Investopedia: #/A

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ADV Form

A required submission to the Securities and Exchange Commission (SEC) by a professional investment advisor that specifies the investment style, assets under management and key officers of the firm. The form must be updated annually and be made available as public record for companies managing in excess of $25 million.

Accumulative Swing Index - ASI

A indicator used by traders to gauge a security's long-term trend by comparing bars which contain its opening, closing, high and low prices throughout a specific period of time. When the [term] is positive, it suggests that the long-term trend will be higher, and when the [term] is negative, it suggests that the long-term trend will be lower. The [term] is often cited as being developed by Welles Wilder.

Algebraic Method

A mathematical means of solving a pair of linear equations. Algebraic method refers to a method of solving an equation involving two or more variables where one of the variables is expressed as a function of one of the other variables. There are typically two algebraic methods used in solving these types of equations: the substitution method and the elimination method.

Acceptance Of Office By Trustee

A mutual understanding that a person has with the estate that implies they will assume administrative duties after being nominated. [term] is basically a formal way of giving consent to serve as a trustee. After being nominated, a trustee may decline to serve but cannot decline after accepting, nor delegate the responsibility.

Accommodation Paper

A negotiable instrument that provides a third-party promise of payment in the case that the original borrower does not live up to the terms of the original transaction. [term]s are usually used to support one party's creditworthiness through endorsement by a second party with a better credit rating.

12B-1 Plan

A no-load mutual fund that is allowed to use fund assets to pay for its distribution costs. The [term] mutual fund is an alternative to paying the sales fees encountered in loaded funds. By charging an annual percentage based on the current value of the investment on an annual basis, investors avoid paying a front-end or back-end load when purchasing or redeeming the fund.

Active Box

A physical location in a brokerage where securities are kept. These securities are usually held as collateral for customers' margin positions. The collateral is used to secure broker loans, which is money lent to brokers and investors by banks. This money is used to finance the brokers' inventory of stock and to finance the underwriting of corporate and municipal securities.

529 Plan

A plan that allows for the prepayment of qualified higher education expenses at eligible educational institutions. Also known as a "qualified tuition program," or more fully as a "section 529 plan."

Accountant's Opinion

A statement signed by an independent accountant outlining his or her opinion regarding the quality of information contained in a company's financial reports and records.

Accidental High Yielder

A stock that carries an abnormally high dividend yield for the specific firm. An [term] is a stock of a company that was not intended to pay an excessive dividend yield;. however, the dividend yield rose when the price of the stock fell while the actual dividend payout remained constant. The adjustment of this ratio therefore causes the stock to be classified as such.

"Just Say No" Defense

A strategy used by corporations to discourage hostile takeovers in which board members reject a takeover bid outright.

419(e) Welfare Benefit Plans

A type of employer-sponsored employee welfare benefit plan. 419(e) welfare benefit plans qualify under paragraph (e) of Section 419 of the Internal Revenue Code. They provide a range of benefits to employees, such as life, health, disability, long-term care and post-retirement medical. These plans can be either target contribution or target benefit in design, and are intended to provide additional financial stability for employees during their retirement years.

Advanced Premium Tax Credit

A type of federal subsidy that reduces the amount individuals pay for their monthly health insurance premiums. Advanced Premium Tax Credits are a provision in the Patient Protection and Affordable Care Act, signed into law on March 23, 2010 by President Barack Obama. The tax credits are sent directly from the government to eligible individuals' health insurers to reduce monthly premium payments. If eligible, the tax credit amount a person receives depends on his/her income; you will pay more for the monthly premium if your income falls near the top of the range, and less if your income is closer to the bottom.

Adversely Classified Asset

A type of loan classification in which the loan or other asset is considered, to some degree, to be impaired. It is an asset that is considered by bank examiners to be of substandard credit quality and whose full repayment of principal and accrued interest is questionable.

2-1 Buydown

A type of mortgage with a set of two initial temporary-start interest rates that increase in stair-step fashion until a permanent interest rate is reached. The initial interest rate reductions are either paid for by the borrower in order to help them qualify for a mortgage, or might be paid for by a builder as incentive to purchase a home.

AG (Aktiengesellschaft)

AG is an abbreviation of Aktiengesellschaft, which is a German term for a public limited company; this is a company whose shares are offered to the general public and traded on a public stock exchange, and whose shareholders' liability is limited to their investment. The shareholders are not responsible for the company's debts, and their personal assets are protected in case the company becomes insolvent. The suffix AG, an equivalent of the English PLC, is used after names of companies in Germany, Austria, Switzerland and Luxembourg.

Adjusted Gross Income - AGI

Adjusted gross income (AGI) is a measure of income calculated from your gross income and used to determine how much of your income is taxable.

Activity-Based Costing - ABC

An accounting method that identifies the activities that a firm performs, and then assigns indirect costs to products. An [term] system recognizes the relationship between costs, activities and products, and through this relationship assigns indirect costs to products less arbitrarily than traditional methods.

Aggregate Level Cost Method

An acturial cost method that tries to match and allocate the cost and benefit of a pension plan over the span of the plan's life. The Aggregate Level Cost Method typically takes the present value of benefits minus asset value and spreads the excess amount over the future payroll of the participants.

Advertising Budget

An advertising budget is an estimation of a company's promotional expenditures over a period of time. An advertising budget is the money a company is willing to set aside to accomplish its marketing objectives. When creating the advertising budget, a company must weigh the trade-offs between spending one additional advertising dollar with the amount of revenue that dollar will bring in as revenue.

Affiliate

An affiliate is a type of inter-company relationship in which one of the companies owns less than a majority of the other company's stock. Affiliation can also describe a type of inter-company relationship in which at least two different companies are subsidiaries of a larger company. An affiliate is determined by the degree of ownership a parent company holds in another company.

Affirmative Covenant

An affirmative covenant is a type of promise or contract which requires a party to do something. For example, a bond covenant that provides that the issuer will maintain adequate levels of insurance or deliver audited financial statements is an affirmative covenant.

Active Investing

An investment strategy involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.

Active Income

Income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation.

Accrued Income

Income that is earned in a fund or by company by providing a service or selling a product, but has yet to be received. Mutual funds or other pooled assets that accumulate income over a period of time but only pay it out to shareholders once a year are, by definition, accruing their income. Individual companies can also accrue income without actually receiving it, which is the basis of the accrual accounting system.

3-6-3 Rule

Slang used to refer to an "unofficial rule" under which the banking industry once operated, which alludes to it being noncompetitive and simplistic. The [term] describes how bankers would give 3% interest on depositors' accounts, lend the depositors money at 6% interest and then be playing golf at 3pm. This alludes to how a bank's only form of business is lending out money at a higher rate than what it is paying out to its depositors.

Acquisition Premium

The difference between the estimated real value of a company and the actual price paid to obtain it. [term] represents the increased cost of buying a target company during a merger and acquisition. There is no requirement that a company pay a premium for acquiring another company; depending on the situation, they may even get a discount.

Accrued Monthly Benefit

The earned pension benefit that will be paid to an employee at regular retirement age. The [term] is based on the employee's years of service through the accrual date, and is paid to pension holders each month following retirement.

Accounting Information System - AIS

The collection, storage and processing of financial and accounting data that is used by decision makers. An [term] is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities.

Accounting Measurement

The computation of economic or financial activities in terms of money, hours or other units. An [term] is a unit of some measurable element that is used to compare and evaluate accounting data. Accounting is often measured in terms of money; for example, when a company records weekly sales at $10,000. The same company could record those transactions in terms of units sold; for instance 5,000 units (of $2.00 products).

Account Executive

This term refers a person who has primary responsibility for an account, whether it be for an individual or corporate client. It is used often in the advertising and public relations business, but can also be used in financial services businesses.

Accelerated Option

This term refers to an option in an insurance contract, usually in the form of a rider, that allows for accelerated benefits or partial benefits sooner than they would otherwise be payable. Alternatively, in life insurance contracts, an accelerated option can refer to the option that allows the policy holder to apply the accumulated cash value to pay off the policy.

Absolute Title

Title to a property that is free of any encumbrances or deficiencies. [term] gives unequivocal right of ownership to the owner, and cannot be disputed or challenged by anyone else. This is opposed to titles with liens, attachments or judgments against them. Also known as a perfect title.

Aaron's Law

a bill introduced in Congress in 2013 to reform the Computer Fraud and Abuse Act of 1986 (CFAA). Representative Zoe Lofgren wrote the bill in response to the 2013 suicide of Aaron Swartz, a computer programmer and political activist who co-founded Reddit. The proposal died in Congress during the 2013 session.

Actionable

A business directive or investment strategy that can feasibly be accomplished in the near future. Company managers and investors try to identify things that are currently [term], as they may be prerequisites toward accomplishing future goals and higher level directives. This usage is different from the standard legal definition of [term], which means that something has provided sufficient grounds to file a lawsuit.

Add-On Certificate of Deposit

A certificate of deposit that allows the bearer to deposit additional funds, after the initial purchase date, that will bear the same rate of interest.

Advertising Injury Coverage

A component of commercial general liability insurance that protects the policyholder against claims of stolen ideas, invasion of privacy, libel, slander and copyright infringement related to advertising. Advertising injury coverage is a type of personal injury insurance (as opposed to physical injury insurance) and may also be called "personal and advertising injury coverage."

90-Day Letter

An IRS notice sent after an audit stating that there was a discrepancy or error within an individuals taxes and they will be assessed unless petitioned.

10-Year Treasury Note

A debt obligation issued by the United States government that matures in 10 years. A [term] pays interest at a fixed rate once every six months and pays the face value to the holder at maturity. An advantage of investing in [term]s, and other federal government securities, is that the interest payments are exempt from state and local income tax. However, they are still taxable at the federal level.

Advance Determination Ruling - ADR

A decision or ruling issued by the Internal Revenue Service to a taxpayer with regard to a taxation or pricing matter. While determination letters from the IRS usually address transactions that have already occurred, they may also be issued on the tax consequences of proposed transactions, hence the term "advance." Also known as "Advance Pricing Agreement."

AC-DC Option

A derivative that gives an investor the right - but not the obligation - to buy (call) or sell (put) a security at a certain price (strike), and in which the investor makes the buy or sell decision at a specific time after the option is in force, rather than at the time of purchase. The [term] is basically an option, which on a future date can become a call or put option at the buyer's discretion. Also called a "chooser option" or "hermaphrodite option".

Accident-Year Statistics

A statistic used by insurance companies to gauge what percentage of the premiums received are being paid out in claims. [term] are a measure of the total losses against the total revenue (both deductibles and premiums).

Additional Personal Allowance

In the United Kingdom, an extra deduction as set forth by HM Revenue & Customs (HMRC) on income tax returns that can be claimed by single, separated or widowed individuals who are not eligible to receive the married couple allowance and who are financially supporting a child under the age of 16.

Adjustment Income

Income paid to the dependent(s) of a primary wage earner in the event of his or her death. These funds, usually provided through life insurance policies, are intended to provide financial support as the beneficiary adjusts to becoming self-sufficient.

Activity Quota

A minimum level of sales-oriented actions that must be met by a salesperson during a given time period. An [term] may require a salesperson to make a certain number of outbound calls, send a certain number of emails to potential clients or submit a certain number of statements of work. The quota is not typically based directly on a revenue figure requirement, but is related to the actions that lead to a sale being made.

Accountable Plan

A plan for reimbursing employees for business expenses. Under this plan, the reimbursement that the employee receives for the expenses is not included in his/her income. Employees are required to account adequately for expenses with records and return any excess reimbursement within a reasonable period of time.

408(k) Plan

A plan set up by an employer to help employees fund their retirement. The [term] is a simplified version of the popular 401(k) plan but is intended for smaller companies (those with fewer than 25 employees). It is also available to self-employed individuals. Under the plan, employees can contribute pretax dollars to the account and thus reduce their net incomes for the year. This results in a tax savings for the contributor.

Activity Center

A pool of activity costs associated with particular processes and used in activity-based costing (ABC) systems. Each [term] is separately identified and can be assigned to specific cost drivers. In this manner, a large overhead cost pool can be subdivided into several [term]s to aid in cost analysis.

3C7

A portion of the Investment Company Act of 1940 that permits the exclusion of investment companies from standard registration requirements with the Securities and Exchange Commission (SEC) if all U.S. investors are considered to be "qualified purchasers" or "accredited investors."

501(c)

A subsection under the United States Internal Revenue Code. The subsection relates to non-profit organizations and tax law and identifies which nonprofit organizations are exempt from paying federal income tax

Acceleration Life Insurance

A type of policy that pays a portion (typically 25\% or 50\%) of the death benefits (the face amount of the policy, less any outstanding loans or fees) in case of a specified illness or medical emergency.

ActiveX

software that allows applications to share information with one another, regardless of what programming language it's written in. [term] was developed by Microsoft (MSFT) in 1996 and is only supported on Windows and with Microsoft products like Word, Excel, Powerpoint and Internet Explorer. Today, Javascript and Flash are more widely used than [term].

After-Hours Market Close

The last transaction and final price of a security that is traded in the after-hours market. The after-hours market is generally more volatile than the regular market, but it can give investors an idea of what to expect at the start of trading the next day. Also referred to as "after-hours close".

Adding To A Loser

The action of a trader/investor increasing a position in an asset when its price is heading in the direction that's opposite to what the investor/trader desires. This is generally not a wise investment decision because unless the asset begins to move in the desired direction, the investor's losses will increase.

After Reimbursement Expense Ratio

The actual expense paid by mutual fund investors. The after reimbursement expense ratio is calculated by subtracting any reimbursements made to the fund by the management and contractual fee waivers from the gross expense ratio. Also known as the "net expense ratio".

Actual Return

The actual gain or loss of an investor. This can be expressed in the following formula: expected return (ex-ante) plus the effect of firm-specific and economy-wide news.

Alan Greenspan

The former chairman of the Board of Governors of the Federal Reserve System as well as the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. His tenure at the helm of the Fed lasted 18 years from 1987 until early 2006, when Ben Bernanke replaced him. He was first appointed to the post by then-president Ronald Reagan and kept at the Fed's helm by successors George H.W. Bush, Bill Clinton and President George W. Bush.

Accounting Standards Executive Committee - AcSEC

The former senior technical organization within the American Institute of Certified Public Accountants (AICPA) that determined the AICPA's technical policies related to financial reporting standards. The group is now known as the Financial Reporting Executive Committee (FinREC). FinREC is authorized to make public statements on behalf of the American Institute of Certified Public Accountants without explicit consent from the AICPA's board of directors.

Ahn Cheol-Soo

The founder and former CEO of Korean antivirus software company AhnLab. Born in 1962 in South Korea, Ahn (also known as Charles Ahn) became highly educated in medicine before his computer hobby took off and became a thriving business. Since then, he has received numerous leadership awards for his successes.

Adjustment Frequency

The frequency at which interest rate changes or resets on an adjustable-rate mortgage occur. Different adjustable-rate mortgages have different adjustment frequencies. Typically, the adjustment frequency is once a year, but it can be as often as once a month or as infrequent as once every five years.

Accrued Market Discount

The gain in the value of a discount bond expected from holding it for any duration until its maturity. Because discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity. The difference between the discounted price for which the bond is sold and its face value at maturity represents the return on investment to the bondholder and may be taxable at the federal, state and/or local level.

Absenteeism

The habitual non-presence of an employee at his or her job. Possible causes of [term] include job dissatisfaction, ongoing personal issues and chronic medical problems. Regardless of cause, a worker with a pattern of being absent may put his reputation and his employed status at risk. However, some forms of absence from work are legally protected and cannot be grounds for termination.

52-Week High/Low

The highest and lowest prices that a stock has traded at during the previous year. Many traders and investors view the 52-week high or low as an important factor in determining a stock's current value and predicting future price movement.

A-Credit

The highest credit grade available as assigned to a borrower by a lender. Lenders use a credit grading system to qualify borrowers. The higher the borrower's credit grade, the lower the interest rate offered to that borrower on a loan.

AAA

The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated [term] has an exceptional degree of creditworthiness and can easily meet its financial commitments. Ratings agencies such as Standard & Poor's and Fitch Ratings use the [term] nomenclature to indicate the highest credit quality, while Moody's uses Aaa.

Active Bond Crowd

The name given to members of the NYSE and their specific bond trading departments that are acknowledged as frequent traders in active bonds.

Accounting Cycle

The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the [term] are: Collecting and analyzing data from transactions and events. Putting transactions into the general journal. Posting entries to the general ledger. Preparing an unadjusted trial balance. Adjusting entries appropriately. Preparing an adjusted trial balance. Organizing the accounts into the financial statements. Closing the books. Preparing a post-closing trial balance to check the accounts. Also known as "bookkeeping cycle".

Accretive

The process of accretion, which is the growth or increase by gradual addition, in finance and general nomenclature. An acquisition is considered [term] if it adds to earnings per share.

Account Reconcilement

The process of confirming that two separate records of transactions in an account are equal. This can happen internally with a bank or broker, such as between general ledger entries and individual account records. Reconcilement also occurs when a customer of a bank or broker confirms that his or her personal records match what is reported on periodic statements. The term can also refer to balancing the books and records of a business with software programs and data entries.

Active Management

The use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund's portfolio. Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold and sell. The opposite of [term] is called passive management, better known as "indexing".

Abacus

1. A calculation tool used by sliding counters along rods or grooves, used to perform mathematical functions. In addition to calculating the basic functions of addition, subtraction, multiplication and division, the abacus can calculate roots up to the cubic degree. 2. A semi-annual accounting journal published and edited by the University of Sydney. Published in 1965, this journal covers all areas of accounting.

Abandonment

1. The act of surrendering a claim to, or interest in, a particular asset. 2. The permitted withdrawal from a forward contract that is made for the purchase of deliverable securities. 3. The act of allowing an option to expire unexercised.

183-Day Rule

part of the "substantial presence test" used by the Internal Revenue Service to determine if a person, who is a dual taxpayer, will have to pay taxes in the United States. It is commonly used by aliens to establish residency in the United States. The determining factor is whether the number of days on which the person was present in the United States exceeds 183 days.

ADF (Andorran Franc)

ADF was a symbol for the Andorran franc, formerly the currency of Andorra, a small nation between the borders of France and Spain. The term Andorran franc referred to French francs that circulated in Andorra, as no Andorran franc coins or notes were ever issued. In 1999, the euro replaced the French franc, and therefore the Andorran franc, as the national currency of Andorra.

Aged Assets

Equipment that has outlived its useful life. Aged assets might include equipment that is still functional, but is expensive to operate and maintain; equipment that still works, but breaks down frequently, disrupting operations; or equipment that is broken and is too expensive to repair. Proper management of aged assets is a significant issue in industries that rely heavily on equipment, such as the oil and natural gas industry.

Allied Healthcare Professional Liability Insurance

Professional liability insurance that provides coverage for medical professionals who are not physicians. Allied healthcare professional liability insurance is often purchased by nurses, physicians' assistants, midwives, dentists, physical therapists, and medical technicians. Allied healthcare professional liability insurance are often marketed through industry associations.

1040EZ Form

an alternative to the Internal Revenue Service's (IRS) 1040 income tax form and offers a faster and easier way to file taxes, meant for taxpayers with rudimentary tax situations. In order to be eligible to use this form, the individual must have a taxable income of less than $100,000, interest income of $1,500 or less, possess no dependents and fulfill other requirements set by the IRS. Also known as "income tax return for single and joint filers with no dependents" and unofficially as the "easy form".

1979 energy crisis

an event of widespread panic about potential gasoline shortages that occurred when oil production decreased in the aftermath of the Iranian Revolution. Although oil output only decreased by around 4% worldwide, the panic drove up oil prices far higher than the decrease justified, and caused long lines at gas stations.

Above The Line Deduction

certain types of deductions that are subtracted from your income before the adjusted gross income is calculated for tax purposes.

Ad Blocking Software

removes advertisements from websites. Some (maybe most) users prefer to browse the Internet without ads, which can be distracting and time consuming.

Accumulation Unit

1) In the case of a variable annuity, a measurement of the value invested in the account during the accumulation period of the contract. The more funds you contribute to your annuity account, the more [term]s you will build. 2) In the case of a unit trust, a type of investment structure where the trust's income is directly reinvested into the trust, instead of being paid out as cash to the investor.

Accumulation Plan

1. A general financial strategy in which an investor attempts to build the value of his or her portfolio to a desired size. 2. In the context of mutual funds, a formal arrangement in which an investor contributes a specified amount of money to the fund on a periodic basis. By doing so, the investor accumulates a larger and larger investment in the fund through his or her contributions and the increase in value of the fund's portfolio.

Accumulation Phase

1. A period of time when an annuity investor is in the early stages of building up the cash value of the annuity. This is followed by the annuitization phase where payments are paid out to the annuitant. 2. The period of time when an investor builds up the value of their investment through savings.

Account

1. An arrangement by which an organization accepts a customer's financial assets and holds them on behalf of the customer at his or her discretion. 2. A statement summarizing the record of transactions in the form of credits, debits, accruals and adjustments that have occurred and have an affect on an asset, equity, liability or past, present or future revenue. 3. A relaying of happenings from one party to another.

Accumulation

1. An individual investor's cash contributions to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process. 2. An institutional investor's purchase of a large number of shares in a public company over an extended period of time. 3. The retention of company profits in corporate finance for reinvestment in business operations, as opposed to the payout of earnings as dividends to shareholders.

Adjusted Exercise Price

1. An option's strike price after adjustments have been made for stock splits to its underlying security. 2. A term used to describe the strike prices for options written on Ginnie Mae pass through certificates.

Accretion

1. Asset growth through addition or expansion. 2. In reference to discount bonds, it describes the accumulation of value until maturity.

Absorbed

1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices. 2. In underwriting, when an issue has been completely sold to the public. However, the underwriter may absorb (purchase) any shares it is unable to sell in the IPO in order to support the company's share price. 3. In mergers, when an acquired firm is folded into the acquiring company. The acquired firm is said to have been "[term]" and the acquiring firm is called the "absorbing firm." This type of merger is called an "absorption."

Account Analysis

1. In cost accounting, this is a way for an accountant to analyze and measure the cost behavior of a firm. The process involves examining cost drivers and classifying them as either fixed or variable costs. The cost accountant then uses the company's data to figure out the estimated variable cost per cost-driver unit or fixed cost per period. 2. In banking, it is a periodic statement outlining the banking services provided to a firm. The statement is usually provided monthly and involves displaying all pertinent data, including the company's average daily balance and charges that the company incurs from the bank.

Above Water

1. Refers to the condition of a company's asset when its actual value is higher than the book value used in its financials. 2. Financially referring to a person staying out of economic trouble or a company remaining financially viable.

Account Balance

1. The amount of money in a financial repository, such as a checking account, at any given moment. 2. The total amount of money owed to a third party such as a credit card company, utility company, mortgage banker or other type of lender or creditor. The [term] will always be the net amount after factoring in all debits and credits.

All-Cash Deal

1. The cash purchase of a target company. When an all-cash deal occurs, the equity portion of the parent company's balance sheet remains unchanged. This is opposed to a all-stock deal, where equity on the balance sheet would be affected. 2. The transfer of a real estate property without financing or mortgages. The buyer would produce the appropriate funds at the time of closing; the seller would receive the entire selling price at closing.

Acquirer

1. The firm which is purchasing a company in an acquisition. The [term] is also known as a bidder. 2. A financial institution or merchant bank (a merchant [term]) which is contacted to authorize a credit card or debit purchase. The [term] will either approve or decline the debit or credit card purchase amount. If approved the [term] will then settle the transaction by placing the funds into the seller's account.

25% Rule

1. The idea that a local government's long-term debt should not exceed 25% of its annual budget. Any debt beyond this threshold is considered excessive and a potential risk, since the municipality may have trouble paying the cost of debt. 2. A technique for determining royalties which stipulates that a party selling a product based on another party's intellectual property must pay that party a royalty of 25% of the gross profit made from the sale, before taxes. The 25% rule applies to trademarks, copyrights, patents and other forms of intellectual property.

Accumulation Period

1. The phase in an investor's life when he/she builds up his/her savings and the value of his/her investment portfolio with the intention of having a nest egg for retirement. 2. In the context of a deferred annuity, the period of time when the annuitant is making contributions to the annuity and building up the value of his/her annuity account. This is usually followed by the annuitization phase, when guaranteed payments are paid out to the annuitant for a specified period of time (usually the rest of his/her life).

Ad Infinitum

A Latin phrase meaning "to infinity" - in other words, forever. In finance, the term is associated with a perpetuity, in which the payments derived from an asset at fixed intervals are assumed to go on forever and ever, or ad infinitum.

500 Investor Rule

A SEC stipulation requiring a company that exceeds 500 individual investors with more than $10 million in assets to file its financials with the Securities & Exchange Commission. According to SEC rules, such a company has 120 days following the end of their fiscal year's end to file.

