| A | B |
|---|
| share | a unit of ownership in a corporation (i.e. a unit of stock) |
| bond | a note issued by a firm or a government entity that promises to repay the principal along with interest on a certain maturity date |
| equity | a stock |
| broker | indivdual who is licensed and authorized to trade stocks and securities for investors |
| commission | the fee paid to a broker for his services in executing stock and securities trades |
| dividend | a share of a corporation's profits that is paid out on a quarterly basis to a shareholder |
| yield | the rate of interest that is paid out on a bond |
| capital gain | the profit gained when a stock is sold by an investor |
| dollar cost averaging | investment strategy that involves buying the same dollar amount of a stock at regular intervals; results in lower average purchase price |
| margin account | allows investors to borrow capital in order to buy stocks and securities |
| IPO | the first ever sale of stock by a newly formed corporation to the public |
| bear market | used to describe a stock market in decline |
| bull market | used to describe a rising stock market |
| Dow Jones | market index that tracks the prices of 30 major American corporations; often used to judge the condition of the stock market |
| NYSE | oldest and largest stock exchange in the United States |
| NASDAQ | electronic stock exchange used primarily for trading stocks in hi-tech industries |
| SEC | federal agency which has primary responsibility for regulating the trade of stocks and securities |
| pension | a retirement plan set up by a firm or a government agency for its employees |
| 401 (k) | a retirement plan that allows a firm to match up to 100% of an employee's tax free contributions |
| IRA | retirement account that allows individuals to invest their money tax-free and defer tax payments until they withdraw from the account at the age of 59 1/2. |
| Roth IRA | retirement account that allows individuals to invest money and allow their investments to grow until they may be withdrawn tax-free at the age of 59 1/2 |
| expansion multiplier | the effect that results when banks are able to loan money in amounts far in excess of their reserves |
| reserves | the percentage of a deposit that a bank is required to hold |
| credit rating | a published ranking based on detailed financial analyesis by a credit bureau of an individuals ability to pay back a loan |
| liabilities | obligations of debt that an individual has towards creditors |
| assets | any item of value that an individual owns |
| net worth | a measure of an individual's wealth; an individuals assets minus their liabilities |
| mortgage | a long-term loan (usually 30 years) made for the purchase of a home |
| collateral | assets pledged by an individual to secure a loan or other credit; are seized in default if debts are not repaid |
| interest rate | a percentage of the principal on a loan, bond, etc. that must be repaid by the borrower |
| lien | a legal claim against an asset or collateral that is used to secure a loan |
| Annual Percentage Rate (APR) | the yearly cost in interest of a loan |
| bankruptcy | a court proceeding in which a debtor's assets are confiscated or sold and the debtor is relieved of all liability |
| Chapter 11 | U.S. bankruptcy law that deals with protecting creditors from unreasonable loss when a debtor files for bankruptcy |
| premium | a regular periodic payment for an insurace policy |
| deductible | monetary amount that must be paid by the insured before an insurance carrier will cover any costs associated with a claim |
| copay | the amount that an insured person is expected to pay when claiming benefits under their policy (usually done with medical insurance at the time of a medical visit) |
| coinsurance | insurace policy provision under which the insurer and the insured share the costs of coverage |
| liability | Insurance coverage to protect against claims alleging that one's negligence or |
| comprehensive | Notification to an insurance company requesting payment of an amount due under the |
| beneficiary | an individual who receives benefits under a will, insurance policy, retirement plan, or any other contract |
| ability to pay | a concept of tax fairness that assumes that people with different amounts of wealth should pay taxes at different rates |
| income tax | a tax on the money that an individual earns |
| adjusted gross income | an individual's total income minus the deductions that they are allowed for certain types of expenses |
| standard deduction | an amount provided by law that taxpayers can deduct from their adjusted gross income before their tax is determined |
| exemptions | an amount that taxpayers can claim for themselves, their spouses, or other eligible dependents that is subtracted from adjusted gross income before their tax is determined |
| progressive tax | a tax that takes a larger % of income from high-income groups than from low income groups |
| withholding | "pay-as-you-go" taxation; an amount that employers withhold from an employees' paycheck in order to allow them to pay their taxes at regular intervals |
| flat tax | a proportional tax that taxes all income at the same rate |
| regressive tax | a tax (i.e. sales tax) that takes a larger % of income from low-income individuals than from high-income individuals |
| payroll taxes | a "flat" tax collected from employers and employees to finance a specific program |
| F.I.C.A. | payroll tax that is used to finance Social Security and Medicare |
