Yield The amount a bond pays out in interest every year.
Yield The amount a bond pays out in interest every year.
Working Class A socioeconomic group characterized by filling most working roles in a society but having very little total wealth or power.
Whole Life Insurance A type of life insurance that expires after a certain number of years if the policy holder does not die. When the policy expires, there is a cash payout. Whole life insurance is considered a type of investment.
Wealth Management The act of a business to help a person or family to manage their wealth in such a way that it is properly invested to grow over time.
Wealth The total net worth of a person, including intangible assets.
Warren Buffet One of the world’s richest men and most famous investor, and proponent of the Buy and Hold investing strategy.
Warranty A written guarantee of work, customer satisfaction, or product reliability offered by a seller or manufacturer to a buyer. Warranties are offered to increase customer confidence in a product.
Wants The endless goods or services that a person wants, but not needs, to have. Managing “wants” against income and savings is a central conflict of personal finance.
Wall Street A street in downtown New York City that is home to the New York Stock Exchange.
Wage Garnishment The act of a creditor gaining the right to a portion of a person’s paycheck to pay back a previous debt before it is ever paid to the employee itself. This is frequently a consequence of structured bankruptcy procedures or lawsuits.
W-2 A document provided by employers to employees of companies in the United States detailing the total income paid during the previous tax year, including the amount that was withheld by the company and paid to the government as taxes. This is usually the starting point to filing a tax return.
VRIO Framework A strategic thinking exercise that examines if a company or product is Valuable, Rare, Imitatable, and Organized. If the company or product answers “no” to any of these questions, it is not likely going to be able to maintain a strong competitive advantage over competition.
Voting Rights The right of common stock holders of publicly traded companies to vote on key issues facing the company. The most common type of vote is whether to approve a merger or acquisition of another company, or to elect the Board of Directors.
Volume The total number of shares of a security that have traded during the current (or last, if the markets are closed) trading day.
Volatility ETF A type of ETF that gains value as some underlying index’s price becomes more volatile. Investors buy volatility ETFs during periods of great uncertainty when stock prices experience a lot of up and down movement.
Volatility A measurement of how much an investment or portfolio’s price moves up and down over a given period of time.
Vision Insurance A type of insurance that covers the cost of eye exams, glasses, contact lenses, and corrective vision surgery.
Vertical Management A type of management structure characterized by several layers of management between front-line employees and top decision makers. Vertical management is characterized by clear divisions of business units, with low levels of autonomy for front-line workers and low-level managers.
Variable Interest A type of interest rate applied to loan that changes over time in line with some external index. Variable interest rate loans are typically offered at an interest rate below a fixed interest rate, but the interest rate may increase over time.
Variable Expenses Types of expenses that will vary significantly from month to month. Holiday shopping would be a variable expense.
Value Investing An investing strategy based on finding companies that appear to be priced lower than their competitors, based primarily on metrics like PE ratios or another fundamental metric.
Use Tax A type of tax that is applied by using a particular public good or service. A toll on a highway is a type of use tax.
Upper Class A socioeconomic group characterized by controlling the majority of wealth and power in a country or economic system. It may be legally enforced (like a nobility class) or arise economically.
Unsystemic Risk A type of risk that does not risk being catastrophic to a system as a whole, but instead may be a risk to a specific process or business unit. Unsystemic risks are typically easier and cheaper to address.
Unsought Goods A marketing term that refers to items that a customer considers buying that they did not even realize they wanted. This can refer to things like candy bars at the check-out line of a store, or add-on purchases.
Unskilled Labor A type of worker who does not have specialized skills. Unskilled labor is characterized as easy to replace with minimal training if a worker leaves their position.
Unsecured Loan A type of loan that is issued without any underlying collateral. Unsecured loans typically have higher interest rates than secured loans. One example would be a credit card.
Unrealized Losses The value decrease from an investment from when it was purchased until today, but the stock is not yet sold. Unrealized losses are not recorded as losses by a business or taxed.
University A post-secondary educational institution that offers not just specialized degrees in a variety of fields, but also more advanced degrees (Master and Ph. D level) and extensive research facilities.
Unit Of Account One of the major concepts of money that says that a certain amount of money should be consistent over time. For example, $1 is always $1 – you would not go into the store tomorrow and they would tell you that your dollar from yesterday is worth only $0.50 today. While the Read More…
Unit Investment Trust A type of closed-ended fund that has a specific set of securities, but with a specific lifespan. At the end of the life of the Unit Investment Trust, the investors can redeem their shares for the holdings of the trust, or the holdings are sold off and the investors receive cash payments Read More…
Unemployment Rate The rate of number of people who are currently unemployed divided by the total number of people in the labor force (people who either have jobs or are looking for jobs).