Advanced Technology Vehicle Manufacturing Program

A U.S. Government subsidy created under section 136 of the Energy Independence and Security Act of 2007 that provides $25 billion in low-interest loans and grants to automakers and parts suppliers, in order to create advanced technology vehicles and their major components in the United States

30-Year Treasury

A U.S. Treasury debt obligation that has a maturity of 30 years. The [term] used to be the bellwether U.S. bond but now most consider the 10-year Treasury to be the benchmark.

Agricultural Sector Investment Program - ASIP

A World Bank program focused on agricultural development in Africa. The Agricultural Sector Investment Program's four primary goals are: Policy and institutional improvements to reform key areas of marketing, trade and pricing, food security and land use and tenure. Public investment to complement policy and institutional improvements. Private sector development to attract private dollars. The creation of a rural investment fund for small-scale capital investments in rural areas on a matching grant basis to support privatization of government farms.

ABA Bank Index

A banking index that is made up of community banks and banking institutions. This index was created to represent the smaller institutions of the banking industry and stands in contrast to the KBW Banking Index in that respect. The ABA index trades on the Nasdaq under the symbol ABAQ.

Account Activity

A banking term that refers to any activity that creates a debit or credit in an account. In a bank account, this would include deposits and withdrawals. In a brokerage account, it would include buy and sell transactions, dividends, interest, etc. [term] can also refer to debits and credits in a company or organization's accounting records.

Accelerated Death Benefit - ADB

A benefit that can be attached to a life insurance policy that enables the policy holder to receive cash advances against the death benefit in the case of being diagnosed with a terminal illness. Many individuals who choose the [term] have less than one year to live and use the money for treatments and other costs needed to stay alive.

Accumulation Bond

A bond issued at an original issue discount (OID). This means that the interest accumulates but is not paid until maturity; there are no semi-annual coupon payments as with most bonds. These bonds are also referred to as "accrual bonds."

Act Of God Bond

A bond issued by an insurance company, linking principal and interest to a company's losses due to natural disasters. [term]s are issued by insurers to protect against unforeseen events.

Absolute Value

A business valuation method that uses discounted cash flow analysis to determine a company's financial worth. The [term] method differs from the relative value models that examine what a company is worth compared to its competitors. [term] models try to determine a company's intrinsic worth based on its projected cash flows.

Adjusted Net Asset Method

A business valuation procedure used in acquisition accounting that changes the stated values of a company's assets and liabilities to reflect its current fair market values. This accounting technique adjusts asset and liability values either up or down, so they reflect the true values on either an ongoing concern, forced liquidation or orderly liquidation basis.

Adjusted Premium Method

A calculation method used arrive at a life insurance policy's cash surrender value (CSV). There are three steps in the Adjusted Premium Method. 1. Calculate the first-year expense allowance 2. Arrive at the Adjusted Premium 3. Substitute the adjusted premium for the Net Level Premium used in the equation for arriving at the Prospective Reserve. This is a term specific to the insurance industry.

Activity Sequence-Sensitive

A calculation used in activity-based costing for determining the costs associated with activities based on particular time-based processes. [term] is a means of determining the costs of an activity dependent upon the order in which the tasks are accomplished and the time required to complete individual tasks.

Accounting Change

A change in accounting principles, accounting estimates, or the reporting entity. A change in an accounting principle is a change in a method used, such as using a different depreciation method or switching from LIFO to FIFO. An example of an accounting estimate change could be the recalculation of machine's estimated life due to wear and tear. The reporting entity could change due to a merger or a break up of a company. [term]s require full disclosure in the footnotes of the financial statements to describe the justification and financial effects of the change. This allows readers of the statements to analyze the changes appropriately.

Abandonment Option

A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable. A type of "real option".

Alienation Clause

A clause in a mortgage contract that requires full payment of the balance of a mortgage at the lender's discretion if the property is sold or the title to the property changes to another person. Nearly all mortgages have an alienation clause.

Abandonment Clause

A clause in a property insurance contract that, under certain circumstances, permits the property owner to abandon lost or damaged property and still claim a full settlement amount. If the insured party's property cannot be recovered, or the cost to recover or repair it is more than its total value, it can be abandoned and the insured party is entitled to a full settlement amount.

Accelerated Benefits

A clause in certain life insurance policies that enables the policy holder to receive the benefits before death. [term]s are normally reserved for those that suffer from a terminal illness, have a long term high-cost illness, require permanent nursing home confinement or have a medically incapacitating condition. Some insurance companies differ on how much cash can be pulled out and how close to death the insured has to be in order to receive these benefits. Insurers offer anywhere from 25% to 100% of the death benefit as an early payment. Also referred to as living benefits.

Acceleration Covenant

A clause included in certain debt securities and swap agreements stating that the immediate collection of payment and termination of contract will take place should any number of clauses being violated by the borrower including default or a downgrade of debt. Also referred to as "acceleration clause."

Accounting Entity

A clearly defined economics unit that is accounted for separately. An [term] can be either a business or subdivision of a business that engages in economic activities, has economic assets and resources that must be accounted, and is separate from the personal dealings of its owners. Once an [term] is determined, transactions within the specific unit are accounted. The entity should not be flexible or regularly changed, in order to insure the accuracy of accounting. Also known as a "reporting entity".

Absolute Pollution Exclusion

A commercial liability insurance policy clause that removes coverage of pollution that results from regular business operations. [term] to comprehensive general liability insurance policies became common after 1986, when standard pollution exclusions no longer contained "sudden and accidental" pollution incidents.

Add To Cash Value Option

A common benefit option on life insurance policies wherein the policy owner allows the dividends from policy to be used for the purposes of accumulating cash values. On death, the beneficiaries receive an increased death benefit from the cash value amount that was accrued within the policy.

5 By 5 Power In Trust

A common clause included in many trusts allowing for beneficiary withdrawals from the trust. Specifically, '5 by 5 Power' or the '5 by 5 clause', gives the beneficiary power to withdraw the greater of: a) $5,000 or b) 5% of the trust's fairmarket value from the trust each year.

Accounting Profit

A company's total earnings, calculated according to Generally Accepted Accounting Principles (GAAP), and includes the explicit costs of doing business, such as depreciation, interest and taxes.

After Tax Operating Income - ATOI

A company's total operating income after taxes. This non-GAAP measure excludes any after-tax benefits or charges such as effects from accounting changes.

Address Commission

A comprehensive directory of street names and address ranges. The Address Coding Guide (ACG) was initially created by the U.S. Census Bureau to enable automated assignment of addresses on a mailing list. This mailing list is used to gather information on the demographics of the U.S. population. Certain entities such as cities and municipalities or large mailing firms may maintain their own address coding guides.

Accidental Means

A condition for losses covered under an insurance policy that requires the loss to have been the result of an accident rather than the result of a non-accident. As a condition, [term] is designed to protect insurers from having to pay claims on events that were not accidents.

2011 U.S. Debt Ceiling Crisis

A contentious July 2011 debate regarding the maximum amount of borrowing that the United States government should be allowed to undertake. A debt ceiling has been in place since 1917, but the government raises it whenever it comes close to hitting it. Hitting the debt ceiling would mean defaulting on interest payments to creditors. The consequences of such a default could include late, partial or missed payments to federal pensioners, Social Security and Medicare recipients, government employees and government contractors, as well as an increase in interest rate at which the U.S. could undertake further borrowing. The[term] was a heated negotiation over how to avoid potential problems like these.

Aged Fail

A contract between two broker-dealers that has not been settled within 30 days of the settlement date. Aged fails typically occur when a security is undelivered due to the failure of the selling client to deliver the security to his or her broker; the broker is then unable to deliver the security to the buying broker. This typically results in the receiving firm having to adjust its books accordingly, to account for the asset not being received.

Adhesion Contract

A contract in which one party has substantially more power than the other in creating the contract. For a contract of adhesion to exist, the offeror must supply a customer with standard terms and conditions that are identical to those offered to other customers. Those terms and conditions are not negotiable.

Acceleration Clause

A contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met. An [term] outlines the reasons that the lender can demand loan repayment. Also known as "acceleration covenant".

Aleatory Contract

A contract type in which the parties involved do not have to perform a particular action until a specific event occurs. Events are those which cannot be controlled by either party, such as natural disasters and death. Aleatory contracts are commonly used in insurance policies. The insurer does not have to pay the insured until an event, such as a fire, results in property loss.

Acceptance

A contractual agreement on a time draft or sight draft to pay the amount due at a specified date. The party who is expected to pay the draft writes "accepted", or similar wording indicating [term], next to his or her signature along with the date. This person then becomes the acceptor, and is obligated to make the payment by the maturity date. A banker's [term] is a time draft honored by a bank, and is typically used in international trade. A trade [term] is a time draft drawn by the seller of goods on a buyer. In a trade [term], the buyer is the acceptor.

After-Tax Contribution

A contribution made to any designated retirement or any other account after taxes has been deducted from an individual's or companies taxable income. After-tax contributions can be made on a tax deferral, and on a non tax deferral basis, pending on the type of account the entity is making contributions to.

Abatement Cost

A cost borne by many businesses for the removal and/or reduction of an undesirable item that they have created. Abatement costs are generally incurred when corporations are required to reduce possible nuisances or negative byproducts created during production.

Accreting Principal Swap

A derivative where counterparties exchange financial instrument benefits, involving a growing notional principal amount. An [term], is an interest rate or cross-currency swap where the notional principal grows as it reaches maturity. This type of swap may be used in instances where the borrower anticipates the need to draw down funds over a certain period of time but wants to fix the cost of the funds in advance. Also called accreting swap, accumulation swap, construction loan swap, drawdown swap and step-up swap.

Agio

A description of the bond premium when the bond market value is greater than the par value. In international markets, agio can also sometimes refer to the fee paid for undertaking a transaction. Because these bonds are often traded on international markets, the agio premium is also used to describe the premium to exchange currencies.

Absolute Beneficiary

A designation of a beneficiary that can not be changed without the written consent of that beneficiary. Also referred to as an "irrevocable beneficiary", absolute beneficiaries can also refer to a trust, an employee benefit plan such as a pension, or any other instrument or contract with a beneficiary clause.

Actuarial Science

A discipline that assesses financial risks in the insurance and finance fields using mathematical and statistical methods. [term] applies the mathematics of probability and statistics to define, analyze and solve the financial implications of uncertain future events. Traditional [term] largely revolves around the analysis of mortality and the production of life tables, and the application of compound interest.

Accumulated Dividend

A dividend on a share of cumulative preferred stock that has not yet been paid to the shareholder. [term]s are the result of dividends that are carried forward from previous periods and shareholders of cumulative preferred stock receive dividends before any other shareholders.

Affidavit Of Title

A document provided by the seller of a piece of property that explicitly states the status of potential legal issues involving the property or the seller. The affidavit is a sworn statement of fact. For example, someone looking to sell a piece of real estate would have to provide an affidavit of title indicating that the property is truly owned by the seller, that the property is not being sold to another party, that there are no liens against the property and that the seller is not in bankruptcy proceedings.

Air Waybill - AWB

A document that accompanies goods shipped by an international courier to provide detailed information about the shipment and allow it to be tracked. The air waybill has multiple copies so that each party involved in the shipment can document it.

Acquittance

A document that shows that a debtor has been released from a debt obligation. An [term] are often given as an indication from the lender to a debtor that the owed amount has been completely repaid and that the lender cannot request further repayment on that specific debt.

Alternative Documentation

A documentation process designed to expedite loan approval where the lender accepts from the borrower documents such as W-2s, paycheck stubs and bank statements as verification of income made on the loan application. Confirming a borrower's information in this manner is considerably quicker than the traditional method of verifying such information with third parties.

Age Discrimination In Employment Act Of 1967

A federal statute protecting "certain applicants and employees" 40 years of age and older from workplace discrimination. The Age Discrimination in Employment Act (ADEA) specifically prohibits the use of an employee's or job applicant's age as a factor in "hiring, promotion, discharge, compensation, or terms, conditions or privileges of employment."

Acquisition Fee

A fee charged by a lessor to cover the expenses incurred in arranging a lease. [term]s may also refer to charges and commissions paid for the acquisition or purchase of property, such as closing costs, real estate commission, and development/construction fees. [term]s may be paid up front by the buyer or lessee or added to the loan amount and paid over the term of the loan.

Activity Charge

A fee charged to cover the servicing costs of an account. An activity charge is triggered by an activity or event, and should follow a fee schedule outlined in the account contract. These fees can be based on teller and non-teller activities.

Adjusted Balance Method

A finance/accounting method where costs are based on the amount(s) owing at the end of the current time period (once credits and payments are posted).

Adhocracy

A form of business management which emphasizes individual initiative and self-organization in order to accomplish tasks. This is in contrast to bureaucracy which relies on a set of defined rules and set hierarchy in accomplishing organizational goals. The term was popularized by Alvin Toffler in the 1970s.

Accounts Receivable Insurance

A form of credit insurance offered by commercial insurers to businesses. Accounts receivable insurance can take the form of multi-buyer insurance (a pool of receivables) or key buyer insurance.

Accrual Swap

A form of discrete time-switch option in which the interest on one side accrues only if certain conditions are met. Payment of interest in the [term] occurs if the reference rate, such as LIBOR or EURIBOR, is above or below a certain level. One party pays the standard floating reference rate, and in turn receives the reference rate plus a spread. Interest payments to the counterparty will only accrue for days in which the reference rate stays within a certain range.

Advance-Deposit Wagering - ADW

A form of gambling on the outcome of horse races in which the bettor must fund his account before being allowed to place bets. ADW is often conducted online or by phone. In contrast to ADW, credit shops allow wagers without advance funding; accounts are settled at month-end. Racetrack owners, horse trainers and state governments sometimes receive a cut of ADW revenues.

Accelerated Bookbuild

A form of offering in the equity capital markets. It involves offering shares in a short time period, with little to no marketing. The bookbuild of the offering is done vey quickly in one or two days. Underwriters may sometimes guarantee a minimum price and proceeds to the firm.

Accounting Standards Committee - ASC

A former organization under the Consultative Committee of Accountancy Bodies (CCAB) in the United Kingdom. The [term] duties included developing standards for financial reporting and accounting, recording these standards and communicating them through press releases and publications. It existed between 1976 and 1990 when its duties were assumed by the Accounting Standards Board (ASB). The committee was preceded by the Accounting Standards Steering Committee (ASSC).

Alfonso Cortina de Alcocer

A former president, CEO and chairman of Spanish oil company Repsol YPF. Alcocer's presidency of Repsol was controversial because he did not have a background in the petroleum industry and some believed he partly gained the role through his business and political connections. He left the company in 2004, after which he became president of Inmobiliaria Colonial and then senior advisor at TPG Capital.

Acceptance Testing

A functional trial performed on a product before it is put on the market or delivered to the purchaser. The [term] process is designed to replicate the anticipated real-life use of the product to ensure that what the consumer or end user receives is fully functional and meets their needs and expectations.

Accounting Postulate

A fundamental assumption in the field of accounting. Like any field, the present system of accounting has certain underlying axioms which form the basis of the all further work. [term]s are generally very well agreed upon and form the foundation of the discipline.

Abu Dhabi Investment Authority - ADIA

A government-owned investment organization that manages the sovereign wealth fund for Abu Dhabi, United Arab Emirates. According to the Sovereign Wealth Fund Institute's rankings, the [term] sovereign wealth fund ranked as the largest in the world in 2010. It is also one of the world's largest institutional investors.

Alberta Investment Management Corporation - AIMCo

A government-owned investment-management corporation headquartered in Edmonton, Alberta. AIMCo has approximately $69 billion CAD in assets under management as of 2009, making it one of Canada's largest institutional money-management firms.

Advisory Management

A group within a bank or brokerage that provides professional, personalized investment guidance. Advisory management services allow private individuals to consult with investment professionals before making changes to their portfolios. Advisory management professionals have expertise in one or more investment areas and provide guidance that is tailored to an individual's specific situation.

Adaptive Expectations Hypothesis

A hypothesis stating that individuals make investment decisions based on the direction of recent historical data, such as past inflation rates, and adjust the data (based on their expectations) to predict future rates.

Accessory Dwelling Unit (ADU)

A legal and regulatory term for a secondary house or apartment with its own kitchen, living area and separate entrance that shares the building lot of a larger, primary house. The [term] may be attached to an existing house or garage, or it may be built as a stand-alone unit, but it usually uses the water and energy connections of the primary house and may be rented separately.

Alimony Trust

A legal arrangement where property is transferred to a former spouse as a source of support following a divorce or separation. The payor spouse transfers investments and other assets that generate income into an alimony trust for the recipient spouse or beneficiary. The payor spouse cannot claim an alimony deduction on the income from an alimony trust, while the recipient spouse is taxed on the income but not the principal.

Accord And Satisfaction

A legal contract whereby two parties agree to discharge a tort claim, contract or other liability for an amount or based on terms that differ from the original amount of the contract or claim. [term] is also used to settle legal claims prior to bringing them to court.

Adverse Domination

A legal doctrine that allows regulators to bring litigation against a corporation's officers and directors as long as those officers and directors remain with the corporation. Adverse domination extends the typical statute of limitations under which litigation can be sought.

Accountant's Letter

A letter that usually precedes a financial report. An accountant's letter is produced by a company's independent auditors. It summarizes the scope of the accountant's audit and its results in very general terms. The term is frequently used interchangeably with the term "auditor's opinion".

Acquired Fund Fees And Expenses - AFFE

A line item in a fund-of-funds' prospectus that shows the operating expenses of the underlying funds. This became a requirement as of January 2007 and this information is found beneath the "Fees and Expenses" heading.

Accountants' Index

A list of articles and books of interest to accounting professionals that is released by the American Institute of Certified Public Accountants (AICPA) on a quarterly and annual basis. Topics of interest include auditing, tax accounting, financial accounting and managerial accounting.

Activity Dictionary

A list of particular activities that are utilized in activity-based costing (ABC) analysis. The list consists of descriptions of a variety of activities, including a description of the activity, inputs, outputs, suppliers, customers and cost drivers. An [term] is intended to help decision-makers determine and improve the efficiency of an operation as it pertains to costing.

Acquisition Loan

A loan given to a company to purchase a specific asset or to be used for purposes that are laid out before the loan is granted. The [term] is typically only able to be used for a short window of time, and only for specific purposes. Once repaid, funds available through an acquisition loan cannot be reborrowed as with a revolving line of credit at a bank.

125% Loan

A loan, usually a mortgage, with an initial loan amount equal to 125% of the initial property value. In other words, a 125% loan has a loan-to-value ratio (LTV ratio) of 125%.

Actual Total Loss

A loss that occurs when the insured property is totally destroyed or is damaged in such a way that it can be neither recovered nor repaired for further use, or the insured is irretrievably deprived of it. Usually, this indicates the maximum settlement possible according to the terms of the policy. Also known as "total loss."

Above Full-Employment Equilibrium

A macroeconomic term used to describe the real gross domestic product (GDP) is currently in excess of its long-run average, or some other historical measure. Accordingly, the amount that the current real GDP is greater then the historic average is called an inflationary gap, as this will create inflationary pressures in this particular economy.

Absorption Costing

A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. [term] uses the total direct costs and overhead costs associated with manufacturing a product as the cost base. Generally accepted accounting principles (GAAP) require [term] for external reporting. [term] is also known as "full absorption costing".

Accounting Manual

A manual that contains pertinent accounting rules and other information for a business or organization. [term]s can contain guidelines for various policies and procedures. They also often specify organizational rules and standards for corporate accounts.

Absolute Breadth Index - ABI

A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices in the coming weeks.

Advance/Decline Ratio- ADR

A market-breadth indicator used in technical analysis to compare the number of stocks that closed higher with the number of stocks that closed lower than their previous day's closing prices. To calculate the advance/decline ratio, divide the number of advancing shares by the number of declining shares. The A/D ratio can be calculated for various time periods, such as one day, one week or one month.

ACCRA Cost Of Living Index - COLI

A measure of key living costs compiled by the Council for Community and Economic Research. The [term] compares cost of living differences between urban areas in the United States weighted by different types of consumer expenditures in mid-management households. The index is used by economists, corporations and researchers to assess relative living costs. First published in 1968, it is available quarterly.

Accounting-Based Incentive

A method for compensating corporate executives based on whether they help their companies reach certain performance levels in areas such as earnings per share and return on equity. These plans are widely used and can be divided into two types: those that reward performing executives with cash and those that reward performing executives with stock. It is common for incentive pay to make up a significant portion of an executive's compensation in firms of all sizes. Executives are also compensated with a base salary and benefits.

Abnormal Earnings Valuation Model

A method for determining a company's worth that is based on book value and earnings. Also known as the residual income model, it looks at whether management's decisions cause a company to perform better or worse than anticipated. The model says that investors should pay more than book value if earnings are higher than expected and less than book value if earnings are lower than expected.

Adjusted Net Worth

A method for valuing an insurance company using capital values, surplus values, and an estimated value for business on the company's books. You start with the estimated value for business and add unrealized capital gains, the capital surplus and the voluntary reserves.

All-Inclusive Income Concept

A method of income reporting that includes the total non-owner changes in equity on a company's financial statements. It excludes investments by owners and distributions to owners. Following the all-inclusive income concept, all items, including extraordinary and nonrecurring gains and losses, are incorporated into the income statement. Since all gains and losses are reported on the income statement, this type of income reporting results in what is sometimes referred to as comprehensive income.

A-B Split

A method of testing the effectiveness of marketing methods or media. Using [term] marketing, a list of target names is split into two groups on a random basis, with one group designated as a control group and the other as a test group. The objective of the [term] is to determine which single variable is the most effective in improving response rates to a marketing campaign or achieving some other desired outcome.

Actuarial Cost Method

A method used by actuaries to calculate the amount a company must pay periodically to cover its pension expenses. The two main methods used are the cost approach and the benefit approach. The cost approach calculates total final benefits based on several assumptions, including the rate of wage increases and when employees will retire. The amount of funding that will be needed to meet those future benefits is then determined. The benefit approach finds the present value of future benefits by discounting them. Also known as an actuarial funding method.

Actuarial Basis Of Accounting

A method used in computing the periodic payments that a company must make to fund its employee pension benefits. The actuarial basis stipulates that total contributions from the company plus investment returns on pension assets must match the required annual contribution from the pension fund. Assumptions must be made for the length of workers' careers, the rate of return on plan assets, the rate of salary increases and the discount rate used for future benefits.

Adjustment Index

A modification made to a piece of numerical data, or a set of numerical data, by a product of some type of a mathematical formula. There are a number of different types of adjustment indices, ranging in scale and purpose from mortgage rate adjustment to handicapping a golfer's score.

Accumulation/Distribution

A momentum indicator that attempts to gauge supply and demand by determining whether investors are generally "accumulating" (buying) or "distributing" (selling) a certain stock by identifying divergences between stock price and volume flow. It is calculated using the following formula: [term] = ((Close - Low) - (High - Close)) / (High - Low) * Period's volume

Aggressive Growth Fund

A mutual fund that attempts to achieve the highest capital gains. Investments held in these funds are companies that demonstrate high growth potential, usually accompanied by a lot of share price volatility. These funds are only for non risk-averse investors willing to accept a high risk-return trade-off. Also commonly referred to as a "capital appreciation fund" or "maximum capital gains fund".

130/30 Mutual Fund

A mutual fund that has long positions and short positions in its portfolio. Specifically, in a [term], the fund is long 100\% of its assets, and in addition it shorts 30\% of the value portfolio and uses the cash received in the short sale to invest long in more assets. So in total, the fund is 130\% in the long portfolio and 30\% in the short portfolio, hence 130/30.

Advance Premium Mutual

A mutual insurance company that operates as an advance premium insurer rather than an assessment insurer. Advance premium mutual insurers assess premiums in advance and they do not change for some period of time. An assessment insurer assesses policyholders their premiums based on actual experience of the company

457 Plan

A non-qualified, deferred compensation plan established by state and local governments and tax-exempt governments and tax-exempt employers. Eligible employees are allowed to make salary deferral contributions to the [term]. Earnings grow on a tax-deferred basis and contributions are not taxed until the assets are distributed from the plan.

Academy of Accounting Historians

A nonprofit organization that researches how accounting principles and rules have changed over time. The [term] was created in 1973 and publishes journal and research papers throughout the year. Membership is not restricted to accountants.

Accounting and Auditing Organization for Islamic Financial Institutions - AAOIFI

A not-for-profit organization that was established to maintain and promote Shariah standards for Islamic financial institutions, participants and the overall industry. The [term] was created on February 26, 1990 to ensure that participants conform to the regulations set out in Islamic finance. The founding and associate members, as well as the regulatory and supervisory authorities of the [term], define the acceptable standards for various functions. This includes areas such as accounting, governance, ethics, transactions and investment.

