401(a):

A type of employer-sponsored retirement plan similar to a 401(k) but typically offered to specific groups of employees and with different contribution rules.

401(k):

A tax-advantaged retirement savings plan in the United States where employees can contribute a portion of their salary, often with employer matching.

403(b):

A tax-advantaged retirement savings plan for certain employees of public schools, tax-exempt organizations, and certain ministers, similar to a 401(k) but with some differences.

403(c):

A retirement plan for employees of public educational institutions and certain non-profit organizations, similar to a 401(k) but with some differences in contribution limits and rules.

457 Plan:

A tax-advantaged retirement savings plan available to employees of state and local governments, as well as certain non-profit organizations.

529 ABLE Account:

A tax-advantaged savings account designed for individuals with disabilities, allowing for qualified disability-related expenses without affecting eligibility for government assistance programs.

529 Plan:

A tax-advantaged savings plan designed to encourage saving for future education costs, offering various investment options for account holders.

Accrual Accounting:

An accounting method that recognizes revenue and expenses when they are earned or incurred, regardless of when the cash is actually received or paid.

Back-End Load:

A sales charge or fee assessed when an investor redeems mutual fund shares, typically applied as a percentage of the total redemption amount.

Balanced Fund:

A type of mutual fund that combines a mix of stocks, bonds, and sometimes cash, aiming to provide investors with a diversified and balanced portfolio.

Basis Point (BPS):

A unit of measure used in finance to describe percentage changes in interest rates or other financial metrics, with one basis point equal to one-hundredth of a percentage point.

Bear Market:

A market condition characterized by a prolonged decline in investment prices, typically more than 20%, often accompanied by pessimism and a lack of investor confidence.

Blue Chip Stocks:

Shares of large, well-established companies with a history of stable performance, often considered less risky than stocks of smaller companies.

Bond:

A debt security that represents a loan made by an investor to a borrower, typically a government or corporation, with periodic interest payments and the return of the principal at maturity.

Bull Market:

A market condition characterized by a sustained rise in investment prices, often accompanied by optimism and a high level of investor confidence.

Buy and Hold:

An investment strategy where an investor buys securities and holds onto them for an extended period, regardless of short-term market fluctuations.

Callable Bond:

A bond that can be redeemed by the issuer before its maturity date, potentially leading to the payment of the face value and any call premium.

Capital Asset Pricing Model (CAPM):

A financial model that calculates the expected return on an investment based on its risk relative to the overall market.

Capital Gain:

The profit realized from the sale of an asset, such as stocks, real estate, or other investments, resulting in a positive difference between the purchase and sale prices.

Cash Flow:

The net amount of cash moving into and out of a business, investment, or financial product, providing insights into liquidity and financial health.

Certificate of Deposit (CD):

A time deposit offered by banks with a fixed term and fixed interest rate, often providing higher interest rates than regular savings accounts.

Chartered Financial Analyst (CFA):

A professional designation for financial analysts, recognized globally, awarded by the CFA Institute.

Closed-End Fund:

A type of investment fund with a fixed number of shares that are traded on an exchange, often at a discount or premium to their net asset value.

Collateral:

Assets pledged as security for a loan, serving as a guarantee for the lender in case the borrower fails to repay the loan.

Common Stock:

A type of equity security representing ownership in a corporation, with voting rights and the potential for dividends.

Compound Interest:

The process where interest is earned not only on the initial investment but also on the accumulated interest from previous periods, leading to exponential growth.

Convertible Bond:

A type of bond that can be converted into a predetermined number of shares of the issuer's common stock, providing potential upside for bondholders.

Convertible Preferred Stock:

A type of preferred stock that can be converted into a predetermined number of common shares, providing the investor with potential equity participation.

Credit Score:

A numerical representation of an individual's creditworthiness, often used by lenders to assess the risk of lending money or extending credit.

Debit Spread:

An options trading strategy that involves the simultaneous purchase and sale of options contracts, resulting in a net debit to the investor's account.

Debt-to-Equity Ratio:

A financial metric indicating the proportion of a company's capital that comes from debt compared to equity, providing insight into its financial structure and risk.

Defined Benefit Plan:

A retirement plan that promises a specified monthly benefit to the participant upon retirement, often based on salary and years of service.

Defined Contribution Plan:

A retirement plan where both employees and employers contribute to individual accounts, with the ultimate benefit depending on the contributions and investment performance.

Diversification:

The practice of spreading investments across various assets to reduce risk by avoiding overexposure to a single investment or asset class.

Dividend:

A payment made by a corporation to its shareholders, usually in the form of cash or additional shares, representing a portion of the company's profits.

Dividend Yield:

A financial ratio calculated by dividing the annual dividend payment by the current market price of the stock, representing the dividend income as a percentage of the stock's value.

Inflation:

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

Initial Public Offering (IPO):

The first sale of a company's stock to the public, marking the transition from private to public ownership.

Interest Rate:

The cost of borrowing money, often expressed as a percentage, representing the interest charged on a loan or earned on an investment.

Investment Advisor:

A professional who provides advice and guidance on investment strategies, portfolio management, and financial planning to clients.