Unemployment Insurance A type of government program that protects against short periods of unemployment. Unemployment insurance is a payroll tax charged to employers and can be collected by people if they lose their job through a layoff or firing. If an employee quits, they are not eligible for unemployment insurance benefits.
Underlying Security The investment instrument that a derivative product’s value is based on. For example, the underlying security of an options contract would be the stock this option was written for.
Underemployment An economic concept where a skilled person can only find employment in jobs that do not utilize their skills, and so their actual income is considerably lower than what they theoretically could earn with the skills they possess. An example of this would be a doctor working as a taxi driver – while she Read More…
Uncollectable Accounts Accounts that exist on a company’s balance sheet as an account receivable that the company acknowledges will never be collected, usually due to the person who owes the money having been declared bankrupt. Uncollectable accounts are typically written off the balance sheet at the end of the period.
Ultimate Consumers Ultimate Consumers are the final consumers in the chain of a resource life. An example would be potash mined as fertilizer – it is first mined by a mining company, then sold to fertilizer companies, then sold to farmers, who use it on their crops, who sell their crops to grocery store chains, Read More…
Trust Fund A type of entity that exists and can hold assets but acts as a fiduciary agent for some other beneficiary. An example of a trust is a Real Estate Investment Trust, which uses the funds provided by its investors only to invest in real estate to provide a return for its investors. Trusts Read More…
Trial Balance A first attempt of an accountant to prepare financial statements for a company. The trial balance is used to ensure all credit and debits are equal before any adjusting entries are made to prepare the finalized financial statements.
Trend Lines Lines on a chart that “smooth out” variations by using a moving average of a subset of the data points. Trend lines allow an analyst to see longer-term trends without being distracted by short-term changes.
Treasury Stock Stock that has been re-purchased by the company that issued it. Companies hold treasury stock until the stock’s price increases, then re-sells it on the open market.
Treasury Bond A bond issued by the federal government to fund government activities. The largest holder of treasuries is the Social Security Administration, which uses the interest payments on treasury bonds to fund the system.
Transunion One of the three major credit rating agencies that issues consumer credit reports.
Trailing Stop Order A type of order for a stock or other security that specifies that the “stop price” of the order moves to match the peak of the stock as the price changes.
Trade-In The act of taking one asset and using its value towards the down payment of another. This is most commonly used when purchasing a car – a person’s existing car can be “traded in” towards the down payment on the new car.
Trade Validation An action as part of an electronic trading system for investments that validates the trade the user did indeed enter the details of the trade about to be processed and will be properly sent to the market for execution.
Trade Surplus A concept from international trade where one country exports more goods or services from another country than it imports in return.
Trade School A type of post-secondary education that seeks to train students in a particular skill. Trade Schools often focus on specific technical skills, like construction, plumbing, or automotive repair.
Trade Reporting A reporting requirement that orders that are executed on a stock exchange by major investment banks (“market makers”) must be reported within 90 seconds of order execution to prevent asymmetric information.
Trade Fulfillment The act of an order that was placed from an investor being executed on the open market, and the shares of stock (or cash in exchange for stock) is transferred back to that investor’s account.
Trade Deficit A concept from international trade where one country may import more goods or services from another country than it exports in return.
Trade Capture The process where a brokerage registers that an investor has placed an order on their front-end system. After trade capture, the order is passed to back-end systems and onto the stock exchange itself for order execution.
Trade Barrier An artificial restriction on trade between two or more countries. This can be an absolute barrier (some good or service may not ever be traded with some country), or simply a high tax placed on the import.
Total Surplus An economic concept combining the Producer’s Surplus and the Consumer’s Surplus to find the total economic benefit of a particular allocation coming from a specific price and quantity.
Tort A “penalty” in the legal sense. For insurance purposes, a “tort” state is one where every accident must establish some level of fault between the people involved, with insurance companies only paying out relative to how “at fault” their insured customer was in the accident.
Tit-For-Tat A concept originating in game theory where a player always repeats back whatever was done to them in the previous turn. This was made most famous in an experiment of the “Prisoner’s Dilemma” game, where the Tit-for-Tat strategy had the highest total reward of thousands of different strategies tested in simulations pitting them with Read More…
Tips Extra payment made to workers in the service industry in appreciation of their individual efforts. Tipping is customary in the United States (and wages of many service workers is low because tipping is expected) but is not in many other countries (where worker wages are higher to compensate).