Aggregator

A party involved within the secondary mortgage market that purchases mortgages from financial institutions and then securitizes them into mortgage-backed securities (MBS). Aggregators earn profit by purchasing individual mortgages at lower prices and then selling the pooled MBS at a higher premium.

Adverse Possession

A principle of real estate law that allows a person who possesses someone else's land for an extended period of time to claim legal title to that land. Land claimed under adverse possession does not require the claimant to pay for that land, but does require that the claimant prove that the land possession is actual, open and notorious, exclusive, hostile or adverse and continuous.

Accountant

A professional person who performs accounting functions such as audits or financial statement analysis. [term]s can either be employed with an accounting firm, a large company with an internal accounting department, or can set up an individual practice.

Actuary

A professional statistician working for an insurance company. They evaluate your application and medical records to project how long you will live.

Accounting Hall Of Fame

A prominent award in the field of accounting. The [term] was started by Ohio State University in 1950. The award is highly selective, and is given only to very prominent accountants who have made "lasting contributions to the field."

ACNielsen

A provider of market research and analysis of media and viewer interaction. [term] is part of the Nielson Company and attempts to provide its clients with valuable insights into consumer behavior and marketing information. This is done through data collection and measurement methods that evaluate what consumers watch and what they buy. [term] is best-known for its Nielsen ratings, which measure audiences for television, radio and newspapers in media markets. The company was founded by Arthur C. Nielsen Sr. in 1923, and was incorporated in 1929. It has its headquarters in New York and is part of the privately-held The Nielsen Group.

Alberta Heritage Savings Trust Fund

A provincial fund established in the Canadian province of Alberta which aims to manage and invest the savings from Alberta's vast non-renewable resources to provide the greatest financial return on those savings for current and future generations of Albertans. The Alberta Heritage Fund was enacted under the Alberta Heritage Savings Trust Fund Act of 1976. The fund invests in equities, bonds, real estate, private equities and absolute return strategies.

Adjustment Provision

A provision in a life insurance policy that allows the policy to be changed in one or more ways. This may involve increases or decreases to either the policy's premium or face amount, changes to the length of protection or period of premium payments.

Additional Child Tax Credit

A refundable credit that can be claimed by taxpayers who are ineligible to claim the full non-refundable child tax credit, because it exceeds their total tax liability. The [term] was created to reimburse taxpayers for the non-refundable portion of their child tax credit. The [term] is available to families with three or more qualified children

8-K

A report of unscheduled material events or corporate changes at a company that could be of importance to the shareholders or the Securities and Exchange Commission.

48-Hour Rule

A requirement that all pooled information regarding to-be-announced transactions on forward mortgage-backed securities (MBS) be communicated to the buyer from the seller before 3 p.m. EST 48 hours prior to the settlement date of the trade. The [term] is a requirement under the Securities Industry And Financial Markets Association (SIFMA), which is formerly known as the Public Securities Association (PSA) or Bond Market Association.

Actuarial Adjustment

A revision made to reserves, premiums and other values based on a company's actual loss experience as well as expenses and expected benefits to be paid.

Accidental Death And Dismemberment Insurance - AD&D

A rider attached to a life or health insurance policy. [term] covers death by accidental means (rather than natural causes) and dismemberment, which includes loss of the use of certain body parts (including limbs or eyesight.) These riders are usually written in such a way that the insurer must pay double the amount payable otherwise, or a specific amount of continous income payments, and are sometimes called double indemnity riders. [term] insurance is often offered by employers as an extra option on group health plans.

28/36 Rule

A rule-of-thumb for calculating the amount of debt that can be taken on by an individual or household. The [term] states that a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans. This rule is used by mortgage lenders and other creditors to assess borrowing capacity, the premise being that debt loads in excess of the 28/36 yardstick would be difficult for an individual or household to service and may eventually lead to default.

Add-On Sale

A sale of additional goods or services to a buyer. Depending on the business, [term]s may represent a source of significant revenues and profits to a company. An [term] is generally suggested by the salesperson once the buyer has made a firm decision to buy the core product or service. Sometimes known as "upselling."

Additional Cardholder

A secondary user added to a credit card account by the main or primary cardholder. The [term] generally gets to enjoy all the benefits of the credit card, without being liable for making payments on the account, which remains the responsibility of the main cardholder. As a result, cardholders need to be very cautious about adding additional cardholders to their credit cards. While some issuers allow friends to be added as additional cardholders, other issuers restrict additional users to those individuals who are immediate family members, at least 18 year of age, and living at the same address as the primary cardholder.

Airline Industry ETF

A sector exchange-traded fund (ETF) that invests in stocks of airline companies, so as to obtain investment results that correspond to those of an underlying airline index. Because of the very limited number of airlines in most nations, an airline ETF is unlikely to be restricted only to domestic carriers, but would very likely include foreign carriers as well.

Adaptive Selling

A selling strategy in which the way a product or service is presented varies according to the type of consumer viewing it. [term] takes into account the situation in which the product or service is presented, the demographics of the consumer and feedback that has been received about the product or service.

Acquisition Accounting

A set of formal guidelines describing how assets, liabilities, noncontrolling interest and goodwill of a target company must be reported by a purchasing company on its Consolidated Statement of Financial Position. With [term] the fair market value of the acquired firm is allocated between the net tangible and intangible assets portion of the balance sheet of the acquiring firm; any difference is regarded as goodwill. Also called "business combination accounting."

Accelerated Return Note (ARN)

A short- to medium-term debt instrument that offers a potentially higher return linked to the performance of a reference index or stock. An [term] generally caps the total return it will provide, but typically does not provide any downside protection. This restricts its appeal to a narrow segment of the investor populace, viz. investors who believe that the reference index or stock will only appreciate marginally until the [term] matures, but will not decline sharply.

Accounts Payable Turnover Ratio

A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period.

Abeyance

A situation in which the rightful owner of a property, office or title has not yet been decided. [term] results when the current owner or holder does not declare a single current beneficiary. Instead, the new owner is determined through the outcome of a particular event at some time in the future. Thus, the ownership of the property, office, or title is left unfilled. [term] is derived from the Old French word "abeance." which means a longing or gaping, with future expectation.

Accounting Insolvency

A situation where the value of a company's liabilities exceeds its assets. [term] looks only at the firm's balance sheet, deeming a company "insolvent on the books" when its net worth appears negative.

Acquisition Indigestion

A slang term describing an acquisition or merger in which the companies involved have trouble integrating with one another. [term] may also describe a situation in which the purchasing company has difficulty making the most of a takeover.

Adminispam

A slang term describing electronic messages from a company's executives that are of little value to the employee who has received it because it pertains to personnel that the employee is not involved with or projects that the employee does not work on. Adminispam is formed by the combination of the words "administration" and "spam," with the latter referring to unwanted communication.

Adware

A software package that plays, displays or downloads advertisements to a remote computer. Adware is a term that originates from "advertising-supported software". Adware often appears on the remote computer in the form of a pop-up, a new window that is opened containing the advertisement. Users can often disable the frequency of adware by managing the pop-up controls and preferences within their internet browsers.

Accelerated Share Repurchase - ASR

A specific method by which corporations can repurchase outstanding shares of their stock. The [term] is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company. The shares are returned to the client through purchases in the open market, often purchased over a period that can range from one day to several months.

Acceptable Quality Level - AQL

A statistical measurement of the maximum number of defective goods considered acceptable in a particular sample size. If the [term] is not reached for a particular sampling of goods, manufacturers will review the various parameters in the production process to determine the areas causing the defects. The [term] is an important statistic to companies seeking a Six Sigma level of quality control.

Aftermarket Report

A summary of how shares of an initial public offering (IPO) performed after being introduced on the secondary market. At minimum, an aftermarket report will provide the company's name, its ticker symbol, the offer date, offer price and closing price. Investors can then see whether the new stock increased or decreased in price on the secondary market compared to what investors paid on the primary market. An aftermarket report might also include a company description, basic financial data, basic financial ratios and links to recent news articles about the company.

Account Current

A summary of the performance of each individual insurance agent in the company. The [term] is written and issued by the insurance company each year so the agents can see their total commissions earned, policy cancellations and premiums paid.

10-K Wrap

A summary report of a company's annual performance that bundles the 10-K report required by the Securities and Exchange Commission (SEC) with additional commentary from the company, covering such things as the corporate vision, letter to shareholders and business overview among other topics. Is often released instead of a traditional annual report and generally contains fewer images and comments from management.

Accelerated Cost Recovery System - ACRS

A system of depreciation introduced by the Economic Recovery Tax Act of 1981. [term] depreciation is based on recovery periods instead of useful life. These periods were predetermined by the IRS.

Actuarial Life Table

A table or spreadsheet that shows the probability of a person at a certain age dying before his or her next birthday. These statistics calculate the remaining life expectancy for people at different ages and the probability of surviving a particular year of age. Because men and women have differing mortality rates, an [term] is computed for separately for men and women. Also called mortality table, life table or actuarial table.

Accumulated Earnings Tax

A tax imposed by the federal government upon companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary.

Airport Tax

A tax levied on passengers for passing through an airport. The tax is generally paid for use of the airport, and is one of a number of taxes that are typically included in the price of an airline ticket. Often, the bulk of the fee is called the landing fee, paid by the aircraft and transferred to the customer via the ticket price, to land at a specific airport. These fees will vary greatly depending on the popularity of the airport. Revenue from airport taxes fund is used for facility maintenance.

Advance Canvass

A technique used by companies to generate "buzz" in advance of a new product launch or promotional campaign, by visiting retailers to obtain their support. Advance canvassing is generally done when the launch is imminent, as doing it well ahead of the launch may reduce its effectiveness.

Accelerated Payments

A term associated with making additional unscheduled payments on a loan at predetermined, or random intervals. Making additional unscheduled payments reduces the principal balance of the loan, meaning that more principal and less interest is paid off in subsequent payments. Making [term]s will lead to the early pay-off of a loan.

Advanced Economies

A term used by the International Monetary Fund to describe developed countries. While there is no established numerical convention to determine whether an economy is advanced or not, advanced economies have a high level of gross domestic product per capita, as well as a very significant degree of industrialization.

Accredited Investor

A term used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings. [term]s include individuals, banks, insurance companies, employee benefit plans, and trusts.

Adjustment in Conversion Terms

A term used to describe the adjustment made to a convertible securities' conversion factor when the exchangeable stock underlying the convertible undergoes a split.

Adaptive Market Hypothesis

A theory posited in 2004 by MIT professor Andrew Lo. It combines principles of the well-known and often controversial Efficient Market Hypothesis with principles of behavioral finance. Lo postulates that investor behaviors such as loss aversion, overconfidence and overreaction are consistent with evolutionary models of human behavior, which include actions such as competition, adaptation and natural selection.

Address Verification Service - AVS

A tool provided by credit card processors and issuing banks to merchants in order to detect suspicious credit card transactions. The Address Verification Service (AVS) checks the billing address submitted by the card user with the cardholder's billing address on record at the issuing bank. This is done as part of the merchant's request for authorization of the credit card transaction. The credit card processor sends a response code back to the merchant indicating the degree of address matching, depending on which the credit card transaction may be accepted or rejected.

Alimony Substitution Trust

A trust agreement in which a divorced person agrees to pay spousal support from the income generated from a trust. An alimony substitution trust is different from receiving alimony because this trust is taxed differently. The ex-spouse responsible to provide income from the trust is not required to pay income taxes on the income generated by the trust nor do they receive a tax deduction for payments made from this trust.

Active Trust

A trust where the trustee is held accountable for additional responsibilities. With an [term], those additional responsibilities can be in respect to the control or management of the trust, collection of rent, profits, and sale proceeds; in other words the administration of the trust property. Also referred to as a special trust.

Accounts Receivable Financing

A type of asset-financing arrangement in which a company uses its receivables - which is money owed by customers - as collateral in a financing agreement. The company receives an amount that is equal to a reduced value of the receivables pledged. The age of the receivables have a large effect on the amount a company will receive. The older the receivables, the less the company can expect. Also referred to as "factoring".

Absolute Auction

A type of auction where the sale is awarded to the highest bidder. [term]s do not have a reserve price which sets a minimum required bid for the item to be sold. One type of [term] relates to foreclosed properties, where the winning bid acquires the foreclosed property. This is opposed to a lender confirmation auction, where the lender must approve the bid in order to complete the transaction.

Agreement Corporation

A type of bank chartered by a state to engage in international banking. The bank "agrees" with the Federal Reserve Board (FRB) to limit its activities to those allowed an Edge Act corporation.

Affinity Card

A type of credit card issued by a bank and a charitable organization whose logo appears on the card. Each time the card is used, a percentage of the transaction is donated to the organization.

Active Index Fund

A type of index fund where a fund manager bases the fund's initial investment proportions according to the benchmark index in which the manager is attempting to track, and then proceeds to add what he/she believes to be higher performing stocks that are unrelated to underlying index. The fund manager will then actively manage the composition of these non-benchmark stocks in order to earn yields that exceed the benchmark index.

ABA Transit Number

A unique number assigned by the American Bankers Association (ABA) that identifies a specific federal or state chartered bank or savings institution. In order to qualify for an [term], the financial institution must be eligible to hold an account at a Federal Reserve bank. [term]s are also known as ABA routing numbers, and are used to identify which bank will facilitate the payment of the check.

Add-On No-Fault Laws

A variation of no-fault insurance that allows a claimant to also pursue tort liability claims against another driver. Add-on no-fault insurance is offered in several states, and is considered to be less restrictive on the issue of torts than pure no-fault insurance.

Accounting Ratio

A way of expressing the relationship between one accounting result and another, which is intended to provide a useful comparison. [term]s assist in measuring the efficiency and profitability of a company based on its financial reports. [term]s form the basis of fundamental analysis. Also called financial ratio.

Accommodation Endorsement

A written agreement from one entity to back the credit liability of another. This insurance is made without consideration, and adds strength to the creditworthiness of the insured entity. This would usually be made by a parent company to a subsidiary, and allows the subsidiary to take on the parent's credit standing. An [term] is similar to a government guaranteeing a third party's debt with its full faith and credit.

Adequate Notice

A written document that specifies in detail the terms and conditions of a loan or extension of credit to a consumer. Adequate notice requires the consumer to be informed of key details of the credit arrangement, such as the annual percentage rate, grace period, annual fee, etc.

Affidavit Of Loss

A written statement declaring the physical loss of a security - usually through theft or destruction by fire/flood. The affidavit contains all details regarding the loss, the owner's name and any information pertaining to the security, such as serial number or date of issue. Once the statement has been made, one can issue a letter of indemnity, requesting the replacement of the security.

Activity Ratios

Accounting ratios that measure a firm's ability to convert different accounts within its balance sheets into cash or sales. [term] are used to measure the relative efficiency of a firm based on its use of its assets, leverage or other such balance sheet items. These ratios are important in determining whether a company's management is doing a good enough job of generating revenues, cash, etc. from its resources.

Accruals

Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense.

Additional Collateral

Additional assets put up as collateral by a borrower against debt obligations. [term] is used to lessen the risk to the lender. Creditors might require extra collateral in order for a given loan to remain at a constant interest level, or to appease investors or a credit committee. Such collateral might include cash, certificates of deposit, equipment, stock or letters of credit.

Additional Paid In Capital

Additional paid in capital is a value that is often included in the contributed surplus account in the shareholders' equity section of a company's balance sheet. The account represent the excess paid by an investor over the par-value price of a stock issue. Additional paid-in-capital can arise from issuing either preferred or common stock.

Add-On

Additional shares put on the market by a company that has already gone public. Reasons why a company might use [term] financing include raising cash to fund existing operations, expanding operations or paying for a new project. While an [term] is useful for raising money, it can cause the company's share price to decline, and current shareholders to be diluted.

Affluenza

Affluenza is a social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses". Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements. People said to be affected by affluenza typically find that the very economic success they have been so vigorously chasing ends up leaving them feeling unfulfilled, and wishing for yet more wealth.

Algorithmic Trading

Algorithmic trading, also referred to as algo trading and black box trading, is a trading system that utilizes advanced and complex mathematical models and formulas to make high-speed decisions and transactions in the financial markets. Algorithmic trading involves the use of fast computer programs and complex algorithms to create and determine trading strategies for optimal returns.

Account History

All activity within an account, usually since inception. In a bank account, the [term] includes all transactions initiated by the account holder as well as passive entries (such as interest on balances, which are credited to the account). The account history is also called a "ledger", depending on where the account is held.

Accounting Records

All of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. [term] include records of assets and liabilities, monetary transactions, ledgers, journals, and any supporting documents such as checks and invoices.

All-in-on (AIO) PC

All-in-one PCs (AIO PCs) are desktop computers which integrate in one product all of the components of a computer except for the keyboard and mouse. Many AIO PCs today have touch screen monitors.

Adam Smith

An 18th-century philosopher and free-market economist famous for his ideas about the efficiency of the division of labor and the societal benefits of individuals' pursuit of their own self-interest. In his first book, The Theory of Moral Sentiments, Smith proposed the idea of the invisible hand, or the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs will tend to pay higher wages to attract workers to these positions. Smith died in 1790.

All-Holders Rule

An SEC regulation that requires a tender offer to be made available to all holders of the identical class of the security. The All-Holders Rule is specified in Rule 14d-10 of the Securities Exchange Act of 1934, which specifies equal treatment of security holders. This rule is especially important during takeover bids, ensuring that any tender offers made by the acquiring company cannot be directed to only those shareholders in favor of the takeover.

Absorbed Account

An account that has been combined or that has merged with another related account. Accounts are often absorbed into existing accounts as a way of simplifying the accounting process. Once an account has been absorbed the original account will cease to exist, although a paper trail will remain to show how funds have been moved.

Accrued Liability

An accounting term for an expense that a business has incurred but has not yet paid. A company can accrue liability for any number of items, such as a pension account that will pay retirees in the future. [term]s can be recorded as either short or long-term liabilities on a company's balance sheet.

5-1 Hybrid Adjustable-Rate Mortgage - 5-1 Hybrid ARM

An adjustable-rate mortgage (ARM) with an initial five-year fixed-interest rate. After this initial five-year period, the interest rate begins to adjust on an annual basis according to an index plus a margin (or, the fully indexed interest rate). The speed and the extent to which the fully indexed interest rate can adjust are usually limited by an interest rate cap structure. There are several different indexes that the fully indexed interest rate might be tied to. While the index is variable, the margin is fixed for the life of the loan. Also known as a "five-year fixed-period ARM".

Adjustable-Rate Mortgage - ARM

An adjustable-rate mortgage, is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. Normally, the initial interest rate is fixed for a period of time, after which it resets periodically, often every year or even monthly. The interest rate resets based on a benchmark or index plus an additional spread, called an ARM margin.

Adjusted Cost Base - ACB

An adjusted cost base (ACB) is an income tax term that refers to the change in an asset's book value resulting from improvements, new purchases, sales, payouts or other factors. An adjusted cost base can be calculated on a single or a per unit basis.

Adverse Opinion

An adverse opinion is a professional opinion made by an auditor indicating that a company's financial statements are misrepresented, misstated, and do not accurately reflect its financial performance and health. Adverse opinions are usually given after an auditor's report, which can be internal or independent of the company

Agency Bond

An agency bond is a bond issued by a government agency. These bonds are not fully guaranteed in the same way as U.S. Treasury and municipal bonds.

Advanced Internal Rating-Based - AIRB

An approach that requests that all risk components be calculated internally within a financial institution. The advanced internal rating-based (AIRB) approach helps an institution reduce its capital requirements and credit risk. In addition to the basic internal rating-based (IRB) approach estimations, the AIRB approach allows banks to estimate more risk components themselves, such as loss given default (LGD) and exposure at default (EAD). These would normally be estimated by supervisory authorities.

Accumulated Benefit Obligation

An approximate measure of a company's pension plan liability. The [term] is estimated based on the assumption that the pension plan is to be terminated immediately; it does not consider any future salary increases. This differs from the projected benefit obligation, which assumes that the pension plan is ongoing, and thus accounts for future salary increases.

Accrued Revenue

An asset class for goods or services that have been sold or completed but that have not yet been billed and/or paid for. [term] is income that has been incurred but not received, such as monthly rent that is due in arrears, or following the monthly rental period. The income has been earned (since an individual or firm rented the item) but the revenue has not been received (as per the rental agreement to pay in arrears).

Active Asset

An asset that is used by a business in its daily or routine operations. [term]s can be tangible, such as buildings or equipment, or intangible, such as patents or copyrights. [term]s are listed as assets on the business's balance sheet.

Addendum

An attachment to an a document such as an insurance policy that changes the original policy conditions, either to include or exclude coverage. The [term] becomes part of the legal contract.

All-Pay Auction

An economic and game theory concept in which participants place silent bids on a particular item. Unlike a standard auction, all-pay auction has everybody pay for their bid, regardless of whether they win the item being sold. Of course, in a standard auction, the highest bid wins the item.

Acceleration Principle

An economic concept that draws a connection between output and capital investment. According to the [term], if demand for consumer goods increases, then the percentage change in the demand for machines and other investment necessary to make these goods will increase even more (and vice versa). In other words, if income increases, there will be a corresponding but magnified change in investment. Also referred to as the accelerator principle.

Ability To Pay

An economic principle stating that the amount of tax an individual pays should be dependent on the level of burden the tax will create relative to the wealth of the individual. The [term] principle suggests that the real amount of tax paid is not the only factor that has to be considered, and that other issues such as ability to pay should also factor into a tax system.

Accelerator Theory

An economic theory that suggests that as demand or income increases in an economy, so does the investment made by firms. Furthermore, [term] suggests that when demand levels result in an excess in demand, firms have two choices of how to meet demand. Raise prices to cause demand to drop. Increase investment to match demand. The [term] proposes that most companies choose to increase production thus increase their profits. The theory further explains how this growth attracts more investors, which accelerates growth.

Account Manager

An employee who is responsible for the day-to-day management of a particular customer's account with the business. The [term] is a point of contact, and provides customer support, upselling, technical assistance and general relationship management. An [term] may be in charge of a number of smaller accounts, or may focus on a few larger accounts.

Accommodation Endorser

An entity or person who agrees to back the credit obligations of another party in order to allow that party to obtain credit for which they would not otherwise qualify. It is the equivalent of a payment guarantee.

Accumulated Other Comprehensive Income

An entry that is generally found in the shareholders' equity section of the balance sheet. [term] is used to sum up unrealized gains and losses because those items have not been settled. This account can include unrealized gains and losses from investments held by the firm, company pension funds and foreign currency transactions.

90-Age Formula

An equation used by Canadian retirees to calculate how much money to withdraw each year from their Registered Retirement Income Funds (RRIFs), a type of tax-advantaged individual retirement plan. Retirees are required to withdraw a minimum amount from the plan each year and can calculate the amount to be withdrawn using one of two formulas: the 90-age formula or the 90-percentage schedule.

Accounting Error

An error in an accounting item that was not caused intentionally. An [term] can include discrepancies in dollar figures, or might be an error in using accounting policy incorrectly (i.e., a compliance error). [term] should not be confused with fraud, which is an intentional error in an accounting item, usually to hide or alter data for personal gain.

Actively Managed ETF

An exchange-traded fund that has a manager or team making decisions on the underlying portfolio allocation or otherwise not following a passive investment strategy. An [term] will have a benchmark index, but managers may change sector allocations, market-time trades or deviate from the index as they see fit. This produces investment returns that will not perfectly mirror the underlying index.

Accelerated Reply Mail - ARM

An expedited delivery of business reply mail offered by the U.S. Postal Service. Reply mail may be routed to a postal facility other than the one to which the mail is addressed, and is available for pickup by the [term] customer, or reshipped by express mail to the customer. The [term] service is generally used to receive orders and payments faster, thus reducing order-processing times and enabling more efficient cash management.

Adjuster

An insurance claims agent. A claims adjuster is charged with evaluating an insurance claim to determine the insurance company's liability under the terms of an owner's policy.

Admitted Company

An insurance company that is domiciled in one state but is admitted by another state to transact insurance business. Because insurance licenses are governed by the states, an insurance company must be licensed by each state where it intends to conduct business, and must comply with each state's insurance codes, including financial requirements.

Active Partner

An invested person who is involved in the daily operations of the partnership. An [term] helps run the business to enhance his or her returns and is therefore considered a material participant. This person typically shares more risk and return versus a limited or silent partner.

90/10 Strategy

An investing strategy that involves deploying 90% of one's investment capital in interest-bearing instruments that have a lower degree of risk, and the balance 10% in high-risk investments. This is a relatively conservative investment strategy that aims to generate higher yields on the overall portfolio. Potential losses will typically be limited to the 10% that is invested in the high-risk investments, depending on the quality of bonds purchased.

