, including budgeting, saving, investing, and planning for future financial needs.