Joint and Survivor Annuity:

An annuity payment option that provides income for two individuals, typically spouses, with payments continuing to the surviving beneficiary after the death of one.

Joint Liability:

A legal obligation where two or more parties share responsibility for a debt or financial obligation, making each party individually responsible for the entire amount.

Joint Tenancy with Right of Survivorship (JTWROS):

A form of joint ownership of property where each party has an equal share, and if one owner dies, their share is automatically transferred to the surviving owner(s).

Keiretsu:

A business network of interrelated companies in Japan, often with cross-shareholding arrangements, collaborating closely in various business activities.

Key Performance Indicator (KPI):

A measurable value that demonstrates how effectively a company is achieving key business objectives, often used to evaluate and monitor performance.

Leverage:

The use of borrowed funds or debt to increase the potential return on an investment, but also amplifying the risk of financial loss.

Leveraged Buyout (LBO):

A financial transaction in which a company is acquired using a significant amount of borrowed funds, often with the intention of restructuring and improving its financial performance.

Lien:

A legal right or interest that a lender has in a borrower's property, often granted as security for a loan.

Overhead:

The ongoing operational expenses of a business that are not directly tied to the production of goods or services but contribute to overall business costs.

Passive Income:

Income generated from investments or business activities in which the investor is not materially involved, such as dividends, interest, or rental income.

Passive Investing:

An investment strategy that aims to replicate the performance of a specific market index or benchmark, often through the use of index funds or exchange-traded funds (ETFs).

Portfolio:

A collection of financial assets such as stocks, bonds, and other investments held by an individual, institution, or fund.

Preferred Return:

A predetermined rate of return that certain investors, often in private equity or real estate investments, are entitled to receive before other participants receive distributions.

Preferred Stock:

A type of equity security that represents ownership in a company and typically carries fixed dividends, priority over common stockholders, and no voting rights.

Prepayment Penalty:

A fee charged by a lender when a borrower pays off a loan before its scheduled maturity date, designed to compensate the lender for potential lost interest.

Price-to-Earnings Ratio (P/E Ratio):

A financial ratio calculated by dividing the market price per share of a stock by its earnings per share, providing insight into the valuation of a company's stock.

Put Option:

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified timeframe.

Qualified Dividend:

A type of dividend that qualifies for the lower tax rates applicable to long-term capital gains, meeting specific criteria set by the tax code.

Qualified Plan:

An employer-sponsored retirement plan that meets specific requirements outlined by the Internal Revenue Service (IRS), providing tax advantages to both employers and employees.

Quantitative Analysis:

An investment approach that relies on mathematical and statistical methods to analyze financial data, identify patterns, and make informed investment decisions.

Underwater Mortgage:

A situation where the outstanding balance on a mortgage exceeds the current market value of the property, leaving the homeowner with negative equity.

Underwater Option:

A situation in options trading where the market price of the underlying asset is below the strike price, resulting in a loss if the option is exercised.

Utility Stocks:

Shares of companies in the utility sector, often characterized by stable earnings and dividends, providing consistent income and lower volatility compared to other sectors.

Variable Cost:

Expenses that vary in direct proportion to the volume of production or sales, such as raw materials or labor, impacting the overall cost structure of a business.

Variable Cost Ratio:

A financial ratio that expresses variable costs as a percentage of sales, providing insight into the proportion of each sales dollar consumed by variable costs.

Value Investing:

An investment strategy that focuses on selecting stocks or other securities that appear to be undervalued relative to their intrinsic or fundamental value.

Wash Sale:

A transaction where an investor sells a security at a loss and repurchases the same or a substantially identical security within a short period, potentially disallowing the loss for tax purposes.

Weighted Average Cost of Capital (WACC):

A calculation that reflects the average cost of funds a company uses to finance its assets, taking into account the relative weights of each component.

Wholesale Banking:

Banking services provided by financial institutions to other large institutions, corporations, or government agencies, often involving large-scale transactions.

Withholding Tax:

A portion of an employee's income that is withheld by the employer and sent directly to the government as a prepayment of income taxes.

Xetra:

A fully electronic trading system for financial instruments, primarily used for trading stocks and exchange-traded funds (ETFs) on the Frankfurt Stock Exchange.

XIRR (Extended Internal Rate of Return):

A financial metric used to calculate the internal rate of return for cash flows that occur at irregular intervals, providing a more accurate measure of investment performance.

Yield Curve:

A graphical representation of the relationship between the interest rates and the time to maturity of debt securities, providing insights into economic conditions and expectations.

Yield Spread:

The difference between the yield of a debt security and the yield of another benchmark security, indicating the risk premium associated with the riskier security.

Yield to Maturity (YTM):

The total return anticipated on a bond if it is held until it matures, considering both interest income and any capital gain or loss.

Zero Coupon Bond:

A debt security that does not make periodic interest payments, instead issued at a discount to its face value, with the investor receiving the face value at maturity.

Zero-based Budgeting:

A budgeting approach where each expense must be justified for each new budget period, starting from a zero base, rather than relying on historical budget amounts.

Zero-cost Collar:

An options trading strategy involving the purchase of a protective put option and the simultaneous sale of a covered call option, designed to limit potential losses and gains within a specific range.