Abusive Tax Shelter

An investment scheme that claims to reduce income tax without changing the value of the user's income or assets. [term]s serve no economic purpose other than lowering the federal or state tax owed when filing. Often, these schemes channel funds through trusts or partnerships to avoid taxation.

100% Equities Strategy

An investment strategy for an individual portfolio or pooled funds vehicle such as a mutual fund. Only equity securities are considered for investment, whether they be listed stocks, over-the-counter stocks, or private equity shares. A mutual fund or ETF will often state a [term] in its prospectus to inform potential investors of the fund's overall risk profile.

Advanced Company (TSX Venture)

An issuer listed on Canada's TSX Venture exchange that has significant financial resources and satisfies the exchange's tier 1 listing standards. Such an advanced company or tier 1 issuer benefits from a more favorable regulatory environment and increased opportunity for participation by institutional investors. As the premier tier, there are fewer advanced or tier 1 companies on the TSX Venture exchange than tier 2 companies.

Administrative Budget

An official, detailed financial plan for an upcoming period for a business. An administrative budget is usually prepared on an annual or quarterly basis and identifies the costs of running an operation that are not tied to producing a product or service. Costs can include those associated with non-production and supervisory payroll, depreciation, amortization, consulting, sales, dues and fees, legal fees and marketing, rent and insurance. The budget enables management to exercise control of the day-to-day activities of the business.

Accelerative Endowment

An option in a whole life insurance policy to use accumulated dividends to convert the policy into an endowment policy prior to its normal maturity date. An endowment policy provides for a lump sum payment to the insured after a certain period.

Against Actual

An order between two traders looking to hedge their positions, in which the traders swap futures positions in exchange for cash positions. Against actual transactions are recorded on commodity and futures exchanges, and are governed by the exchange's rules.

Abend

An unexpected end to a computer program that results in the system crashing or closing down. Derived from the abbreviated version of the term "abnormal end", [term] crashes in a business setting can cost companies a significant amount of money. This is why many information technology (IT) departments spend a lot of resources to detect and correct bugs in software.

Actual Deferral Percentage / Actual Contribution Percentage - ADP/ACP Test

Annual non-discrimination tests for 401(k) plans mandated by the IRS to ensure that a plan does not unduly benefit owners and highly compensated employees at the expense of other employees. [term]s must be passed in order to satisfy the non-discrimination requirements of the IRS if the plan is to continue. If the plan fails either test, the employer must take corrective action to protect its qualified status in the 12-month period following the close of the plan year in which the oversight occurred.

Admiralty Court

Any court governed by admiralty law, whether the court is officially titled admiralty court, or is granted official jurisdiction over admiralty cases. Official jurisdiction for admiralty cases in the United States, for example, has been given to federal district courts, whereas England has a separate court system

Account Inquiry

Any inquiry into an account, whether it be a depositary account or credit account. The inquiry can refer to past records, payments or other specific transactions, or any other entries relating to the account.

Agricultural Credit

Any of several credit vehicles used to finance agricultural transactions, including loans, notes, bills of exchange and banker's acceptances. These types of financing are adapted to the specific financial needs of farmers, which are determined by planting, harvesting and marketing cycles. Short-term credit finances operating expenses, intermediate-term credit is used for farm machinery, and long-term credit is used for real-estate financing.

Alien

Any person who is not a citizen of the country in which he or she lives.

19c3 Stock

Any stock listed on an equity exchange after April 26, 1979. This classification allowed members of exchanges to trade these stocks off the board (not at the exchange).

Allied Lines

Any type of property-casualty insurance that is closely related to fire insurance coverage. Allied lines coverage is almost always taken out along with a standard fire insurance policy. Allied lines insurance can include coverage for such things as accounts receivable, data-processing equipment, water damage and vandalism.

Admitted Assets

Assets of an insurance company that are permitted by state law to be included in the company's financial statements. Although each state has discretion over its own insurance laws, there is a general consensus over which assets are suitable to use when determining the insurance company's solvency.

Abandoned Property

Assets such as cash, stocks, bonds, mutual funds, uncashed checks, land, life insurance policies and the contents of safe deposit boxes that have been turned over to the state after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment. One purpose of [term] laws is to relieve the asset holder of liability.

Accounting Theory

Assumptions, methodologies and frameworks used in the study and application of financial principles. The study of [term] involves a review of both the historical foundations of accounting practices, as well as the way in which accounting practices are verified and added to the regulatory framework that governs financial statements and financial reporting.

Accounting Research Bulletins - ARB

Bulletins containing recommended accounting procedures for the accounting community. The publications are written and issued by the accounting principles board (APB), and were issued by the committee on accounting procedure of the American Institute of Certified Public Accountants (AICPA) prior to 1959. While the recommendations are not binding in themselves, the Securities and Exchange Commission (SEC) usually imposes the recommendations on firms over which it has jurisdiction.

ABCD Counties

Categories of U.S. counties devised by AC Nielsen Company that are based on U.S. Census Bureau population data and proximity to major metropolitan areas. A counties are the largest U.S. counties by population, and D counties are the smallest. Counties are classified on the basis of data from the latest census, which takes place every 10 years. The county classification is used by marketing and advertising agencies, and advertisers in the preparation and analysis of advertising and media plans.

Adopter Categories

Classification of individuals based on their willingness to try out a new innovation or new product. There are five adopter categories - innovators, early adopters, early majority, late majority and laggards. Adopter categories were first described by sociologist Everett Rogers in his landmark book "Diffusion of Innovations" published in 1962

After-Acquired Collateral

Collateral for a loan obtained after the borrower has already entered into a loan agreement. The necessity for after-acquired collateral arises when the borrower has insufficient collateral for the loan, but may be acquiring additional property in the near term. This property would serve as after-acquired collateral, and would be automatically collateralized.

Accumulating Shares

Common stock given to current shareholders of a company in place of or in addition to a dividend. By [term] shareholders don't have to pay income tax on these shares; however, it is still mandatory to pay capital gains tax on them. Sometimes companies pay out these shares in addition to dividends paid in cash. These shares are one way companies replace annual income with capital growth. Also referred to as a stock dividend.

Accounting Software

Computer programs that assist bookkeepers and accountants in recording and reporting on a firm's financial transactions. The functionality of [term] differs from product to product. Larger firms may choose to implement a customized solution which integrates a vast amount of data from many different departments. Smaller firms often choose an off the shelf product.

Adjustable Feature

Contract language that allows adjustments to be made to the premium and commission features of a reinsurance treaty. An adjustable feature may include such features as sliding scale commissions and adjustable ratings. The formulas used by contract parties to adjust premiums and commissions are agreed to in the original contract. Adjustable features are found in most pro rate reinsurance treaties.

Above-The-Line Costs

Costs incurred during the production of an advertising commercial that are associated with the creative side of it. These costs include those incurred for actors, music and photography. Because creativity cannot be measured directly, [term] may have little correlation with the creativity of an advertisement or commercial. That is, incurring high [term] may not necessarily result in a commercial with a high degree of creativity, while a low-budget commercial with minimal [term] may still be quite creative. In accounting, [term] can also refer to costs included in the calculation of net income in the income statement.

Accrued Benefits

Coverage earned by an employee on a pension plan, based on years of service with an employer. [trem] may include vacation, sick or personal time off, or other related benefits. Employees who are laid off, retire or are fired must receive all unpaid [term].

Additional Living Expense Insurance

Coverage under a homeowner's, condominium owner's or renter's insurance policy that covers the additional costs of living that are incurred by the policy holder should the policy holder be temporarily displaced from their place of residence. Such coverage is usually at about 10% to 20% of the insurance that covers the dwelling.

Aggregate Mortality Table

Data on the death rate of everyone who has purchased life insurance, without categorization based on age or time of purchase. This calculation includes combined statistics of mortality tables. In order to price insurance products and ensure the solvency of insurance companies through adequate reserves, actuaries must develop projections of future insured events (such as death, sickness, disability, etc.). To do this, actuaries develop mathematical models of the amount and timing of the events.

Agency Debentures

Debt issued by a federal agency or a government-sponsored enterprise (GSE) for financing purposes. These types of debentures are not backed by collateral, but by the integrity and credit worthiness of the issuer. Officially, agency debentures issued by a Federal Agency, such as the Tennessee Valley Authority, are backed by the full faith and credit of the United States government. Agency debentures issued by a GSE are backed only by that GSE's ability to pay.

Account Hold

Deposits that are delayed before being credited to an account, such as deposited checks that are drawn on foreign or out-of-state banks. A hold can also be placed on an entire account if there has been a transaction that must be or has been reported to the authorities as a suspicious transaction under the anti-money laundering regulations, or if there is a suspicion or report of identity theft.

Accelerated Amortization

Extra payments made towards paying down a mortgage principal. With [term], the loan borrower is allowed to add additional payments to their mortgage bill in order to pay off a mortgage before the loan settlement date. The benefit of doing so is reduced overall interest payments.

Accident And Health Benefits

Fringe benefits provided to employees for sickness, accidental injury, or accidental death. These benefits include payment of hospital and medical expenses as well as income payments.

Actuarial Gain Or Loss

Gain or loss arising from the difference between estimates and actual experience in a company's pension plan. Actuarial gains and losses are used when accounting for pension plans because of the need to make assumptions about the future rate of salary increases, the length of employee tenure, an appropriate discount rate for the plan obligations and the expected rate of return on plan assets.

Accounting Convention

Guidelines that arise from the practical application of accounting principles. An [term] is not a legally-binding practice; rather, it is a generally-accepted convention based on customs, and is designed to help accountants overcome practical problems that arise out of the preparation of financial statements. As customs change, so to will [term]s.

Accountable Care Organizations

Healthcare providers that take a group approach to coordinating the care that patients receive. [term] work to both improve care and save money in overall expenses by providing disease management services and other chronic care management options, while reducing duplicated care measures that often occur when a patient has multiple physicians and specialists.

60-Plus Delinquencies

Home loans that are more than 60 days past due on their monthly mortgage payments. 60-plus delinquency rates are typically expressed as a percentage of a group of loans written within a specified time period, such as a given calendar year. Another common grouping method are the interest rates for the pool of loans that make up a mortgage-backed security (MBS) or other securitized mortgage product. 60-plus delinquencies are less than 90 days past due, and have not yet entered the foreclosure process - loan in the latter status are expressed separately. The 60-plus rate may be split into one for prime loans and subprime loans. The 60-plus rate on subprime loans can be expected to be higher than for prime. Also, 60-plus rates are often published separately for fixed-rate versus adjustable-rate loans.

A-Share

In a family of multi-class mutual funds, this is the class that is usually characterized by a loaded fee structure. Class A mutual fund units will commonly have a front- or rear-end load, to compensate for the sales person's commission. Not all fund companies follow this class structure; however, it is the prominent method of distinction.

Aircraft Insurance

Insurance that provides liability and property coverage for aircraft. Aircraft insurance, also called aviation insurance, can be purchased for a number of different types of aircraft, including standard, experimental, and vintage aircraft, as well as seaplanes.

Acceptance Market

Investment market based on short-term credit instruments. An acceptance is a time draft or bill of exchange that is accepted as payment for goods. A banker's acceptance, for example, is a time draft drawn on and accepted by a bank, which is a common method of financing short-term debts in international trade including import-export transactions.

Adjustment Bond

Issued by a corporation during a restructuring phase, an adjustment bond is given to the bondholders of an outstanding bond issue prior to the restructuring. The debt obligation is consolidated and transferred from the outstanding bond issue to the adjustment bond. This is effectively a recapitalization of the company's outstanding debt obligations, which is accomplished by adjusting the terms (such as interest rates and lengths to maturity) to increase the likelihood that the company will be able to meet its obligations

500 Shareholder Threshold

Legislation that provides additional standards to Section 12(g) of the Exchange Act to provide adequate disclosure of private companies. The [term] forces companies that have more than 499 investors to divulge information about their financial performance. Although the company may still remain private, it must file similar documents to those of public companies. If the number of investors falls back below 500, then the disclosures can be omitted.

Active Stocks

Listed shares on an exchange that are heavily traded. [term] are actively bought and sold, and often have a large number of shares outstanding. Because they are heavily traded, [term] often have low bid-ask spreads as a result of their increased liquidity.

Accounts Uncollectible

Loans, receivables or other debts that have virtually no chance of being paid. An account may become uncollectible for many reasons, including the debtor's bankruptcy, an inability to find the debtor, lack of proper documentation, etc.

Actuarial Service

Method by which corporations determine, assess and plan for the financial impact of risk. Actuaries use mathematical and statistical models to evaluate risk in the insurance and finance industries. In addition to mathematical and statistical methods, actuaries call upon other fields including probability, finance, economics and computer programming to create actuarial models. Actuarial science is used to evaluate and predict future payouts for insurance and other financial industries such as the pension industry.

Accounting Control

Methods and procedures that are implemented by a firm to help ensure the validity and accuracy of its own financial statements. The [term]s do not ensure compliance with laws and regulations, but rather are designed to help a company comply.

Accounts Receivable - AR

Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year. On a public company's balance sheet, [term] is often recorded as an asset because this represents a legal obligation for the customer to remit cash for its short-term debts.

Advertising Allowance

Money that a product manufacturer or service provider pays to a retailer to get the word out about a product. The company may establish requirements for the retailer to receive the allowance, such as getting the company's approval of the advertisement before it is displayed and providing proof that the advertisement was made. By helping the retailer pay its advertising costs, the company's advertising allowance gives the retailer an incentive to carry that product.

Accumulated Income Payments - AIP

Money withdrawn from a Canadian Registered Education Savings Plan (RESP) if the RESP's beneficiary declines to attend college. RESPs allow contributions to grow tax-free until the money is withdrawn, at which time taxes on withdrawals tend to be low or nonexistent since students have little to no income. If the beneficiary chooses not to go to college, the investment income earned in the RESP is not forfeited as long as the subscriber (usually the student's parent) is a resident of Canada at the time of withdrawal, the RESP is at least 10 years old, and the beneficiary is at least 21. An [term] can also be made if the beneficiary is deceased. [term] are not allowed under all types of RESPs.

Abenomics

Nickname for the multi-pronged economic program of Japanese prime minister Shinzō Abe. [term] seeks to remedy two decades of stagnation by increasing the nation's money supply, boosting government spending and enacting reforms to make the economy more competitive.

Above Ground Risk

Non-quantifiable risks that can adversely affect a project or investment. [term] is generally used in the energy industry to refer to non-technical risks such as environmental issues and the regulatory climate. More broadly, [term] refers to a wide range of somewhat nebulous risks such as political risk, corporate risk, security and corporate governance whose impact is difficult to quantify, but could be significant should one or more of these risks become a real threat.

Accounting Series Releases - ASRs

Official accounting pronouncements issued by the Securities and Exchange Commission (SEC). [term] provide guidelines and rules on all aspects of corporate accounting, including requirements, auditing policies and disclosure mandates. [term] are published along with Auditing Enforcement Releases (AAERs) in the SEC Docket. [term] were codified as Financial Reporting Releases (FRRs) starting in 1982.

Alcohol Fuels Credit

One of several general business credits included on the General Business Tax Credit Form 3800. The alcohol fuels credit is a nonrefundable credit that is equal to the amount of alcohol used to manufacture an alcohol-based fuel for sale or use in a taxpayer's business.

A.M. Best

One of the established ratings agencies recognized by the SEC. [term] has traditionally focused exclusively on providing a letter rating for insurance carriers. It has recently branched out into rating financial securities such as bonds. The company basically measures one's ability to fulfill its debt obligations. Ratings range from A++ (superior) to S (suspended).

A+/A1

One of the top ratings that a ratings agency assigns to an issuer or insurer. This rating signifies that the security or carrier has stable financial backing and ample cash reserves. The risk of default for investors or policyholders is very low.

Accounts Receivable (A/R) Discounted

Outstanding invoices representing money owed to a creditor which the firm/creditor sells to a buyer for less than face value, typically to quickly raise capital and improve cash flow. The buying firm - also referred to as a "factor" - purchases the financial obligation at a discounted rate providing the selling firm with immediate cash. However, the sale is undertaken without recourse, meaning that the factor assumes full responsibility for collecting the money owed in order to recoup its financial layout for the account.

Accident Year Experience

Premiums earned and losses incurred during a specific period of time. An [term] is typically examined for a twelve-month period, called the accident year. The exposure period is usually set to the calendar year, and starts on January 1. [term] is used to indicate whether premiums effectively cover an insurer's losses. A negative stat indicates that the premiums were not enough to cover losses. [term] typically includes losses when they occur, not when they are reported. It also includes premiums earned during the same period of time, regardless of when the premiums were underwritten.

Alaska Trust Act

Provides protection against creditors for irrevocable trusts provided that the trust has a grantor who is a discretionary beneficiary. In order for the statute to be applicable, the following requirements must be met: 1. At least one of the trustees must reside in Alaska or have a principal place of business in Alaska. 2. A percentage of the assets of the trust is required to be on deposit in a checking account, brokerage account or other similar account. 3. The records of the trust must be physically located in Alaska, and a percentage of the administration of the trust must take place in Alaska.

Advance Renewal

Renewal of an agreement prior to its expiry. The agreement may refer to any business arrangement between two entities, from magazine subscriptions and mining claims to internet domains and product licenses. Advance renewal generally offers some inducement to the consumer to renew early, and is usually on the same terms and conditions as the initial agreement. A substantial number of advance renewals may indicate a high degree of customer loyalty.

Aftermarket Parts

Replacement parts that are not made by the original equipment manufacturer. Aftermarket parts are used to replace damaged parts in automobiles and other equipment, but their use may alter the coverage of an insured item. They are similar to generic pharmaceuticals in that they are cheaper than brand name medication, but are likely to have similar effectiveness.

Accounting Changes And Error Correction

Requirements for the accounting for and reporting of a change in accounting principle, change in accounting estimate, change in reporting entity or the correction of a transaction. [term] is a pronouncement made by the Financial Accounting Standards Board (FASB) and is a Statement of Financial Accounting Standards (SFAS). It outlines the rules for correcting and applying changes to financial statements. This pronouncement, Number 154, replaced FASB Statement No. 3 and the Accounting Principle Board (APB) Opinion No. 20. It was issued in May 2005.

Activities of Daily Living - ADL

Routine activities that people tend do everyday without needing assistance. There are six basic [term]s: eating, bathing, dressing, toileting, transferring (walking) and continence. An individual's ability to perform [term]s is important for determining what type of long-term care (e.g. nursing-home care or home care) and coverage the individual needs (i.e. Medicare, Medicaid or long-term care insurance).

Akio Mimura

Served as chairman and president of Nippon Steel Corp. Mimura entered the company in 1963 (when it was Fuji Iron & Steel) at age 22, directly after completing college, and became president in 2003 and chairman in 2008. He was the company's first chief executive to meet with foreign investors outside of Japan. He has also held leadership roles with major steel organizations such as the Japan Iron and Steel Federation and the World Steel Association.

A-Shares

Shares in mainland China-based companies that trade on Chinese stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange. A-shares are generally only available for purchase by mainland citizens; foreign investment is only allowed through a tightly-regulated structure known as the Qualified Foreign Institutional Investor (QFII) system.

Accelerated Dividend

Special dividends paid by a company ahead of an imminent change in the treatment of dividends, such as an adverse change in dividend taxation. [term]s from U.S. companies came to the forefront in the fourth quarter of 2012. During that period. numerous companies expedited dividend payments ahead of the January 1, 2013 expiration of the preferential 15% tax on dividend income instituted by former President Bush in 2003. The concern was that as a consequence of the fiscal cliff, the dividend tax rate could more than double for taxpayers in the highest income bracket.

Actual Authority

Specific powers, expressly conferred by a principal (often an insurance company) to an agent to act on the principal's behalf. This power may be broad, general power or it may be limited, special power. Also known as "express authority."

Adjusted Mean

Statistical averages that have been corrected to compensate for data imbalances. Outliers, present in data sets will often be removed as they have a large impact on the calculated means of small populations; an adjusted mean can be determined by removing these outlier figures. Adjusted means are also called "least squares means" and are calculated using a multiple regression equation.

Ability-To-Pay Taxation

Taxation in the form of a progressive tax. The a[term] principle in taxation maintains that taxes should be levied according a taxpayer's ability to pay. This progressive taxation approach places an increased tax burden on individuals, partnerships, companies, corporations, trusts and certain estates with higher incomes. The theory is that individuals who earn more money can afford to pay more in taxes.

1913 Federal Reserve Act

The 1913 U.S. legislation that created the current Federal Reserve System. The Federal Reserve Act intended to establish a form of economic stability through the introduction of the Central Bank, which would be in charge of monetary policy, into the United States.

AED (United Arab Emirates Dirham)

The AED (United Arab Emirates Dirham) is the currency abbreviation for the United Arab Emirates dirham, the official currency of Dubai and other Emirates. It is often presented with the symbol Dhs or DH. The United Arab Emirates Dirham has been used since 1973, when it replaced several currencies, such as the Dubai riyal and the Qatar riyal.

Affordable Care Act

The Affordable Care Act is a federal statute signed into law in March 2010 as a part of the healthcare reform agenda of the Obama administration. Signed under the title of The Patient Protection and Affordable Care Act, the law included multiple provisions that would take effect over a matter of years, including the expansion of Medicaid eligibility, the establishment of health insurance exchanges and prohibiting health insurers from denying coverage due to pre-existing conditions.

Alexander M. Cutler

The CEO and chairman of power-management company Eaton Corporation. The company produces electrical components and systems; hydraulics components, systems and services; aerospace fuel, hydraulics and pneumatic systems; and vehicle drivetrain and powertrain systems. Cutler helped the company to diversify beyond its initial business, the production of automotive parts, and acquire Westinghouse and numerous other companies while selling off Eaton's less successful divisions.

Alexey Miller

The CEO and chairman of the major Russian energy company Gazprom. Miller has a Ph.D. in Economics from Voznesensky Leningrad Finance and Economics Institute. Born in 1962 in Leningrad (St. Petersburg), he began working for Gazprom as its CEO in 2001. Prior to that, he worked in the St. Petersburg mayor's office, the Port of St. Petersburg, the Baltic Pipeline System and the Russian Federation.

Adam Crozier

The CEO of British broadcaster ITV. Crozier is also a former CEO of the UK's Royal Mail from 2003 to 2009 and the Football Association (FA) from 1999 to 2002. At FA, his marketing plan skyrocketed the company's revenue in just two years. At the Royal Mail, his job was to prepare the unprofitable company for postal deregulation, when it would no longer be a government monopoly. He achieved this goal, although partly through cutbacks in employees and mail deliveries.

Accrue

The ability for something to accumulate over time. In finance, "[term]" is most commonly used when referring to interest, income and expenses of an individual or business. Interest in your savings account [term]s so that over time the total amount in your account grows.

Absolute Advantage

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service. Entities with[term]s can produce a product or service using a smaller number of inputs and/or using a more efficient process than another party producing the same product or service.

Adequate Disclosure

The accounting concept confirming that all essential information is included in a financial statement. Adequate disclosure refers to the ability for financial statements, footnotes and/or supplemental schedules to provide a comprehensive and clear description of a company's financial position. Readers of a company's financial statements, including investors and creditors, should be able to ascertain the company's financial health by reviewing a financial statement with adequate disclosure.

Acid-Test Ratio

The acid-test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities. Commonly known as the quick ratio, this metric is more robust than the current ratio, also known as the working capital ratio, since it ignores illiquid assets such as inventory.

Actual Cash Value

The amount equal to the replacement cost minus depreciation of a damaged or stolen property at the time of the loss. It is the actual value for which the property could be sold, which is always less than what it would cost to replace it.

Adjustment Interval

The amount of time between interest rate changes to an adjustable rate mortgage (ARM). Most ARMs have two adjustment intervals. The first interval is typically longer (usually 3,5,7 or 10 years) during which there is a fixed rate of interest and payment. This initial interval is followed by periodic adjustments to the interest rate (usually every 6 months or year) throughout the remainder of the loan.

Administrative Law

The body of law that governs the administration and regulation of government agencies (both federal and state). Created by Congress (or the state legislature) it encompasses the procedures under which these agencies operate as well as external constraints upon them. Administrative law is considered a branch of public law and is often referred to as regulatory law.

Agribusiness

The business sector encompassing farming and farming-related commercial activities. Agribusiness involves all the steps required to send an agricultural good to market: production, processing, and distribution. It is an important component of countries with arable land, since agricultural products can be exported.

Acquiree

The company that is being acquired or purchased in a merger or acquisition. The [term] is also known as the "target firm". Usually the [term] will see a short-term movement in the price of its shares to resemble the price per share that was paid by the acquirer. This can be a positive or negative amount.

3D Printing

The creation of a 3-D object through an additive printing process. 3-D printing allows the small scale manufacturing of objects out of a variety of materials, including plastics and powders, through a variety of processes. The additive processes used vary according to materials used and budget, and may include laminates (laminated object manufacturing, LOM), resins (stereolithography, SLA), or melted materials (selective laser melting).

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life. Regardless of the method used to calculate it, the depreciation of an asset during a single period is added to the previous period's [term] to get the current [term]. An asset's carrying value on the balance sheet is the difference between its purchase price and [term].

Activity Capacity

The degree to which a particular action is expected to perform. [term] refers to an activity's upper threshold of performance based on historical results and future expectations. An example could be the rate of output for a machining activity measured in terms of cycles per hour. [term] involves a specified set of resources and an extended period of time, taking place under normal or expected operating conditions.

Accountant Responsibility

The ethical responsibility that an accountant has to those who rely on his/her work. An accountant has a responsibility to the company's management, investors, creditors, outside regulatory bodies, and the integrity of the financial markets. Accountants are responsible for the validity of the financial statements they work on, and must perform their duties in accordance with all applicable principles, standards and laws.

Administrative Accounting

The financial reporting of factors that influence decision making, operational control and managerial planning. Administrative accounting focuses on management planning and control to accomplish the company's administrative goals.

AA+/Aa1

The highest rating that some ratings agencies assign to a security or insurance carrier. This rating signifies that there is little to no risk of default and is often assigned to securities that have AMBAC or another type of insurance backing. Investors or policyholders can rest assured that their money is secure with this rating.

A-Note

The highest tranche of an asset backed security or other structured financial product. An [term] is senior to other notes, such as B-notes in bankruptcy or other credit proceedings, and is paid back first with funds from the underlying assets. They can be labeled AAA, AA, or A, depending on the credit quality of the underlying asset. Can also be referred to as a class a note.

Activity Driver Analysis

The identification and assessment of the factors that are involved in the costing of goods and services. [term] is part of activity-based costing, and helps management trace the cost of certain activities to cost objects. [term] compares the different activity drivers and associated costs in an attempt to reduce costs and increase efficiency.

Absolute Physical Life

The length of time that it takes for an asset takes to become fully depreciated, at which time it provides no additional use. The [term] is often taken into consideration when companies purchase assets. The measure is typically associated with assets that have low risk of becoming technically obsolete.

341 Meeting

The meeting of creditors that occurs when an individual files chapter 7 bankruptcy. A 341 meeting gets its name from section 341 of the bankruptcy code. This meeting must include the individual filing bankruptcy and the chapter 7 trustee. It is optional for creditors or their attorneys to attend, and they usually don't. If the individual has a bankruptcy attorney, the attorney should attend the meeting as well.

Accounting Method

The method by which income and expenses are reported for taxation purposes. The Internal Revenue Service requires taxpayers to choose an [term] that accurately reflects their income and to be consistent in their choice of accounting method from year to year. IRS approval is required to change methods. The chosen [term] is based on regulation and tax minimization strategies.

Accounting Cushion

The overstatement of a company's expense provision, in order to create a cushion for future results. A company can use this to artificially understate income in the current period by overstating liability or allowance accounts. This will give the company the ability to overstate income in a later period. An [term] can be achieved by increasing allowances for bad debts in the current period, without any indication that bad debts will actually rise. This would understate accounts receivable in the current period, and the company could make up for it in the next period by overstating accounts receivable. This is a method of income smoothing, and if discovered an auditor or analyst should adjust these back to their proper levels.

Accumulated Income

The portion of net income that is retained by a corporation instead of being distributed as dividends. Any [term] is typically used by the corporation to reinvest in its principal business or to pay down its debt. [term] appears under shareholder's equity on the corporation's balance sheet. Also called "retained earnings".

Advertising Appropriation

The portion of the total marketing budget that is allocated to advertising over a specific time period. The advertising appropriation policy for a company may be based on any one of a number of approaches. For example, spending an amount on advertising that is a fixed percentage of sales or based on the ad spend level of the competition.

Active Retention

The practice of protecting against a loss via the designation of specific funds to pay for the expected amount of the loss. This contrasts to passive retention, in which no money is set aside to cover expected losses.

Advanced Life Underwriting

The process of integrating the complex insurance issues of estate planning, taxation, business insurance and employee benefit plans. Advanced life underwriting can involve the sale and service of large volumes of life insurance or underwriting for a complex business or complex personal cases.

Adjusted Underwriting Profit

The profit that an insurance company generates after paying out claims and expenses. Insurance companies earn revenue by underwriting new business (selling new insurance policies) and earning income on their financial investments. Subtracted from this revenue are expenses associated with running the business and any claims that are made by insurance policy holders. The remainder is the adjusted underwriting profit. This is a term specific to the insurance industry.

Accrual Rate

The rate of interest that is added to the principal of a financial instrument between cash payments of that interest. For example, a six-month bond with interest payable semiannually will accrue daily interest during the six-month term until it is paid in full on the date it becomes due.

After-Tax Return

The return on an investment including all income received and capital gains, calculated by taking expected or paid income taxes into account. Generally reserved for returns on positions that have been closed out or sold, after-tax returns are also used to evaluate the after-tax yields of municipal versus corporate and government bonds because municipals are free from federal income taxes.

Absolute Return

The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - achieves over a given period of time. [term] differs from relative return because it is concerned with the return of a particular asset and does not compare it to any other measure or benchmark.

Actuarial Risk

The risk that the assumptions that actuaries implement into a model to price a specific insurance policy may turn out wrong or somewhat inaccurate. Possible assumptions include the frequency of losses, severity of losses and the correlation of losses between contracts. Also known as "insurance risk".

Accounting Practice

The routine manner in which the day-to-day financial activities of a business entity are gathered and recorded. A firm's [term] refers to the method by which its accounting policies are implemented and adhered to on a routine basis, typically by an accountant and/or auditor or a team of accounting professionals.

Accounting Policies

The specific policies and procedures used by a company to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. [term] differ from accounting principles in that the principles are the rules and the policies are a company's way of adhering to the rules.

1040 Form

The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns. The form contains sections that require taxpayers to disclose their financial income status for the year in order to ascertain whether additional taxes are owed or whether the taxpayer is due for a tax refund. [term]s need to be filed with the IRS by April 15. Also known as the "U.S. individual income tax return" or the "long form".

Adjusted Earnings

The sum of earnings, increase in loss reserves, increase in new business, increase in deficiency reserves, increase in deferred tax liabilities, and capital gains for an insurance company from the previous time period to the current time period. Adjusted earnings provides a measurement of how current performance compares with performance in previous years.

Account Settlement

The summary of business operations and performance for a fiscal period. This statement often includes financial results of the company's main operations along with key performance metrics, which help to give investors and other users an idea of the company's fiscal year operating performance. Also referred to as "settlement of account".

Adjusted Surplus

The surplus (assets minus liabilities) of an insurance company that differs from the company's statutory surplus due to adjustments. It is calculated by taking the statutory surplus plus the Interest Maintenance Reserve and Asset Valuation Reserve. The Statutory Surplus is determined by the accounting treatment of assets and liabilities. Insurance companies are required by the National Association of Insurance Commissioners (NAIC) to maintain reserves as a cushion for potential equity and credit losses.

Accounting

The systematic and comprehensive recording of financial transactions pertaining to a business. [term] also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. [term] is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.

Accounting Period

The time span in which certain financial events took place. The [term] is generally a quarter or a year and reflects all of the financial activity that occurred during that time. However, it should be noted that even though [term]s tend to be generically similar and encompass a like amount of time. The start and end dates of those time periods can be drastically different. Not all companies begin their fiscal year in January. Likewise, not every final quarter ends in December.

Accumulated Value

The total amount an investment currently holds, including the capital invested and the interest (gain) it has earned to date. [term] is important in the insurance field because it refers to the total acquired value in cash value life insurance. It is calculated as the sum or total of the initial investment plus the interest earned to date. Also referred to as accumulated amount or cash value.

Advocacy Advertising

The use of marketing used to support a particular message or cause. Unlike commercial advertising, advocacy advertising is considered to be undertaken in the interest of a group or the public, and typically does not promote a product or service. Funding for advocacy advertising can be through non-profit organizations, by corporations or private advocacy groups. Some governments require that organizations engaging in advocacy advertising clearly state how the funding is provided.

Adjustment

The use of mechanisms by a central bank to influence a home currency's exchange rate. An adjustment is specifically made if the exchange rate is not pegged to another currency, meaning that the currency is valued according to a floating exchange rate. Because the central bank intervenes in the home currency's exchange rate to reduce short-term fluctuations, this is considered a managed floating exchange rate.

Accreted Value

The value, at any given time, of a multi-year instrument that accrues interest but does not pay that interest until maturity. The most well-known applications include zero-coupon bonds or cumulative preferred stock.

Affiliate Network

Third parties that provide a link between a publisher and a company to allow publishers the ability to find and join afilliate programs. Businesses that comprise an affiliate network can cover a variety of different marketing mediums, such as the internet or direct mail, or can operate in related industries. A company looking to acquire new customers will pay members of its affiliate network for the sales leads that they provide.

Accident And Sickness Insurance Act

This is a Canadian government statute that defines the acceptable terms and conditions of health insurance coverage and sets out guidelines to which these policies must conform. It is now known as the Uniform Accident and Sickness Insurance Act, which is the model law adopted by the Canadian Council of Insurance Regulators (CCIR). The model legislation has been enacted, with minor variations, by all Canadian provinces.

A-/A3

This is generally the third- or fourth-highest rating that a rating agency assigns to a security or insurance carrier. It is often the lowest investment-grade rating, but it signifies that the issuer is fairly stable with relatively low default risk.

Advance Funding

This refers to any advance made on a future commitment or payment. The term, advance funding, is used very broadly, ranging from personal or project loans, future contractual payments like annuities or royalties and government appropriations.

Absolute Interest

Total and complete ownership of an asset or property. An individual with an [term] has both a legal and beneficial possession of said asset or property. The term "[term]" indicates that the owner's interest is not diluted by another party's ownership, nor is it dependent on conditions that must be fulfilled.

Affiliated Group

Two or more corporations that are related through common ownership, but are treated as one for federal income tax purposes. An affiliated group consists of a parent corporation and one or more subsidiary corporations. The parent corporation must own at least 80% of its subsidiary's stock and consolidates the subsidiaries financial statements with its own.

A/A2

Usually the second- or third-highest rating that a rating agency assigns to a security or carrier. This rating signifies that there is a relatively low risk of default because the issuer or carrier is fairly stable. Investors and policyholders are therefore taking very little risk with these companies.

Aggressive Investment Strategy

What is an 'Aggressive Investment Strategy' A portfolio management strategy that attempts to maximize returns by taking a relatively higher degree of risk. An aggressive investment strategy emphasizes capital appreciation as a primary investment objective, rather than income or safety of principal. Such a strategy would therefore have an asset allocation with a substantial weighting in stocks, and a much smaller allocation to fixed income and cash. Aggressive investment strategies are especially suitable for young adults because their lengthy investment horizon enables them to ride out market fluctuations better than investors with a short investment horizon. Regardless of the investor's age, however, a high tolerance for risk is an absolute prerequisite for an aggressive investment strategy.

Accommodative Monetary Policy

When a central bank (such as the Federal Reserve) attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). This is done to encourage more spending from consumers and businesses by making money less expensive to borrow by lowering the interest rate. Furthermore, the Federal Reserve also has the authority to purchase Treasuries on the open market to infuse capital into a weakening economy. Also known as an "easy monetary policy".

Actuarial Rate

[term] is an estimate of the expected value of future loss. Usually, the future loss experience is predicted on the basis of historical loss experience and the consideration of the risk involved. Accurate [term]s help protect insurance companies against the risk of severe underwriting losses that could lead to insolvency.

Actuarial Equivalent

[term] is generally used for applying some measurement to two benefit plans to see if the resulting values are sufficiently close. Often, two or more payment streams of the benefit plans end up having the same present value based on the actuarial assumptions. For example, actuarial equivalence measurements can be used to compare one specific benefit plan to a standard plan, to see if the plan is comparable in terms of coverage.

Active Participant Status

a reference to an individual's participation in an employer sponsored retirement plan. The plans which qualify include: 1. Qualified plans, such as profit sharing plans, defined benefit plans, money purchase pension or target benefit plans and 401(k) plans 2. SEP IRAs 3. SIMPLE IRAs 4. 403(b) plans 5. Qualified annuity plans 6. Employee Funded Pension Trusts (created before June 25, 1959) 7. A plan established for its employees by the United States, by a State or political subdivision of the United States, or by an agency or instrumentality of the United States or any of its subdivisions

Acceptor

the third party who accepts responsibility for payment in a bill of exchange drawn upon it. The bill of exchange will generally have three parties: the drawor, the drawee and the [term].

Abandonment And Salvage

An expression that describes the forfeiture of property and the ensuing claim over that property by a second party. [term] can be added as a clause in an insurance contract; this gives the insurance company the ability to accept the abandoned property. Abandonment must be expressed with intent. The potential financial rewards mean that salvage rights are sometimes legally contested by several parties.

52-Week Range

The lowest and highest prices at which a stock has traded in the previous 52 weeks. The [term] is provided in a stock's quote summary along with information such as today's change and year-to-date change. Companies that have been trading for less than a year will still show a [term] even though there isn't data for the full range.

AARP

the nation's leading organization for people age fifty and older. Founded in 1958 by retired educator Dr. Ethel Percy Andrus, it is a nonprofit, nonpartisan association with a membership of 40 million. It provides information, education, research, advocacy and community services through a nationwide network of local chapters and experienced volunteers. It focuses its work on consumer issues, economic security, work, health and independent living issues, and engages in legislative, judicial and consumer advocacy in these areas.

10-K

A comprehensive summary report of a company's performance that must be submitted annually to the Securities and Exchange Commission.It includes information such as company history, organizational structure, equity, holdings, earnings per share, subsidiaries, etc.

412(i) Plan

A defined-benefit pension plan designed for small business owners in the United States. This is a tax-qualified benefit plan, so any amount that the owner contributes to the plan becomes available immediately as a tax deduction to the company. The plan must be funded solely by guaranteed annuities, or a combination of annuities and life insurance.

3C1

A portion of the Investment Company Act of 1940 that permits the exclusion of investment companies from standard registration requirements with the Securities and Exchange Commission (SEC) if they have fewer than 100 U.S. investors.

ABC Agreement

An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may: a) transfer the seat to another employee of the firm b) retain ownership and purchase a new seat for another individual designated by the firm c) sell the seat and transfer any gains to the firm.

12B-1 Fee

An annual marketing or distribution fee on a mutual fund. The [term] is considered an operational expense and, as such, is included in a fund's expense ratio. It is generally between 0.25-1% (the maximum allowed) of a fund's net assets.

A-B Trust

A trust created by a married couple with the objective of minimizing estate taxes. An [term] is a trust that divides into two upon the death of the first spouse. It is formed with each spouse placing assets in the trust and naming as the final beneficiary any suitable person except the other spouse. The trust gets its name from the fact that it splits into two upon the first spouse's death - trust A or the survivor's trust, and trust B or the decedent's trust.

Advance Refunding

1. A bond issuance used to pay off another outstanding bond. The new bond will often be issued at a lower rate than the older outstanding bond. 2. A bond issuance in which new bonds are sold at a lower rate than outstanding ones. The proceeds are then invested, and when the older bonds become callable they are paid off with the invested proceeds.

Administrator

1. A person empowered by a court to act for another person who is deemed incapable of acting for himself/herself. 2. Under the Uniform Securities Act, an entity that enforces the rules and regulations, including registration requirements and post-registration requirements, of investment advisory professionals.

Accrued Interest

1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. [term] occurs as a result of the difference in timing of cash flows and the measurement of these cash flows. 2. The interest that has accumulated on a bond since the last interest payment up to, but not including, the settlement date.

Adventure Capitalist

1. Another word for "venture capitalist", or someone who invests in start-up companies. 2. A specific type of venture capitalist who is more accessible, but who may be harder to find and whose pockets are not as deep as a traditional venture capitalist. Or, a specific type of venture capitalist who is willing to invest in endeavors that would be considered too risky for traditional venture capitalists. 3. A wealthy individual who seeks out exciting experiences. 4. The title of a book in which author and former Wall Street financier Jim Rogers describes his three-year, 116-country road trip. Rogers retired at age 37, and has also toured the world by motorcycle, setting Guinness Book records for both trips.

Acquisition Cost

1. The cost that a company recognizes on its books for property or equipment after adjusting for discounts, incentives, closing costs and other necessary expenditures, but before sales taxes. 2. The cost of a business to acquire a new customer. The company recognizes costs, including marketing and incentives, to introduce new customers to the company's products and services. The customer [term] is calculated by dividing total acquisition costs by total new customers over a set period of time. Also known as "cost of acquisition."

Adjustment Date

1. The date on which financial adjustments will be made to a contract or transaction, as agreed to by all the parties involved in the transaction. 2. Adjustment date also refers to the date on which the interest rate changes in an adjustable rate mortgage (ARM).

Advisor

1. The person or company responsible for making investments on behalf of, and/or providing advice to, investors. 2. In the context of the mutual fund business, an advisor, also known as an investment advisor, is an organization employed by an investment company to manage a particular fund's portfolio. A fund's advisor assigns a manager(s) to make the day-to-day decisions involved in the purchase and sale of a fund's securities according to stated strategies and investment objectives.

Agency Broker

A broker that acts as an agent to its clients. When acting as the agent, the agency broker must look after its clients' best interests, which involves attempting to fill client orders at the lowest price and in the fastest way possible. Common clients of an agency broker include large institutional funds that place large block orders.

Agency Automatic Contributions

A benefit that federal government employees receive for participating in the thrift savings plan. More specifically, this benefit refers to how the government agency in which the individual works will automatically make contributions that equal 1% of the individual's pay, regardless of whether the individual elects to make his or her own contribution.

Agency Matching Contributions

A benefit that federal government employees receive for participating in the thrift savings plan. More specifically, this benefit refers to how the government agency in which the individual works will automatically make contributions that equal 1% of the individual's pay, regardless of whether the individual elects to make his or her own contribution.

Airport Revenue Bond

A bond issued by a municipality or airport authority that uses the revenues of the airport facility to back the bond. An airport revenue bond is tax-exempt and is typically issued when a municipality or airport is looking to expand its facilities or pay for upgrades. Because this debt is issued by a municipality or airport authority it is more likely to have a lower interest rate, making the long-term financing costs for the airport lower.

Active Bond

A bond or other fixed-income security that is frequently traded on the New York Stock Exchange. [term] orders are typically filled quickly due to the presence of higher demand from investors and generally have lower bid-ask spreads.

Accrual Bond

A bond that does not pay periodic interest payments. Instead, interest is added to the principal balance of the bond and is either paid at maturity or, at some point, the bond begins to pay both principal and interest based on the accrued principal and interest to that point.

Administration Bond

A bond that is posted on behalf of an administrator of an estate to assure that he or she conducts their duties according to the provisions of the will and/or the legal requirements of the jurisdiction. The bond covers any financial losses to the estate due to dishonest or improper acts by the administrator.

Accounting Conservatism

A branch of accounting that requires a high degree of verification before making a legal claim to any profit. [term] will recognize all probable losses as they are discovered and most expenditures as they are incurred. Revenue will be deferred until it is verified. Having strict revenue-recognition criteria is one of the most common forms of [term].

Abstract Of Title

A brief history of the titles for a piece of land. The [term] lists all of the legal actions that have been performed or used in conjunction with a piece of property. This is used to determine whether or not there is any kind of claim against a property.

Adjusted Gross Margin

A calculation used to determine the profitability of a product, product line or company. The adjusted gross margin includes the cost of carrying inventory, whereas the gross margin calculation does not take this into consideration. The adjusted gross margin, therefore, provides a more accurate look at the profitability of a product than the gross margin allows.

Advertising Costs

A category included in financial accounting to represent expenses associated with promoting an industry, entity, brand, product name, or specific products or services in order to stimulate a desire to buy the entity's products or services. Advertising costs include space in print and online venues, broadcast time, radio time and direct mail advertising. Advertisng costs will in most cases fall under SG&A expenses on a company's income statement.

Alliance Of American Insurers - AAI

A coalition consisting primarily of property-casualty insurance carriers. The Alliance of American Insurers was formed in order to provide political clout for the property-casualty insurance industry. It pursues various activities directed toward promoting its objectives to both politicians and the public.

After-Tax Basis

A comparison of the net yields produced by taxable and tax-exempt bonds. After-tax basis is most often used when comparing between bonds used to finance private business endeavors (corporate bonds) and bonds used to finance public projects (tax-free municipal bonds). Because one must pay taxes on income derived from corporate bonds, the yield on those bonds is necessarily less than the stated interest rate, whereas tax-exempt municipal bonds can be evaluated at face value.

Acquisition

A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. [term]s are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. [term]s are often paid in cash, the acquiring company's stock or a combination of both.

Alien Corporation

A corporation that was created in another country. Alien corporations are most commonly classified as any corporation that is formed outside of the United States. Other countries do not refer to U.S.-based corporations with this term.

Activity Cost Driver

A factor that influences or contributes to the expense of certain business operations. In activity based costing (ABC), an [term] is something that drives the cost of a particular activity. A factory, for example, may have running machinery as an activity. The [term] associated with running the machinery could be machine operating hours, which would drive the costs of labor, maintenance and power consumption of running the machinery activity.

Adoption Credit

A federal tax credit that may be claimed by federal taxpayers who incur qualifying expenses, such as adoption fees, court costs, attorney fees and travel expenses, to adopt an eligible child. To claim the credit, the taxpayer must submit adoption documents and form 8839, Qualified Adoption Expenses, along with his or her federal tax return. Form 8839 is used to calculate the amount of the credit and also asks for the child's first and last name, birth year, whether the child has special needs, whether the child is foreign born and if the child is disabled.

ABX index

A financial benchmark that measures the overall value of mortgages made to borrowers with subprime or weak credit. The [term] uses credit default swap contracts to come up with an overall value and is made up of 20 bonds that is comprised of groups of subprime mortgages. Using this index, financial institutions are able to determine if the market for these securities are improving or worsening. Also referred to as Asset-Backed Securities Index.

African Development Bank - ADB

A financial institution comprising 53 African and 24 non-African countries which promotes economic and social progress in Africa through loans, equity investments and technical assistance. Structurally, the ADB Group includes the African Development Bank, the African Development Fund and the Nigeria Trust Fund. Established in 1964 and headquartered in Tunisia, the Bank has provided a cumulative $55 billion in loans and grants in the region.

Acquisition Debt

A financial obligation incurred through the construction, improvement or purchase of a primary or secondary residence. A home mortgage is an example of an acquisition debt. The Internal Revenue Service (IRS) provides certain tax advantages for home acquisition debt. Taxpayers can deduct the interest paid during the tax year for mortgages that qualify as home acquisition debt. The IRS considers home acquisition debt to be any mortgage after Oct. 13, 1987 that was used to buy, build or substantially improve a main or secondary home. The mortgage must also be secured by that home.

Accelerated Vesting

A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to receive the monetary benefit from the option much sooner. If a company decides to undertake [term], then it may expense the costs associated with the stock options sooner.

Air Pocket Stock

A stock that experiences a sudden drop, similar to a plane hitting an air pocket. Air pocket stocks are usually the result of investors reacting to negative news.

Across The Board

A market-wide directional movement, or a market condition in which most stocks and sectors are moving in the same direction. These movements are usually caused by market-wide events.

Advertising Elasticity Of Demand - AED

A measure of a market's sensitivity to increases or decreases in advertising saturation. Advertising elasticity is a measure of an advertising campaign's effectiveness in generating new sales. It is calculated by dividing the percentage change in the quantity demanded by the percentage change in advertising expenditures. A positive advertising elasticity indicates that an increase in advertising leads to an increase in demand for the advertised good or service.

Affordability Index

A measure of a population's ability to afford to purchase a particular item, such as a house, indexed to the population's income. An affordability index uses the value of 100 to represent the position of someone earning a population's median income, with values above 100 indicating that an item is less likely to be affordable and values below 100 indicating that an item is more affordable.

Activity-Based Budgeting - ABB

A method of budgeting in which the activities that incur costs in every functional area of an organization are recorded and their relationships are defined and analyzed. Activities are then tied to strategic goals, after which the costs of the activities needed are used to create the budget. [term] stands in contrast to traditional, cost-based budgeting practices in which a prior period's budget is simply adjusted to account for inflation or revenue growth. As such, [term] provides opportunities to align activities with objectives, streamline costs and improve business practices.

Add-On Interest

A method of calculating interest whereby the interest payable is determined at the beginning of a loan and added onto the principal. The sum of the interest and principal is the amount repayable upon maturity.

401(a) Plan

A money-purchase retirement savings plan that is set up by an employer. The [term] allows for contributions by the employee, the employer, or both. Contribution amounts, whether dollar-based or percentage-based, eligibility, and vesting schedule are all determined by the sponsoring employer. Funds are withdrawn from a [term] through lump-sum payment, rollovers to another qualified plan, or through an annuity.

11th District Cost of Funds Index - COFI

A monthly weighted average of the interest rates paid on checking and savings accounts offered by financial institutions operating in the states of Arizona, California and Nevada. Published on the last day of each month, the [term] represents the cost of funds for western American financial institutions.

Air Loan

A mortgage fraud scheme in which a mortgage broker invents a property and a borrower in order to earn profits on completed loan transactions by defrauding lenders. Since the borrower is not real, the broker may set up a system of phone banks and mailboxes that are used to "verify" the borrower's employment, home address, credit history, and so on as well as the property's title history and appraisal value.

100% Mortgage

A mortgage loan in which the borrower receives a loan amount equivalent to the total value of the property to be purchased. In this situation, the borrower does not need to make a down payment to secure the loan.

All-In-One Mortgage

A mortgage loan that combines the features of a checking account, a home equity loan and a mortgage in order allow depositors to reduce the amount of interest paid on their mortgages. Any deposits made into the savings account portion of the all-in-one mortgage are put toward paying the mortgage, but instant liquidity can still be achieved, because cash can be withdrawn in the form of a home equity loan.

80-10-10 Mortgage

A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an 80% loan-to-value ratio, the second position lien has a 10% loan-to-value ratio and the borrower makes a 10% down payment. [term] transactions are piggy-back mortgage transactions, and are frequently used by borrowers to avoid paying private mortgage insurance.

Advanced Funded Pension Plan

A pension plan that is funded concurrently with the employee's accrued benefits, such that the funds are set aside well before the employee's retirement. Advanced funded pension plans are generally defined contribution plans, and are fully funded. They can be funded by the employer alone, or by some combination of the employer and the employee.

Alimony Payment

A periodic pre-determined sum awarded to a spouse or former spouse following a separation or divorce. Alimony is an obligation to make payments for support or maintenance; an alimony payment is the actual sum paid to fulfill the obligation. A decree or court order outlines the alimony payment structure and requirements.

Accounts Receivable Aging

A periodic report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding. [term] is a critical management tool as well as an analytic tool that helps determine the financial health of a company's customers, and therefore the health of their business.

Account Statement

A periodic summary of account activity with a beginning date and an ending date. The most commonly known are checking [term]s, usually provided monthly, and brokerage [term]s, which are provided monthly or quarterly. Monthly credit card bills are also considered [term]s.

Alaska Permanent Fund

A permanent fund for the U.S. state of Alaska. The Alaska Permanent Fund originates from surplus revenues gained from the development of Alaska's oil and gas reserves

Actual Owner

A person or entity that receives the benefit of ownership. Being the [term], the asset is under the person's or entity's name and they are entitled to any advantage from that. The [term] can be hard to determine at times if there are multiple people or entities involved. Also known as a beneficial owner.

Ad-Noter

A person who has noticed an advertisement in a publication. An [term] is someone who may only have noted the advertisement or glanced at it without any recall of the product or service it promotes, as opposed to people who have had a closer look at the ad or have read part of it. The term was introduced by noted advertising researcher Daniel Starch in the 1920s and is used in Starch Tests that measure the effectiveness of elements of an advertisement such as its size and layout.

Activities, Interests And Opinions - AIO

A person's characteristics used by market researchers to construct the individual's psychographic profile. An individual's [term] are typically unearthed by researchers through their responses to statements or questions in a survey. The most common applications of [term] are in market segmentation and advertising, where they help in focusing a company's marketing and promotional efforts to its target audience.

After The Bell

A phrase used to describe news, earnings reports and other activities that are released after the stock market has closed for the day. Announcements after the bell are integrated into stock prices at the open of the next trading session, as investors are not able to place orders when the market is closed. Positive information about a particular security, released after the bell, may result in a surge in early morning trading activity, while negative news may result in a security opening lower.

Aggregate Stop-Loss Insurance

A policy designed to limit claim coverage (losses) to a specific amount. This type of coverage is to ensure that catastrophic claims (specific stop-loss) or numerous claims (aggregate stop-loss), do not upset the financial reserves of a self-funded plan. Aggregate stop-loss protects the employer against higher-than-expected claims. If total claims exceed the aggregate limit, the stop-loss insurance carrier reimburses the employer.

Accumulation Option

A policy feature of permanent life insurance that allows policyholders to leave any dividends received with the insurer, where the dividends can earn interest. [term]s are the variety of options holders of participating life insurance policies can make with the dividends they receive. Some types of insurance pay dividends to their policyholders each year when the insurance company performs better than estimated. Also called an "accumulation option," "accumulation at interest option" or "dividends on accumulation".

Accredited Automated Clearing House Professional - AAP

A professional designation awarded by NACHA (The Electronic Payments Association) to individuals who are experts in electronic payments. Successful applicants earn the right to use the [term] designation with their names for five years, which can improve job opportunities, professional reputation and pay. Every five years, [term] professionals must complete 60 hours of continuing education or successfully retest in order to continue using the designation.

Accumulation Area

A price range in which investors typically purchase shares of a particular stock. The [term] is determined by looking at the volume and its corresponding price. It appears as a rectangle with a price line bouncing up and down between the upper and lower limits. According to technical analysts, stocks that hit the [term] presents an opportunity to buy because it is expected to attract more demand.

Accounting Standard

A principle that guides and standardizes accounting practices. The Generally Accepted Accounting Principles (GAAP) are a group of [term]s that are widely accepted as appropriate to the field of accounting. [term]s are necessary so that financial statements are meaningful across a wide variety of businesses; otherwise, the accounting rules of different companies would make comparative analysis almost impossible.

Agency Cost Of Debt

A problem arising from the conflict of interested created by the separation of management from ownership (the stockholders) in a publicly owned company. Corporate governance mechanisms, such as boards of directors and the issuance of debt, are used in an attempt to reduce this conflict of interest. However, introducing debt into the picture creates yet another potential conflict of interest because there are three parties involved: owners, managers and lenders (bondholders), each with different goals.

Activity-Based Management - ABM

A procedure that originated in the 1980s for analyzing the processes of a business to identify strengths and weaknesses. Specifically, [term] seeks out areas where a business is losing money so that those activities can be eliminated or improved to increase profitability. [term] analyzes the costs of employees, equipment, facilities, distribution, overhead and other factors in a business to determine and allocate activity costs.

Account Aggregation

A process by which accounts are linked for the purpose of combining fees or to ease access for account holders. One form of [term] is householding, whereby all the savings, checking and brokerage accounts of a household are linked. In householded accounts, statements and online summaries display all accounts within the household.

Accounts Receivable Conversion - ARC

A process that allows paper checks received in payment for an account receivable to be electronically scanned and converted into an electronic payment through the Automated Clearing House. [term] saves time and the expense of actually processing the check. Both the vendor and the bank on which the payment was drawn receive only an electronic image of the check.

Accredited In Business Valuation - ABV

A professional designation awarded by the American Institute of Certified Public Accountants (AICPA) to CPAs who are also business valuation service providers. Applicants must pass the [term] exam and meet work experience and lifelong learning requirements. Successful applicants earn the right to use the [term] designation with their names, which can improve job opportunities, professional reputation and pay. Every three years, [term] professionals must complete 60 hours of continuing professional education. They must also pay an annual fee of several hundred dollars. Applicants study the subjects listed in the [term] Exam Content Specification Outline.

Accredited Asset Management Specialist - AAMS

A professional designation awarded by the College for Financial Planning to financial professionals who successfully complete a self-study program, pass an exam and agree to comply with a code of ethics. Successful applicants earn the right to use the [term] designation with their names for two years, which can improve job opportunities, professional reputation and pay. Every two years, [term] professionals must complete 16 hours of continuing education and pay a fee to continue using the designation. The [term] program is developed in conjunction with some of the nation's top investment firms. Applicants study case studies based on real-life scenarios designed to prepare them to be effective in the real world and build lasting relationships with clients.

Accredited Valuation Analyst - AVA

A professional designation awarded by the National Association of Certified Valuation Analysts (NAVCA) to business valuation professionals who hold a business degree, have sufficient work experience in business valuation, submit business and personal references and recommendations, are members in good standing of NAVCA and pass the [term] exam. Successful applicants earn the right to use the [term] designation with their names, which can improve job opportunities, professional reputation and pay. Every three years, [term] professionals must complete 36 hours of continuing professional education.

Accredited Personal Financial Planning Specialist

A professional designation for Certified Public Accountants who have completed the required coursework and passed an examination administered by the Certified Financial Planner Board of Standards. The [term] designation enables the accountant to offer personal financial-planning services separate from similar services that may be offered as an adjunct to accounting services.

Actuarial Consultant

A professional who advises clients on which methods, processes, policies, plans, etc. they should consider when making financial, insurance- or pension-related decisions. [term]s calculate and analyze statistics, make forecasts, provide the most accurate information to clients and help them realize what their best options are.

After-Tax Return On Assets

A profitability measure that indicates how well a company uses its capital resources to generate income. To calculate after-tax return on assets, divide the company's total after-tax income by the value of its total assets. The resulting figure, multiplied by 100, will be a percentage; the higher the percentage, the more efficiently the company uses its assets.

After-Tax Return On Sales

A profitability measure that indicates how well a company uses its sales revenue. To calculate after-tax return on sales, divide the company's after-tax net income by its total sales revenue. The resulting figure, multiplied by 100, will be a percentage; the higher the percentage, the more efficiently the company uses its sales revenue.

Accelerated Resolution Program (ARP)

A program designed to reduce the time and cost of resolving failed financial institutions. The [term] is designed to sell the assets of failed institutions, often to other large institutions. The [term] is designed to pass the conservation stage of the insolvency resolution process.

Accounting Trends And Techniques (Publication)

A prominent publication put out annually by the American Institute of Certified Public Accountants (AICPA) to update accountants on current financial reporting practices. The publication has been distributed since 1946.

Advance Commitment

A promise or agreement to take some future action. For example, a promise by a buyer to purchase goods at a price set beforehand is an advance commitment.

Agreed Amount Clause

A property insurance provision in which the insurer agrees to waive the co-insurance requirement. To obtain an agreed amount clause, insurers require a statement of property values signed by the insured as a condition of activating or including an agreed value provision in a commercial property policy, otherwise known as an agreed amount clause.

All Cash, All Stock Offer

A proposal by one company to purchase all of another company's outstanding shares from its shareholders for cash. An all cash, all stock offer is one method by which an acquisition can be completed. In this type of offer, one way for the acquiring company to sweeten the deal and try to get uncertain shareholders to agree to a sale is to offer a premium over the price for which the shares are presently trading.

After-Acquired Clause

A provision included in legal contracts ensuring that subsequent acquisitions of assets will be included in the debtor's liability to the lender.

Accounting Historians Journal

A publication that examines the history of accounting. First printed in 1977, The [term] is published in order to provide education regarding the foundations and changes of accounting. The Academy of Accounting Historians is a not-for-profit corporation that seeks to foster the research, publication, teaching and personal interchanges as related to accounting history.

Advanced Diploma In Insurance

A qualification earned by insurance professionals and conferred by the Chartered Insurance Institute (CII). The Advanced Diploma in Insurance is predominately earned by professionals located in the United Kingdom. It was formerly called The Associateship of the Chartered Insurance Institute (ACII).

401(k) Plan

A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a [term] may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

All-Purpose Financial Statement

A record of financial activity that is suitable for a variety of users to properly assess the financial health of a company. An all-purpose financial statement is a type of financial statement that is intended for review by diverse groups, such as potential investors, creditors, employees, shareholders and suppliers.

Abatement

A reduction in the level of taxation faced by an individual or company. Examples of an [term] include a tax decrease, a reduction in penalties or a rebate. If an individual or business overpays its taxes or receives a tax bill that is too high, it can request an abatement from the tax authorities.

Advertising Association Of The West - AAW

A regional advertising group based on the American West Coast that was formed to protect and promote the advertising trade, and uphold high industry standards. The Advertising Association of the West's predecessor organization, the Pacific Coast Advertising Men's Association, was formed in 1904 by the amalgamation of a number of local advertising clubs. The AAW and the Advertising Federation of America (AFA), its East Coast counterpart, worked separately until 1967 to raise advertising standards through self-regulation and education.

Advertising Federation Of America - AFA

A regional advertising group based on the U.S. East Coast that was formed uphold high advertising standards and also to protect and promote the advertising trade. Its predecessor organization, the National Federation of Advertising Clubs, was formed in 1905 by the merger of a number of local advertising clubs. The AFA and its West Coast counterpart the Advertising Association of the West (AAW) worked independently until 1967 to raise advertising standards through self-regulation and education.

Act-As-One Provision

A reinsurance contract provision that requires reinsurers that are party to a single contract to work together to choose a single arbitrator in the case of a dispute. An [term] is used when multiple reinsurance companies are involved in the same dispute, and prevents a situation in which multiple arbitration panels are being used to represent different reinsurers.

Adjustment Credit

A short-term loan made by a Federal Reserve Bank to a smaller commercial bank as needed to maintain reserve requirements and support short-term lending. These advances are a very common form of borrowing from a Federal Reserve Bank and are most often used when interest rates are high and money supply is short.

ADP National Employment Report

A report that measures levels of non-farm private employment. The ADP National Employment Report is based on payroll data from over half of ADP's U.S. business clients. The data represents about 24 million employees from all 19 of the major North American Industrial Classification (NAICS) private industrial sectors. The ADP Employer report is sponsored by ADP Employer Services and is maintained by Macroeconomic Advisers LLC., and is based on an analysis of over five years of data and a monthly review of payroll records.

403(b) Plan

A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement income accounts can invest in either annuities or mutual funds. Also known as a "tax-sheltered annuity (TSA) plan."

Accepting Risk

A risk management method used in the business or investment field. [term] occurs when the cost of managing a certain type of risk is accepted, because the risk involved is not adequate enough to warrant the added cost it will take to avoid that risk.

Admiralty Liability

A risk, event or conduct that would run afoul of admiralty (maritime) laws, thereby putting the matter under the jurisdiction of an admiralty court. Most notably, matters subject to admiralty law do not require trial by jury.

80-20 Rule

A rule of thumb that states that 80% of outcomes can be attributed to 20% of the causes for a given event. In business, the 80-20 rule is used to help managers identify problems and determine which operating factors are most important and should receive the most attention based on an efficient use of resources. Resources should be allocated to addressing the input factors have the most effect on a company's final results. Also known as the "Pareto principle", the "principle of factor sparsity" and the "law of the vital few."

Absolute Priority

A rule that stipulates the order of payment - creditors before shareholders - in the event of liquidation. The [term] rule is used in bankruptcies to decide what portion of payment will be received by which participants. Debts to creditors will be paid first and shareholders (partial owners) divide what remains. Regarding the estate of a deceased person, the [term] rule will ensure payment of outstanding debts before the distribution to beneficiaries. Also known as "liquidation preference."

1040A Form

A simplified version of the 1040 form for individual income tax. To be eligible to use a [term], an individual must fulfill certain requirements such as not itemizing deductions, not owning a business and having a taxable income of less than $100,000. Unofficially known as the "short form".

Abu Dhabi Investment Council - ADIC

A sovereign wealth fund owned by Abu Dhabi, the capital of the United Arab Emirates (UAE). It is wholly owned and administered by the UAE. The [term] is funded by revenue from the country's oil industry, and invests those revenues in a wide range of asset classes, including equities, debt, real estate, infrastructure and private equity. Its sister fund is the Abu Dhabi Investment Authority (ADIA), which is one of the world's largest sovereign wealth funds.

8(a) Firm

A special status given to a firm that is owned and operated by persons deemed to be socially or economically disadvantaged. A business considered an [term] is eligible to receive financial assistance, training, mentoring and other forms of assistance. The status is part of a business development program administered by the Small Business Administration (SBA), a United States agency charged with supporting the growth and development of small businesses. It is specifically outlined in Section 8(a) of the Small Business Act, and is designed to help small, disadvantaged businesses compete in the general market.

AAAA Spot Contract

A standardized contract drawn up by the American Association of Advertising Agencies that governs the purchase of television or radio spots. The [term] is generally between the advertising agency that represents the client and the television or radio station. The contract spells out all relevant details of the purchase, such as the number of spots and the duration of the advertising campaign, the date and time of airing the spots, and the cost to the advertiser.

Accounting Interpretation

A statement clarifying how accounting standards should be applied. [term]s are issued by accounting standards groups, such as the Financial Accounting Standards Board (FASB), American Institute of CPAs (AICPA) or International Accounting Standards Board (IASB). Interpretations are generally not requirements, but rather outline best practices and give further explanation. By contrast, accountants are required to follow the accounting standards that are in place.

Acceptance Sampling

A statistical measure used in quality control. A company cannot test every one of its products due to either ruining the products, or the volume of products being too large. [term] solves this by testing a sample of product for defects. The process involves batch size, sample size and the number of defects acceptable in the batch. This process allows a company to measure the quality of a batch with a specified degree of statistical certainty without having to test every unit of product. The statistical reliability of a sample is generally measured by a t-statistic.

Addition Rule For Probabilities

A statistical property that states the probability of one and/or two events occurring at the same time is equal to the probability of the first event occurring, plus the probability of the second event occurring, minus the probability that both events occur at the same time.

Address Coding Guide - ACG

A statistical property that states the probability of one and/or two events occurring at the same time is equal to the probability of the first event occurring, plus the probability of the second event occurring, minus the probability that both events occur at the same time.

Absolute Frequency

A statistical term describing the total number of trials or observations within a given interval or frequency bin. The frequency bins can be of any size, but they must be mutually exclusive, exhaustive and the data must be grouped.

All-Ordinaries Stock Index

A stock index comprised of common shares from the Australian Stock Exchange. The All-Ordinaries Index is the most quoted benchmark for Australian equities. The ASX is responsible for calculating and distributing the index and its returns.

Absolute Return Index

A stock index designed to measure absolute returns. The absolute return index is actually a composite index made up of five other indexes. This index is used to compare the absolute returns posted by the hedge fund market as a whole against individual hedge funds.

All-Cap Fund

A stock mutual fund that invests in equity securities without regard to whether a company is characterized as small, medium or large. The term "cap" is shorthand for capitalization. The investment community measures a company's size by its market capitalization, which is calculated by multiplying the number of a company's outstanding shares by its current stock price.

130-30 Strategy

A strategy that uses financial leverage by shorting poor performing stocks and purchasing shares that are expected to have high returns. A 130-30 ratio implies shorting stocks up to 30% of the portfolio value and then using the funds to take a long position in the stocks the investor feels will outperform the market. Often, investors will mimic an index such as the S&P 500 when choosing stocks for this strategy.

529 Prepaid Tuition Plan

A tax-advantaged method for paying future college tuition costs at current prices. [term]s are authorized by Section 529 of the Internal Revenue Code and allow the account holder to purchase tuition credits at their present price even though they will not be used until a future year, when tuition costs will have most likely increased. Plans are state sponsored and only available in some states, but it is possible to participate in a prepaid tuition plan outside of the account holder's current state of residence.

529 Savings Plan

A tax-advantaged method of saving for future college expenses that is authorized by Section 529 of the Internal Revenue Code. The plan allows an account holder to establish a college savings account for a beneficiary and use the money to pay for tuition, room and board, mandatory fees and required books and computers. The money contributed to the account can be invested in stock or bond mutual funds or in money market funds, and the earnings are not subject to federal tax (or state tax, in most cases) as long as the money is used only for qualified college expenses. The plans are open to both adults and children.

Advance/Decline Index

A technical analysis tool that represents the total difference between the number of advancing and declining security prices. This index is considered one of the best indicators of market movements as a whole. Stock indexes such as the Dow Jones Industrial Average only tell us the strength of 30 stocks, whereas the advance/decline index can provide much more insight into the movements of the market.

Adaptive Price Zone - APZ

A technical indicator that helps investors identify possible market turning points. The [term] can be especially useful in a sideways-moving market. This indicator attempts to signal significant price movements by using a a set of bands based on short-term, double-smoothed exponential moving averages. It can help day traders profit in volatile markets by signaling price reversal points, which can indicate potentially lucrative times to buy or sell. The [term] can be implemented as part of an automated trading system.

Above Par

A term used to describe the price of a security when it is trading above its face value. A security usually trades at [term] when its income distributions are higher than those of other instruments currently available in the market. If an investor purchases a security above face value, he or she will incur a capital loss at maturity when it is redeemed for face value.

Abnormal Return

A term used to describe the returns generated by a given security or portfolio over a period of time that is different from the expected rate of return. The expected rate of return is the estimated return based on an asset pricing model, using a long run historical average or multiple valuation.

Adverse Credit History

A track record of poor repayment history on one or more loans or credit cards. An adverse credit history will be reflected in a consumer's credit report. It will lower his or her credit score and make it more difficult to get a loan or credit card with the best terms or even to be approved at all.

2% Rule

A trading practice where an investor should concentrate no more than 2% of available capital on a single trade. To follow the 2% rule an investor first calculates 2% of the available trading capital, called the capital at risk. Brokerage fees for buying and selling shares are then factored into the capital at risk, and this figure is divided by the current share price. The resulting figure is the total amount of shares that can be purchased. If market conditions change and result in the trader losing the total value of that trade the downside exposure is only 2%, since the value of the original trade was limited to 2% of the total amount of trading capital available.

Active Tranche

A tranche of a collateralized mortgage obligation (CMO) that is currently receiving principal payments that are passed through to its investors. While interest is paid on all tranches of a CMO when it is first issued, principal payments on each tranche are made according to a set schedule that is defined in the CMO prospectus. A tranche becomes the [term] during the period when it is receiving (and paying out to investors) principal payments as per the schedule, in addition to interest.

Agency Cross

A transaction in which an investment adviser acts as the broker for both his client and the other party to the transaction. Investment advisers are not required to obtain the client's consent for each individual agency cross transaction, but must have the client's prior consent to engage in such transactions.

Accounting Event

A transaction or change recognized on the financial statements of an accounting entity. [term]s can be either external or internal. An external transaction would occur with an outside party, such as the purchase or sales of a good. An internal transaction would involve changes in the accounting entity's records, such as adjusting an account on the financial statements.

3/27 Adjustable-Rate Mortgage - 3/27 ARM

A type of adjustable-rate mortgage (ARM) frequently offered to subprime borrowers. These mortgages are designed as short-term financing vehicles that give borrowers time to repair their credit until they are able to refinance into a mortgage with more favorable terms. [term]s have a three-year fixed-interest-rate period after which the interest rate begins to float based on an index plus a margin (known as the fully indexed interest rate). There is a high probability that the fully indexed interest rate will be substantially higher than the initial three-year fixed interest rate; therefore, to avoid payment shock, the intent of 3/27 mortgage borrowers is to be able to refinance the mortgage before the interest rate begins to adjust.

2/28 Adjustable-Rate Mortgage - 2/28 ARM

A type of adjustable-rate mortgage that has a two-year fixed interest rate period after which the interest rate on the mortgage begins to float based on an index plus a margin. The index plus the margin in known as the fully indexed interest rate. Often, a [term] is designed as a short-term financing vehicle that provides borrowers with time to repair their credit before they refinance into a mortgage with more favorable terms.

All-In Coverage

A type of insurance coverage that applies to communally used features in residential multi-family buildings as well as the structures inside the individual units. All-in coverage, also called all inclusive coverage, is used for condominiums (or condos), a type of residential property in which some common elements, such as the entryway or light fixtures, are used by all residents of the building.

Air Cargo Insurance

A type of insurance policy that protects a buyer or seller of goods being transported through the air. Air cargo insurance is designed to protect the insured against items damaged, destroyed or lost. Cargo insurance is offered through insurance companies, some freight forwarders and trade service intermediaries. The amount of coverage and deductible required with this insurance varies, with each insurance provider.

Advisor Account

A type of investment account where an investment advisor works closely with a client in formulating and implementing investment purchases and strategies. In most cases, the client has the final say on all investment decisions. The fee structure of an advisor account is typically asset-based, in which the annual fee paid by the client is based on a percent of the assets held in the account. There are no trading commission fees.

Affinity Fraud

A type of investment scam in which a con artist targets members of an identifiable group based on things such as race, age, religion, etc. The fraudster either is, or pretends to be, a member of the group. Often the fraudster will be promoting a ponzi or pyramid scheme.

3-2-1 Buydown

A type of mortgage with a series of three initial temporary-start interest rates that increase in a stair-step fashion until a permanent interest rate is reached. Lenders will charge for the temporary interest rate reductions. A [term] is sometimes used as a method to help a borrower with excess cash (but a relatively low income) to qualify for a mortgage. Or, a [term] mortgage might be offered by a builder as incentive to purchase a home.

12B-1 Fund

A type of mutual fund that charges its holders 12B-1 fees instead of up-front or back-end commissions. [term]s take a portion of assets held and use them to pay expense fees and distribution costs. These costs are included in the fund's expense ratio and are described in the prospectus.

Accordion Feature

A type of option that a company can buy that gives it the right to increase its line of credit or similar type of liability with a lender. Companies typically purchase an [term]in anticipation of the need for more working capital for possible expansion opportunities.

Adjustable-Rate Preferred Stock - ARPS

A type of preferred stock where the dividends issued will vary with a benchmark, most often a T-bill rate. The value of the dividend from the preferred share is set by a predetermined formula to move with rates, and because of this flexibility preferred prices are often more stable then fixed-rate preferred stocks

Aggregate Stop-Loss Reinsurance

A type of reinsurance agreement in which losses over a specific amount are covered solely by the reinsurer and not by the ceding company. Aggregate stop-loss reinsurance caps the aggregate amount of losses that a ceding company is responsible for, called the attachment point, and would only apply when the value of claims occurrences reaches the attachment point.

Agency By Necessity

A type of relationship whereby one party can make essential decisions for another party. Agency by necessity is recognized in the courts and typically applies when one party is unable to make.

Active Risk

A type of risk that a fund or managed portfolio creates as it attempts to beat the returns of the benchmark against which it is compared. In theory, to generate a higher return than the benchmark, the manager is required to take on more risk. This risk is referred to as [term].

Additional Insured

A type of status associated with general liability insurance policies that provides coverage to other individuals/groups that were not initially named. After endorsement, the additional insured will then be protected under the named insurer's policy and can file a claim in the event that they are sued.

Accommodation Trading

A type of trading in which a trader accommodates another by entering into a non-competitive purchase or sale order. An accommodation trade is often executed when two traders are participating in illegal trading.

Acidizing

A type of well stimulation treatment used to improve the permeability of reservoir rocks. [term] involves pumping acids into the well in order to dissolve the rock, which improves production by creating channels in the rock to allow oil and natural gas to reach the well. Acids can also be used to dissolve debris found in the well.

Absolute Performance Standard

A way of measuring an organization's progress and how effective and efficient it is at running its business. The [term] is a benchmark for quality control that is only attainable in theory. However, it is a good way to measure how well a business and its workers are doing.

1%/10 net 30

A way of providing cash discounts on purchases. It means that if the bill is paid within 10 days, there is a 1% discount. Otherwise, the total amount is due within 30 days

Adweek

A weekly publication covering trends and issues in advertising. It covers a wide range of advertising-related topics in its print and online publications that extend beyond traditional advertising to new media and pop culture. First published in 1978, Adweek is currently owned by Prometheus Global Media, formerly known as e5 Global Media.

Adjusted Basis

The proportionate value of an asset or security that reflects any deductions taken on, or capital improvements to the asset or security.

Abbreviated New Drug Submission (ANDS)

A written request to Health Canada to obtain marketing approval for a generic drug. An[term] must be approved by Health Canada, the country's federal department in charge of national health care, under Canada's Food and Drug regulations before the generic drug can be marketed in the country. An [term] provides the necessary information for the government agency to evaluate how safe and effective a generic drug is compared with its brand-name equivalent. The generic must be equally safe and effective to gain approval.

Abbreviated New Drug Application (ANDA)

A written request to the U.S. Food and Drug Administration (FDA) to manufacture and market a generic drug in the United States. [term]s are "abbreviated" since they do not require the applicant to conduct clinical trials and require less information than a New Drug Application. If an [term] is approved, the generic drug will be listed in the Orange Book, which lists all medicines the FDA has found to be safe and effective. An [term] contains the information the FDA needs to evaluate how safe and effective a proposed generic drug is compared with its brand-name equivalent. The FDA will not approve the generic unless it is equally safe and effective.

Adjudication

Adjudication is a legal term that refers to the process of hearing and settling a case. It usually represents the final judgment or pronouncement in a case that determines the required course of action in reference to the issue presented. Adjudication can also refer to the process of validating an insurance claim as well as a decree in the bankruptcy process between the defendant and the creditors.

Adjusted Funds From Operations - AFFO

Adjusted funds from operations (AFFO) refers to the financial performance measure primarily used in the analysis of real estate investment trusts (REITs). The AFFO of a REIT, though subject to varying methods of computation, is generally equal to the trust's funds from operations (FFO) with adjustments made for recurring capital expenditures used to maintain the quality of the REIT's underlying assets. The calculation takes in the adjustment to GAAP straight-lining of rent, leasing costs and other material factors.

Advisory Endorsement

Adjustments to the provisions used to create an insurance policy, and which are created by a ratings bureau for distribution to the bureau's member insurers. An advisory endorsement is not filed with a state insurance commission, and is instead provided to member insurers to file on their own.

Administrative Expenses

Administrative expenses are the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales. These expenses are related to the organization as a whole as opposed to an individual department. Salaries of senior executives and costs of general services such as accounting are examples of administrative expenses.

Administrative Services Only - ASO

Administrative services only (ASO) is an arrangement in which an organization funds its own employee benefit plan such as a pension plan or health insurance program but hires an outside firm to perform specific administrative services. For example, an organization may hire an insurance company to evaluate and process claims under its employee health plan while maintaining the responsibility to pay the claims itself.

Advance Directive

Advance directive is a document expressing a person's wishes about critical care when he is unable to decide for himself. With an advance directive, individuals have the power to make future decisions about their own critical care without outside influence. A person who wishes or does not wish to be placed upon life support can create an advance directive that will be followed by hospital staff should he become incapacitated.

Adverse Selection

Adverse selection refers to a situation where sellers have information that buyers do not, or vice versa, about some aspect of product quality. In the case of insurance, adverse selection is the tendency of those in dangerous jobs or high-risk lifestyles to get life insurance. To fight adverse selection, insurance companies try to reduce exposure to large claims by limiting coverage or raising premiums.

Affiliated Companies

Affiliated companies are companies that are less than 50% owned by a parent company; the parents are minority shareholders. More loosely, the term "affiliated companies" is sometimes used to refer to companies that are related to each other in some way. For example, Bank of America has numerous affiliated companies, including Banc of America, US Trust, Landsafe, Balboa and Merrill Lynch.

Affirmative Action

Affirmative action is a policy in which an individual's color, race, sex, religion or national origin are taken into account by a business or the government in order to increase the opportunities provided to an underrepresented part of society. Affirmative action is designed to increase the number of people from certain groups within businesses, institutions and other areas of society in which they have historically had low representation. It is often considered a means of countering historical discrimination against a particular group.

After-Hours Trading - AHT

After-hours trading (AHT) is trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks (ECNs) has greatly facilitated after-hours trading, which is no longer restricted only to large institutional investors but is now available to any investor. Also known as the "after-hours market."

After-sales Support

After-sales support, sometimes called after-sales service, is any service provided after a customer has purchased a product. After-sales support can include warranties and guarantees and can be used as a marketing strategy for companies. Some customers might seek out a company's products based on its after-sales service, for example, Best Buy's (BBY) Geek Squad or Apple's (AAPL) Apple Care.

After-Tax Income

After-tax income is the amount of money that an individual or company has left over after all federal, state and withholding taxes have been deducted from taxable income. After-tax income represents the amount of disposable income that a consumer or firm has to spend on future investments or on present consumption. Also known as "income after taxes".

After-Tax Profit Margin

After-tax profit margin is a financial performance ratio, calculated by dividing net income after taxes by net sales. A company's after-tax profit margin is important because it tells investors the percentage of money a company actually earns per dollar of sales. This ratio is interpreted in the same way as profit margin - the after-tax profit margin is simply more stringent because it takes taxes into account.

Agency Costs

Agency costs are a type of internal cost that arises from, or must be paid to, an agent acting on behalf of a principal. These costs arise because of core problems, such as conflicts of interest, between shareholders and management. Shareholders wish for management to run the company in a way that increases shareholder value, while management may wish to grow the company in ways that maximize their personal power and wealth that may not be in the best interests of shareholders.

Aggregate Supply

Aggregate supply is the total supply of goods and services produced within an economy at a given overall price level in a given time period. It is represented by the aggregate-supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally, there is a positive relationship between aggregate supply and the price level. Rising prices are usually signals for businesses to expand production to meet a higher level of aggregate demand. Also known as "total output".

Aggregation

Aggregation in the futures markets is a principal involving the combination of all future positions owned or controlled by a single trader or group of traders. Aggregation in financial planning is a time-saving accounting method that consolidates an individual's financial data from various institutions. It is increasingly popular with advisers for servicing clients' accounts.

Aging

Aging is a method used by accountants and investors to evaluate and identify any irregularities within a company's accounts receivables. Aging is achieved by sorting and inspecting the accounts according to their length outstanding. By aging a company's accounts receivables, a person can get a better view of a company's bad debt and financial health.

Alfred Nobel

Alfred Bernhard Nobel is the man after whom the Nobel Prize is named. Nobel, born in 1833 in Stockholm, was a scientist, inventor, entrepreneur, author and pacifist. He patented an explosive called nitroglycerin, founded several companies and patented dynamite and gelignite, among other accomplishments. He became wealthy in the process.

Advance Payment

An advance payment is a type of payment that is made ahead of its normal schedule, such as paying for a good or service before you actually receive the good or service. Advance payments are sometimes required by sellers as protection against non-payment.

A. Michael Spence

An American economist who has won the Nobel Memorial Prize in Economic Sciences. Spence is a professor emeritus of management in the Graduate School of Business at Stanford University, and a senior fellow at the Hoover Institution - a Stanford-based free-market think tank. Spence received the Nobel Memorial Prize in 2001, along with George Akerlof and Joseph Stiglitz, for his analysis of information asymmetry - specifically of how individuals can use their education credentials as a signal to potential employers. Spence is also a recipient of the John Bates Clark Medal. Prior to teaching at Stanford, Spence taught economics and business administration at Harvard.

Actuarial Assumption

An [term] is an estimate of an uncertain variable input into a financial model, normally for the purposes of calculating premiums or benefits. For example, a common [term] relates to predicting a person's lifespan, given their age, gender, health conditions and other factors. Actuaries use large tables of statistical data which correlate the uncertain variable to a variety of key predictive variables. Given the values for the predictive variables a sound [term] can be made for the uncertain variable.

Actuarial Valuation

An [term] is a type of appraisal which requires making economic and demographic assumptions in order to estimate future liabilities. The assumptions are typically based on a mix of statistical studies and experienced judgment. Since assumptions are often derived from long-term data, unusual short-term conditions or unanticipated trends can occasionally cause problems.

Administrative Charge

An administrative charge is a fee charged by an insurer or other agency responsible for administering a group employee benefit plan to cover expenses related to record keeping and/or other administrative costs; also referred to an an "administrative fee".

Active-Share Study

An academic study conducted by researchers from Yale in 2006. The [term] examined the proportion of stock holdings in a mutual fund's composition that was different from the composition found in its benchmark. The greater the difference between the asset composition of the fund and its benchmark, the greater the active share. According to the [term], there was a positive correlation between a fund's active-share value and the fund's performance against its benchmark.

Adjunct Account

An account in financial reporting that increases the book value of a liability account. An adjunct account is a valuation account from which credit balances are added to another account. For example, if a company issues bonds, the unamortized premium on bonds payable account (sometimes called bond premium) is an adjunct account because its credit balance is added to the bonds payable account.

Account In Trust

An account that is managed by one party for the benefit of another. It is sometimes called an account held in trust, and the trust relationship can be either explicit or implied. [term] are typically set up for minors, and transfer of ownership will occur when the minor reaches legal age.

Accountant's Liability

An accountant's legal liability while performing professional duties. An accountant is liable for a client's accounting misstatements. This risk of being responsible for fraud or misstatement forces accountants to be knowledgeable and employ all applicable accounting standards. An accountant who is negligible in his or her examination of a company can face legal charges from either the company or investors and creditors that rely on the accountant's work.

Accounts Payable - AP

An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The [term] entry is found on a balance sheet under the heading current liabilities. [term] are often referred to as "payables". Another common usage of [term] refers to a business department or division that is responsible for making payments owed by the company to suppliers and other creditors.

Accrued Expense

An accounting expense recognized in the books before it is paid for. It is a liability, and is usually current. These expenses are typically periodic and documented on a company's balance sheet due to the high probability that they will be collected.

Accounts Receivable Subsidiary Ledger

An accounting ledger that shows the transaction and payment history separately for each customer to whom the business extends credit. The balance in each customer account is periodically reconciled with the accounts receivable balance in the general ledger, to ensure accuracy. The subsidiary ledger is also commonly referred to as the subledger or subaccount.

Accounts Payable Subsidiary Ledger

An accounting ledger that shows the transaction history and amounts owed separately for each supplier from whom the business receives credit for purchases. The balance in the customer accounts is periodically reconciled with the accounts payable (AP) balance in the general ledger to ensure accuracy. The [term] ledger is also commonly referred to as the AP subledger or subaccount.

Accrual Accounting

An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial condition.

Accumulated Earnings and Profits

An accounting term applicable to stockholders of closely held businesses. [term] are a company's net profits after deducting distributions to the stockholders. This is calculated as of the beginning of the year.

Accrued Dividend

An accounting term referring to the balance sheet item that accounts for dividends that have been declared but not yet paid to shareholders. [term]s are booked as a liability from the declaration date and remain as such until the dividend payment date. [term]s should not be confused with accumulated dividends, which refer to dividends due to holders of cumulative preferred stock.

Accretive Acquisition

An acquisition that will increase the acquiring company's earnings per share (EPS). These acquisitions tend to be favorable for the company's market price because the price paid by the acquiring firm is lower than the boost the new acquisition will provide to the acquiring company's EPS.

Account Freeze

An action taken by a bank or brokerage that prevents any transactions from occurring in the account. Typically, any open transactions will be cancelled, and checks presented on a frozen account will not be honored. [term]s can be initiated by either the account holder or a third party.

Adverse Action

An action that denies an individual or business credit, employment, insurance or other benefits. An adverse action is generally taken by a business or government based on a criminal past or information found in credit reports.

Ad Valorem Tax

An ad valorem tax is a tax based on the assessed value of real estate or personal property. Ad valorem taxes can be property tax or even duty on imported items. Property ad valorem taxes are the major source of revenue for state and municipal governments. Municipal property ad valorem taxes are also known as "property taxes".

Accommodation Line

An addition or change to a standard insurance contract. The change is suggested, or requested, by either the broker or the insured as an addition to the plan to fit their individual needs. In this type of agreement, the broker usually receives a higher commission (or bonus), the client receives greater coverage and the insurer maintains the business of a valued customer.

Adjustable Life Insurance

An adjustable life insurance is a type of life insurance that combines features of term and whole life coverage, giving holders the option to change the characteristics of their policies as their needs change over time. Adjustable life insurance policies allow holders to manipulate the period of protection, increase or decrease the face amount, raise or lower the premium amount, and change the length of the premium payment period. These policies also incorporate an interest bearing side fund (cash value). Adjustable life insurance is also known as "flexible premium adjustable life insurance".

5-6 Hybrid Adjustable-Rate Mortgage - 5-6 Hybrid ARM

An adjustable-rate mortgage with an initial five year fixed interest rate after which the interest rate begins to adjust every six months according to an index plus a margin (or, the fully indexed interest rate). The index is variable while the margin is fixed for the life of the loan. [term]s are usually tied to the six-month London Interbank Offered Rate (LIBOR) index.

Adjusted Book Value

An adjusted book value is a measure of a company's valuation after liabilities, including off-balance sheet liabilities, and assets are adjusted to reflect true fair market value. The potential downside of using an adjusted book value is that a business could be worth more than its stated assets and/or liabilities because it fails to value intangible assets, account for discounts or factor in contingent liabilities. It is not often accepted as an accurate picture of a profitable company's operating value, however it can be a way of capturing potential equity available in a firm.

Adjusted Closing Price

An adjusted closing price is a stock's closing price on any given day of trading that has been amended to include any distributions and corporate actions that occurred at any time prior to the next day's open. The adjusted closing price is often used when examining historical returns or performing a detailed analysis on historical returns.

Adjusted Premium

An adjusted premium is the premium of a life insurance policy that is adjusted by amortizing the costs associated with acquiring the insurance policy. The adjusted premium is equal to the net-level premium plus an adjustment, to reflect the cost associated with the first year initial acquisition expenses. The adjustment to the net-level premium is an amortization of the expenses associated with establishing the initial insurance policy. The net-level premium is the total cost of the policy (from inception to payout), divided by the number of years the policy is expected to be in force. This term is specific to life insurance companies.

Adjusting Journal Entry

An adjusting journal entry is an entry in financial reporting that occurs at the end of a reporting period to record any unrecognized income or expenses for the period. When a transaction is started in one accounting period and finished in a later period, an adjusting journal entry is required to properly account for the transaction. Adjusting journal entries can also refer to financial reporting that corrects a mistake made previously in the accounting period. Also known as a "balance day adjustment."

Advance Rate

An advance rate is the maximum percentage of the value of a collateral that a lender is willing to extend for a loan. The advance rate helps a borrower determine what kind of collateral to bring to the table in order to secure the desired loan amount, and helps minimize a lender's loss exposure when accepting collateral that can fluctuate in value.

Accredited Advisor In Insurance - AAI

An advanced professional designation earned by insurance producers who complete a course of study and successfully take a series of three national examinations. [term] demonstrates a level of knowledge that is well above that of an insurance producer or agent, and confers on the holder a level of expertise that is very useful when marketing to sophisticated clients.

Aggregate Limit

An aggregate limit is a contract provision used in insurance to limit the amount that can be paid in the policy period. An aggregate limit is the maximum dollar amount your insurer will pay to settle your claims. Often the limit is referred to as an annual aggregate limit, which is just the total amount your insurer will pay in a single year.

Aging Schedule

An aging schedule is an accounting table that shows the relationship between a company's bills and invoices and its due dates. Often created by accounting software, aging schedules can be produced for both accounts payable and accounts receivable to help a company see whether it is current on its payments to others and whether its customers are paying it on time.

Administrative Order On Consent (AOC)

An agreement between an individual or business and a regulatory body in which the individual or business agrees to pay for damages caused by violations and to cease activities that caused the damages to occur. Administrative orders on consent, or AOCs, are most often associated with environmental damages, such as pollution.

Algorithm

An algorithm is set of rules for accomplishing a task in a certain number of steps. One common example is a recipe, which is an algorithm for preparing a meal. Algorithms are essential for computers to process information. As such, they have become central to the daily lives of humans, whether someone orders a book online, makes an airline reservation or uses a search engine. Financial companies use algorithms in areas such as loan pricing, stock trading and asset-liability management. For example, algorithmic trading, known as "algo," is used for deciding the timing, pricing and quantity of stock orders.

All-In Cost

An all-in cost is every cost involved in a financial transaction. All-in costs can be used to explain the total fees and interest included in a financial transaction, such as a loan or CD purchase, or in a securities trade. By comparing all-in costs, investors and borrowers can more easily compare net gain potential.

Additional Death Benefit

An amount that is paid to the beneficiary of a life insurance contract that is separate from the original death benefit. The [term] acts as an extra layer of payment in the event that a predefined situation occurs.

Aguinaldo (Mexico)

An annual Christmas bonus that businesses in Mexico are required by law to pay to their employees. It is required to be paid by December 20 of each year. The aguinaldo is equivalent to at least 15 days wages, and may be pro-rated if the employee has been with the company for less than a full year.

Advance Dividend

An estimate of the present value of an asset being liquidated that is used to provide an immediate dividend to uninsured depositors. An advance dividend is designed to help uninsured deposits in addition to the amount insured by government regulators.

Act Of God

An event that is outside of human control, and which is not directly caused by human activity. An [term] can be an accident or a natural disaster, such as a flood or an earthquake. Insurance policies may cover accidents and damage caused by [term]s. For example, a homeowner in a coastal town may purchase flood insurance to cover the risk associated with his or her house being damaged by a flood.

Adjustable Peg

An exchange rate policy adopted by some countries wherein the national currency is largely pegged or fixed to a major currency such as the U.S. dollar or euro, but can be readjusted from time to time within a narrow interval. The periodic adjustments can are usually intended to improve the country's competitive position in the export market.

Alternative Energy ETF

An exchange-traded fund (ETF) that invests in companies engaged in industries serving alternative energy production and research. Some companies found within alternative energy ETFs may only receive a portion of their revenues from alternative energy goods and services, while other (typically smaller) companies are wholly engaged in alternative or clean energy production. The underlying group of securities used to passively invest assets within these funds varies widely depending on the issuer. Some include many stocks while others have a narrower focus and are thus less diversified.

Additional Voluntary Contribution - AVC

An extra allocation of funds to a retirement savings account that is above the amount that an employer will provide a matching contribution for. Additional voluntary contributions are made at the discretion of the employee and go to an employer sponsored pension plan. Additional contributions can be made to tax-deferred savings accounts such as the 401(k), 403(b) and individual retirement accounts (IRAs).

1040PC Form

An income tax return that is prepared by computer in a three column "answer-sheet" format. It only prints the bottom line number, dollar amount, and, for most entries, a brief description called a "legend page."

Absolute Percentage Growth

An increase in the value of an asset or account expressed in percentage terms. [term] implies that the increase in value is displayed on a standalone basis, and not in relation to a benchmark or another asset. The term "[term]" can cause some confusion, since "absolute" usually refers to total increase or decrease in asset value in dollar terms, while "percentage" refers to the relative change (increase or decrease) over a period of time. Thus if stock X increases in price from $10 to $15, the absolute increase is $5, while the percentage increase is 50%. The term may therefore be more accurately referred to as absolute growth (or absolute return) in percentage terms.

Absentee Landlord

An individual or entity that rents or leases real estate to another party, but does not reside on the premises. An [term] could be anyone from a local investor to an overseas conglomerate. Regardless of the size of their operations, [term]s generally seek to generate rental income from their holdings. [term]s with substantial holdings usually employ management companies to maintain their properties and collect rental payments.

Activist Investor

An individual or group that purchases large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change in the company. A company can become a target for [term]s if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the [term] believes it can fix to make the company more valuable.

Affiliated Person

An individual who is in a position to influence the actions of a corporation. This includes people such as directors, executives, and owners.

Account Supervisor

An individual who oversees the handling of corporate client accounts and generally supervises a number of account executives. It is a middle-management position that requires a number of years of relevant work experience. This job title is common in the advertising and media relations businesses.

Absentee Owner

An individual who owns a piece of real estate but does not live in it. An [term] may also be an entity such as a corporation or real estate investment trust (REIT). The real estate held by an [term] can range widely - while an individual may own a single condominium or apartment, a corporation may own a large chunk of real estate such as an apartment building or shopping mall. The primary motivation of [term]s is to generate returns from their real estate holdings in the form of rental income and potential capital appreciation.

Ability To Repay

An individual's financial capacity to make good on a debt. Specifically, the phrase "[term]" was used in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act in Title XIV, the Mortgage Reform and Anti-Predatory Lending Act, to describe the requirement that mortgage originators substantiate that potential borrowers can afford the mortgage they are applying for. Originators are required to look at a borrower's total current income and existing debt, for example, to make sure that the existing debt plus the potential mortgage debt, property taxes and required insurance do not exceed a stated percentage of the borrower's income.

Actuarial Age

An individual's life expectancy based on calculations and statistical modeling. Actuaries use mathematical and statistical computations to predict a person's life expectancy, or his or her [term], to assist insurance companies with pricing, forecasting and planning. For instance, knowing a person's [term] will help determine the most appropriate payments from an annuity.

Aggregate Limits Reinstatement

An insurance policy clause that allows the policy limits to be returned to their maximum amount during the policy's extended reporting period. Aggregate limits reinstatements are used when the original limits of the policy have been impacted by claims paid, or by any other impairment that reduces the limit.

Absolute Exclusion

An insurance policy clause that eliminates coverage of certain events. [term]s allow insurers to deny coverage of claims regardless of how the event came to be, provided that the exclusion is plainly worded and that it makes clear what specifically is being excluded from coverage.

Against All Risks - AAR

An insurance policy that provides coverage against all types of loss or damage rather than specific ones. Exclusions can still be included in an against-all-risks policy, but the insured will be covered against any risks that are not specifically excluded. Also called "all-risk insurance".

Advance Loss Of Profit (ALOP) Insurance

An insurance policy that provides coverage for financial losses due to delays in construction and infrastructure projects. Advance loss of profit insurance (ALOP), provides a payout to companies that face higher costs or lost profits when a project takes longer than expected to complete. Also called delayed completion coverage or Delay in Start-up Insurance (DSU).

Adjustable Premium

An insurance premium that can move up or down over time based on a policy that is agreed to at the outset of an insurance contract. There are several factors that may cause your adjustable premiums to change, including the varying costs of maintaining the contracts. Also known as a "variable premium."

Alien Insurer

An insurer that is formed following the laws of one country and offers insurance or reinsurance in another country. For example, an insurer that is formed under the laws of Germany that wishes to offer insurance in the United States is an alien insurer. The company would have to conform to the rules and regulations of each state in which it plans to provide insurance services. Also called "alien company".

Airbag Swap

An interest rate swap whose notional value adjusts according to rising interest rates by indexing the floating portion to a constant maturity swap (CMS).

Affirmative Obligation

An obligation of NYSE specialists to enter the market on a particular security (either by posting or bidding and ask) when there is not sufficient market demand and supply to efficiently match orders.

Abeyance Order

An order that is temporarily placed on hold or held in suspension, due to prevailing circumstances, until it can be fulfilled. In advertising, an [term] refers to an order from an advertiser for a media slot on television or radio that is temporarily unavailable. As a result, the order may be held in abeyance until a suitable advertising slot opens up.

Above The Market

An order to buy or sell at a price set higher than the current market price of the security. Examples of [term] orders include: a limit order to sell, a stop order to buy, or a stop-limit order to buy.

Academy Of Financial Divorce Practitioners

An organization dedicated to the development of financial expertise with respect to divorce. The [term] trains its members in the financial aspects of divorce, such as alimony, property settlements, child support and retirement assets. Members of the academy, known as certified financial divorce practitioners (CFDPs), supply unbiased financial expertise to facilitate equitable divorce proceedings.

Adjustment Bureau

An organization that focuses on helping businesses collect outstanding debts from delinquent debtors. Adjustment Bureaus are also known as Collection Agencies. Most Adjustment Bureaus earn a percentage of the outstanding debt upon successful collection. An Adjustment Bureau is not a loan agency or a debt consolidation service, they serve their business clients as opposed to the debtors.

Advertising Checking Bureau - ACB

An organization that serves the trade promotion industry by developing and managing incentive programs. The Advertising Checking Bureau (ACB) also offers a variety of additional services to companies, including advertising tracking, brand building and search engine marketing.

Accountant International Study Group - AISG

An organization that studied the differences in accounting practices between various countries. The [term] was formed in 1966 by professionals from Canada, the United Kingdom and the United States. By 1973, the group expanded its membership to include international accounting standards. The group then folded into the International Accounting Standards Committee (IASC) in 1973, which was reorganized under the International Federation of Accountants and eventually became the International Accounting Standards Board (IASB).

Accountants for the Public Interest - API

An organization whose volunteer accountants provide free services to nonprofit organizations, charities and other groups that would otherwise be unable to afford it. In addition to providing these services, the [term] provide guidance to small businesses on how to navigate accounting principles.

Admiralty Proceeding

Any matter that comes before an admiralty court that involves shipping or a shipping vessel. Admiralty law (also known as maritime law) governs all private legal matters involving events happening in the seas or in bodies of water that have multiple national jurisdictions.

Accelerated Depreciation

Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset.

Activity Cost Pool

In managerial accounting, a set of costs which are incurred when certain operations are performed within the organization. By accounting for all of the costs incurred in a specific activity with a pool, it is simpler to assign those costs to products and get an accurate estimate of production costs. Activity cost pool is an aggregate of all the costs required to perform a task such as production.

Advance Premium Fund

Insurance companies who receive advance premiums must account for the unearned portion of these premiums as a separate liablity item on their balance sheets. This item is commonly referred to as the advance premium fund or account. As the premium is earned, it is run through the income statement.

Additional Expense Coverage

Insurance coverage that provides funds for expenses above what the policyholder was paying before a claim was made. Additional expense coverage is provided to a policyholder if certain criteria are met, and may have a maximum time period over which benefits can be received and a policy limit of the amount of coverage that will be provided.

Admitted Insurance

Insurance purchased from a company that is admitted (or licensed) in the state in which the policy was sold. Admitted insurance must also be sold by an agent who is licensed in that state.

Alimony

Payments made to a spouse or former spouse under a separation or divorce agreement. In the United States, each state sets its own laws on how alimony is awarded and paid. Whether alimony will be awarded and how much it will be is determined by factors such as the length of the marriage, the spouses' relative incomes and the spouses' financial prospects.

Adequacy Of Coverage

The adequacy of coverage concerns how well your insurance policies protect your assets against unforeseen losses. In order to evaluate the adequacy of your insurance coverage, you should consider many different loss scenarios and judge whether your insurance deductibles and limits are sufficient. The concept of adequacy of coverage is subjective, and largely depends on one's propensity to take on risk rather than pay higher insurance premiums. One's ability to absorb losses should also be considered, as a person with very few liquid assets will be unable to pay large deductibles or sustain other uninsured losses. Alternatively, those with substantial assets may wish to obtain higher limits to their coverage to avoid losing the wealth built up over many years.

Adjusted Present Value - APV

The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits, which are the additional effects of debt. By taking into account financing benefits, APV includes tax shields such as those provided by deductible interest.

Advance/Decline Line - A/D

The advance/decline line (A/D) is a technical indicator that plots changes in the value of the advance-decline index over a certain time period. Each point on the chart is calculated by taking the difference between the number of advancing/declining issues and adding the result to the previous period's value, as shown by the following formula: A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Previous Period's A/D Line Value

Advertising-To-Sales Ratio

The advertising-to-sales ratio is a measurement of the effectiveness of an advertising campaign calculated by dividing total advertising expenses by sales revenue. The advertising-to-sales ratio is designed to show whether the resources a firm spends on an advertising campaign helped to generate new sales. A high advertising-to-sales ratio indicates that high advertising expenses resulted in low sales revenue; this could mean the campaign was not successful. A low ratio may indicate that the advertising campaign generated sales.

After-Tax Real Rate Of Return

The after-tax real rate of return is the actual financial benefit of an investment after accounting for inflation and taxes. The after-tax real rate of return is an accurate measure of investment earnings and usually differs significantly from an investment's nominal rate of return, or its return before inflation and taxes. However, investments in tax-advantaged securities (such as municipal bonds) and inflation-protected securities (such as TIPS) as well as investments held in tax-advantaged accounts such as Roth IRAs will show less discrepancy between nominal returns and after-tax real rates of return.

Adjusted Debit Balance

The amount in a margin account that is owed to the broker, minus profits on short sales and balances in a special miscellaneous account (SMA). The adjusted debit balance aids an investor in knowing how much he/she owes in the event of a margin call. Under Regulation T, one can borrow up to 50% of the purchase price of securities on margin.

Accounting Earnings

The amount of money a company has earned during a given period, usually a quarter or year, as reported based on proper accounting standards. [term] help to measure a company's profitability, but investors should consider not just earnings quantity, but also earnings quality, in evaluating a company's accounting earnings. Earnings quality considers whether earnings are repeatable, controllable and bankable.

Agency Plant

The amount of presence that an insurance company has in a market. Agency plant includes both insurance agents that work for the insurer as well as independent agents that can sell the insurer's policies. It can also refer to other personnel that an insurer may use to market its policies.

Accounting Rate of Return - ARR

The amount of profit, or return, that an individual can expect based on an investment made. [term] divides the average profit by the initial investment in order to get the ratio or return that can be expected. This allows an investor or business owner to easily compare the profit potential for projects, products and investments.

After-Tax Payable Period

The average period that a company has between receiving goods and paying its suppliers for the goods, utilizing after-tax accounts payable and cost of sales values. The value is generally determined either quarterly or yearly, thereby substituting for N either 90 (for quarterly values) or 365 (for yearly values). The payable period, or days payable, calculation is: (average after-tax accounts payable / after tax cost of sales) * N number of days

Active Trading

The buying and selling of securities with the intention of holding the securities for a short duration, typically for no more than one day. [term] as an investment strategy seeks to take advantage of short-term movements in price, and often focuses on financial instruments in higher demand, such as stocks, currencies, options, and derivatives. [term] is considered one of the most speculative trading strategies.

Actuarial Equity

The calculation of an insurance premium based on crucial factors such as the applicant's age, gender, health, family history and the type of insurance coverage applied for. This allows insurers to treat applicants fairly according to their estimated risk levels.

Accumulated Fund

The capital fund of a nonprofit organization. Money is directed into the [term] when revenues are greater than expenditures; money is directed away from the [term] (withdrawn) when expenditures are greater than revenues.

Acquisition Financing

The capital that is obtained for the purpose of buying another business. Acquisition financing allows the user to meet their current acquisition aspirations by providing immediate resources that can be applied toward the transaction.

AFA (Afghanistan Afghani)

The currency abbreviation or currency symbol for the Afghanistan afghani (AFA). The Afghanistan afghani is made up of 100 pul. The new afghani replaced the prior currency in early 2003, due to the low relative value of the nation's currency.

ALL (Albanian Lek)

The currency abbreviation symbol for the Albanian lek (plural lekë), the currency for Albania. The Albanian lek is made up of 100 qindarka and is often presented with the symbol "lekë". The Albanian qindarka is no longer issued but is still accepted as currency. In 1992, the new "lek valuta" was introduced, which is equal to 50 lekë.

Actuarial Deficit

The difference between future Social Security obligations and the income rate of the Social Security Trust Fund as of present. The Social Security program is said to be in [term] if the summarized income rate is less than the summarized cost rate of Social Security for any given valuation period. This situation is commonly referred to as the Social Security System being "insolvent."

Actuarial Balance

The difference between future Social Security obligations and the income rate of the Social Security Trust Fund as of present. The Social Security program would be said to be in [term] if the summarized income rate is inline with the summarized cost rate of Social Security for any given valuation period. Commonly referred to as the "solvency" of the Social Security System.

Acquisition Adjustment

The difference between the price an acquiring company pays to purchase a target company and the net original cost of the target utility company's assets. An [term] is the premium paid for acquiring a company more than its tangible assets or book value. Also known as "goodwill."

Accounting Noise

The distortion that is caused in a company's financial statements due to accounting rules and regulations that must be followed. [term] makes it difficult for investors to easily ascertain a company's true financial condition. [term] can make a company's financial reports look better or worse.

Accounting Equation

The equation that is the foundation of double entry accounting. The [term] displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the [term] is: Assets = Liabilities + Shareholder Equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation, or offsetting effects on the same side of the equation. The [term] is also written as Liabilities = Assets - Shareholder Equity and Shareholder Equity = Assets - Liabilities.

Actuarial Analysis

The examination of risk by a highly educated and certified professional statistician. [term] uses statistical models to manage financial uncertainty by making educated predictions about future events. Insurance companies, banks, government agencies and corporations use [term] to design optimal insurance policies, retirement plans and pension plans and to analyze investment risks.

Aggregate Risk

The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.

Accrued Interest Adjustment

The extra amount of interest that is paid to the owner of a convertible bond or other fixed income security. The amount paid is equal to the balance of interest that has accrued since the last payment date of the bond. At the time, the investor converts a convertible bond, there will usually be one last partial payment made to the bondholder to cover the amount that has accrued since the last payment date of record. Also, when buying bonds in the secondary market, the buyer will have to pay accrued interest to the seller as part of the total purchase price.

Advisor Fee

The fee that is paid to a financial advisor for recommending a load mutual fund based on the needs and time-frame of an investor. Fees differ according to the class of mutual fund shares, and are paid to the advisor for recommending a fund that suits an investor's time and goals. Depending on the share class, advisor's can either receive a one-time fee up-front or an annual fee as long as the investor holds the asset.

"A" Round Financing

The first major round of business financing by private equity investors or venture capitalists.

Absolute Rate

The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate.

Accretion of Discount

The increase in the value of a discounted instrument as time passes and it approaches maturity. The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to maturity.

Absorbed Cost

The indirect costs that are associated with manufacturing. Absorbed costs include such expenses as insurance, or property taxes for the building in which the manufacturing process occurs. When the total manufacturing costs are determined, the implicit absorbed costs are not considered, but will be included in a separate account.

Advance Premium

The initial premium paid to bind an insurance policy for a given period of time. The most commonly known use of the term "advance premium", is with respect to fluctuating insurance payments, such as payroll-based policies, where the actual amount due is not known until after the fact.

Agroforestry

The integration of agriculture and/or farming with forestry so the land can simultaneously be used for more than one purpose. This practice is meant to have both environmental and financial benefits. The presence of trees can provide benefits such as sheltering livestock from the elements and improving the soil so that crops will be more productive. The agroforestry system can also provide a more even income for landowners since all of their income is not tied to a few crops or a single season. Agroforestry can also make it easier for farmers to transition from one type of crop to another as market demand for their products changes.

Adjusted Liabilities

The liabilities of an insurance company that differ from the company's statutory liabilities due to adjustments. It is calculated by taking the statutory liability and subtracting the interest maintenance reserve and asset valuation reserve. Statutory liabilities are the insurance company's liabilities as determined by the applicable accounting rules. Insurance companies are required by the National Association of Insurance Commissioners (NAIC) to maintain the aforementioned reserves as a cushion for potential equity and credit losses. This definition is specific to the insurance industry.

Abandon Rate

The percentage of inbound phone calls made to a call center or service desk that are abandoned by the customer before speaking to an agent. It is calculated as abandoned calls divided by total inbound calls (in percent). [term]s have a direct relation to waiting times. The longer the time that customers have to wait before being connected to an agent, the higher the abandon rate is likely to be.

Advertising Club Of New York

The main organization for communications professionals in New York. It offers its members a forum for career development, networking, exchanging of ideas and the recognition of excellence. The Advertising Club of New York traces its origins back to 1896, when a group of business people who called themselves the Sphinx Club met regularly to discuss the advertising business. It became the Advertising Men's League in 1906, and subsequently the Advertising Club of New York in 1915. Also known as the AD Club.

Aggregate Product Liability Limit

The maximum sum of money that an insurance company will pay during the time interval that the product liability insurance coverage is in effect. The aggregate product liability limit remains unchanged no matter how many claims are made per period.

Account Minimum

The minimum balance required to be maintained in an investment account or bank account. An [term] for an investment account may be established to ensure that a client has sufficient capital to execute a trade. A bank may establish an [term] either for the customer to receive a waiver of account servicing fees, or merely to keep the account open. In general, as there is usually no charge to open a client account, financial institutions set [term]s to ensure that their systems are not clogged with thousands upon thousands of dormant accounts containing very little money, since there is a substantial cost involved in administering such accounts.

Accounting Currency

The monetary unit used when recording transactions in a company's book. The [term] is not necessarily the same as the selling currency, which is what customers see when conducting a transaction, such as a sale. Companies are likely to use their home country's currency when recording transactions, even if the sale was denominated in a foreign currency. For example, a Chinese firm conducting business in Japan will likely use the yuan as the [term], even if sales transactions are conducted using the yen.

Agreement Value Method

The most common of three official methods established by the International Swaps and Derivatives Association for calculating termination payments on a prematurely ended swap. The agreement value method is based on the terms available for a replacement swap because the counterparty that did not cause the early termination may need to enter into a replacement swap. Replacement swaps are used to calculate termination payments because changes in market conditions since the initial (now-terminated) swap were entered will mean that the terms of that swap are no longer available. The replacement swap will likely have different terms and different interest rates.

Aggregate Limit Of Liability

The most that an insurer is obligated to pay to an insured party during a specified period. The aggregate limit of liability is spelled out in the insurance contract and caps the amount of covered losses an insurer will pay for. These limits are part of commercial and professional general liability insurance policies.

Adjusted Gross Estate

The net worth of the deceased's estate after deducting the cost of any outstanding debts and admistrative costs associated with the individual. The adjusted gross estate is also the value in which estate taxes are levied upon.

Advances And Declines

The number of stocks that closed at a higher price than the previous day's close, and the number of stocks that closed at a lower price than the previous day's close. Technical analysts looks at advances and declines to analyze the overall behavior of the stock market, in order to discern volatility and to predict whether a price trend is likely to continue or reverse. Typically, a market will be more bullish if more stocks advance than decline.

Add-On Factor

The number of usable square feet divided by the number of rentable square feet in a commercial real estate lease. The result of this calculation will be 1 if the two numbers are identical, but it is usually slightly lower than 1 because some square footage in a building will be partly or totally non-unusable. Non-usable square footage includes space shared with other tenants (such as lobbies, hallways, stairwells, elevators and restrooms) or occupied by structural components (such as support poles and interior walls). In a poorly designed building, the usable area may be considerably less than the rentable area.

Aggressor

The party in a trade that initiates the deal. The aggressor works with the dealer, who takes a passive role and posts the bid and ask quotes. The aggressor in a transaction will typically attempt to instigate the deal and push it forward in order to obtain financial benefit.

Accidental Death Benefit

The payment due to the beneficiary of an accidental death insurance policy, which is often a clause or a rider connected to a life insurance policy. The [term] is usually an amount paid in addition to the standard benefit payable if the insured died of natural causes. Depending on the issuer of the policy, the [term] may extend up to a year after the initial accident occurred, so long as the accident led to the insured's death.

Active Return

The percentage gain or loss of an investment relative to the investment's benchmark. An [term] is the difference between the benchmark and the actual return. It can be positive or negative and is typically used to assess performance.

Actuarial Value

The percentage of total average costs for covered benefits that will be paid by a health insurance plan. Under the Patient Protection and Affordable Care Act (ACA), the U.S. health reform enacted March 23, 2010, health plans available on the Health Insurance Marketplace are divided into four "metallic" tier levels - Bronze, Silver, Gold and Platinum - based on the actuarial values. Bronze plans, for example, pay on average 60% of the medical costs of covered benefits. Silver plans pay 70%, Gold plans pay 80% and Platinum plans pay 90%. IS THIS RIGHT LOL

Accountant In Charge

The person responsible for personnel and assigning the tasks involved in an audit. The [term] maintains workflow by assigning tasks to accounting and clerical staff, monitors an audit's progress, recommends controls and process adjustments, enforces standards, and follows legal guidelines. The accountant is typically a CPA.

Actuals

The physical commodity that underlies a futures contract or is traded in the physical market. This is the homogeneous commodity that is the basis for trade, either through the physical market or a derivative contract such as oil, corn or gold.

Aggressive Accounting

The practice of misreporting income statement and balance sheet items to make a company appear more attractive to investors. Although some forms of aggressive accounting are illegal, others are not. Regardless of the legality, however, aggressive accounting practices are universally frowned upon, as they are clearly designed to deceive. Aggressive accounting is also known as "creative" or "innovative" accounting and in the worst, most fraudulent cases, is referred to as "cooking the books."

Address Hygiene

The precision and purity of postal addresses on a mailing list. Address hygiene has a direct correlation with delivery effectiveness of a mail-out, and thus on the efficacy of a direct marketing campaign. Good address hygiene will result in a small proportion of non-delivered mail, while poor address hygiene will result in a relatively high proportion of rejected mail due to non-delivery. Address hygiene is often much better on mailing lists for solicited items, such as newspapers or magazine subscriptions, than it is on lists used by direct marketers for unsolicited promotional mail.

Advance Corporation Tax - ACT

The prepayment of corporate taxes by companies in the United Kingdom that distributed dividend payments to shareholders. The tax, which was introduced in 1973, was abolished in 1999 by then Prime Minister Gordon Brown; however, a 10% tax relief on didvidend income remained.

After-Market Performance

The price level performance of a newly issued stock after its IPO. There is no standard ending time period that is considered, but after-market performance begins on the first day of trading on the exchange. Typically after-market performance will be measured through the lock-up period, anywhere from three to nine months after the IPO date. This allows for the market to "digest" the insider shares that might be sold quickly after the lock-up period ends. By looking at the after-market performance of all IPOs over a certain time period (as in a calendar year), analysts and investment bankers can determine the overall market demand for new issues, and possibly move up or delay a schedule IPO as a result.

Administered Price

The price of a good or service as dictated by a governmental or other governing agency. Administered prices are not determined by regular market forces of supply and demand. Examples of administered prices included price controls and rent controls. Administered prices are often imposed to maintain the affordability of certain goods and to prevent price gouging during periods of shortages (such as gas prices). Rent controls are intended to stabilize rent in certain cities, where rents are reviewed by a standard of reasonableness.

Advertised Price

The price of a product or service as displayed or announced in an advertisement or radio/TV commercial. If the advertised price is well below the normal price of a product, it is likely to be a loss-leader that is priced to entice customers into the retail store in the hopes that they will make additional purchases. A company may offer a price-matching guarantee to its customers, based on the advertised price for a specific product. If a rival offers the same product for a lower advertised price, the company will either match the lower price or refund the difference if the customer has already purchased the product from it.

Account Number

The primary identifier for ownership of an account, whether a vendor account, a checking or brokerage account, or a loan account. An [term] is used whether or not the identifier uses letters or numbers.

Accounting Principles Board - APB

The prior authoritative body of the American Institute of Certified Public Accountants (AICPA). Formed by the American Institute of Certified Public Accountants in 1959, the [term] was replaced in 1973 by the Financial Accounting Standards Board (FASB). The purpose of the [term] was to issue pronouncements on accounting principles. Nineteen of the opinions released by the [term] still stand as part of the Generally Accepted Accounting Principles (GAAP).

Accounting Valuation

The process of valuing a company's assets for financial-reporting purposes. Several [term] methods are used while preparing financial statements in order to value assets. Many valuation methods are stipulated by accounting rules, such as the need to use an accepted options model to value the options that a company grants to employees. Other assets are valued simply by the price paid, such as real estate.

Alberta Securities Commission - ASC

The provincial regulatory agency that is responsible for administering the province of Alberta's securities laws. Alberta securities commission objectives are to foster fair and efficient capital markets in Alberta, and to protect investors. The ASC, as it is commonly known, is a member of the Canadian Securities Administrators, the voluntary umbrella organization of Canada's provincial and territorial securities regulators.

Agency MBS Purchase

The purchase of mortgage-backed securities issued by government-sponsored enterprises such as Ginnie Mae, Fannie Mae or Freddie Mac. The term is most commonly used to refer to the U.S. Federal Reserve's $1.25 trillion program to purchase agency mortgage-backed securities, which commenced on Jan. 5, 2009 and was completed on Mar. 31, 2010.

Absorption Rate

The rate at which available homes are sold in a specific real estate market during a given time period. It is calculated by dividing the total number of available homes by the average number of sales per month. The figure shows how many months it will take to exhaust the supply of homes on the market. A high [term] may indicate that the supply of available homes will shrink rapidly, increasing the odds that a homeowner will sell a piece of property in a shorter period of time.

Admission Board

The representatives of a particular stock exchange who determine whether a company will be allowed to list its shares on that exchange. An exchange's admission board establishes the exchange's listing requirements, ensures that listed stocks comply with those requirements and makes decisions about when a stock should be delisted.

Accountability

The responsibility of either an individual or department to perform a specific function in accounting. An auditor reviewing a company's financial statement is responsible and legally liable for any misstatements or instances of fraud. [term] forces an accountant to be careful and knowledgeable in their professional practices, as even negligence can cause them to be legally responsible.

Accounting Principles

The rules and guidelines that companies must follow when reporting financial data. The common set of [term] is the generally accepted accounting principles (GAAP). To remain listed on many major stock exchanges in the U.S., companies must file regular financial statements reported according to GAAP. [term] differ around the world, and countries usually have their own, slightly different, versions of GAAP.

Affordable Market Value (AMV)

The sale price of a multi-family residential housing unit sold through the FDIC's Affordable Housing Program. The affordable market value of a property reserved for low-income families is lower than the appraised value of the property as it takes into account both the lower income purchase requirement, the physical condition of the property, expected operating expenses, and financing options.

3P

The total amount of reserves that a company estimates having access to, calculated as the sum of all proved and unproved reserves. Unproved reserves are broken into two segments: those based on geological and engineering estimates from proved sources (probable) and those that are less likely to be extracted due to financial or technical difficulties (possible). Therefore, [term] refers to proved plus probable plus possible reserves.

Active Money

The total value of coins and paper currency in circulation amongst the public. The amount of [term] fluctuates seasonally, monthly, weekly and daily. In the United States, the Federal Reserve Banks distribute new currency for the US Treasury Department. Banks lend money out to customers which becomes classified as active money once it is actively circulated.

Abandonment Value

The value of a project or asset if it were immediately liquidated or sold. The abandonment value of an asset or project can vary for a variety of reasons including liquidity, supply-demand factors and implied fair value appraisals performed by certified appraisers. Also referred to as the liquidation value.

Abnormal Spoilage

The waste or wrecking of inventory beyond what is expected in normal business processes. [term] can be the result of broken machinery or from inefficient operations, and is considered to be at least partially preventable. In accounting, [term] is recorded as a separate item: loss from [term].

Acting In Concert

slang term for when parties undertake identical investment actions to achieve the same goal. [term] requires the cooperation of people or corporations to make the same transactions based on a previous arrangement.


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