Time Value of Money The financial concept that time is worth some amount of money. While this also applies to personal finance (such as paying a cleaner to clean your home to save yourself a few hours), it is stronger in higher-level finance and is based on liquidity. If there is a restriction that prevents Read More…
Time Decay The amount of an option’s value that is lost the closer the current date moves to the option’s expiration date. The Time Decay refers to the lost value because someone who would be buying this option has less time for it to generate a potential profit.
Ticker Symbol A short code used on a stock exchange to refer to a company’s stock. In the United States, ticker symbols are between 1 and 5 letters long. They are called “Ticker Symbols” because the short form made it faster to transfer information about many stocks quickly using a ticker tape connected to a Read More…
Theft The act of taking something that belongs to someone else. This can be stealing a good or taking and using someone else’s intellectual property without permission.
Terminal Value A calculation used to give some value to a business or asset beyond the scope of the current analysis. For example, if I have a business that I know is growing at 10% per year, I might try to estimate the value of this business over the next 10 years. The Terminal Value Read More…
Term Life Insurance A type of life insurance that expires after a certain number of years, and only has a pay-out if the insured person dies before the expiration. Term life insurance is the most basic type of life insurance.
Term The length of a loan or contract. This may be expressed in years, months, weeks, or days.
Ten-Bagger A term used to refer to a stock that increases its price by over 10x.
Technology An economic term to refer to the machinery and other capital used by labor to produce some output. Increases in technology increases the output produced by a given hour of labor – improving total efficiency.
Technical Analysis A type of investment research that focuses on analyzing the movements in a stock’s price to find patterns, typically over a very short period of time (minutes to days). Technical analysts attempt to “buy low” and “sell high” on very small up and down movements of a stock’s price.
Taxable Income Income that is earned and can be taxed. Taxable income is found by taking a person’s net income for the year and subtracting any tax deductions the person qualifies for.
Tax Rate The percentage rate that is charged on income as income tax. Tax rates increase as income increases, making income taxes a “Progressive Tax”.
Tax Preparation Software A type of software that exists to help people prepare and file their income taxes at the end of each tax year. Tax prep software are a popular alternative to using the services of a professional accountant while still having a high level of guidance on what tax credits or deductions exist Read More…
Tax Deductions An incentive provided by governments to encourage certain behaviors in exchange for reduction in their taxable income, and thus the total tax that must be paid. Unlike a tax credit, tax deductions can only reduce your tax owed to 0 – it cannot be refunded as cash if your total tax owed would Read More…
Tax Credit An incentive provided by governments to encourage certain behaviors in exchange for a rebate on some type of taxes. Unlike a tax deduction, tax credits can be refundable if the total tax owed is less than zero.
Tastes And Preferences The individual attributes of a person that dictate style, fashion, and what a person likes or dislikes. Tastes and preferences can change over time – a product that is very popular one year can be found unpopular the next year due to a general change in consumer’s tastes and preferences.
Target Markets A marketing term that refers to where a product is being marketed. The target market can be a geographic location, a target age group of consumers, or other subsets of people with similar characteristics that the marketing team is trying to reach.
Trade Execution The act of an order placed by an investor being sent to market, a pairing trader found, and the exchange of securities for cash taking place.
Tangible Wealth A type of wealth expressed in money, physical assets, or property. Tangible wealth can be seen or touched and converted (if necessary) into cash and spent.
Systemic Risk The threat of a problem arising from an entire system, rather than one specific part of that system. Systemic risks are typically very expensive to correct – but catastrophic if they are realized.
Symmetrical Triangle A technical analysis pattern where support lines are increasing, and resistance lines are decreasing at the same rate. A symmetrical triangle implies that the price is about to have a strong change in one direction or the other but does not give any indication of which direction.
SWOT Analysis A type of marketing (or other type) of analysis that breaks the current situation of a business or project into Strengths over the competition, Weaknesses that need to be improved upon, Opportunities for new growth, and Threats that would threaten core business (or loss of some opportunities).
Swing Trading A short-term investing strategy that holds stocks usually for less than 1 week. Swing traders rely on market sentiment and attitudes around a particular stock but try not to get too invested in up-to-the-second technical analysis charts.
Surplus The quantity supplied exceeds the quantity demanded.
Support Lines A technical analysis term that looks for a trend in the minimum prices a stock falls to before the price starts to rise again. Day traders will often try to buy shares with prices near the support line in the expectation that the price is about to increase.
Supply An economic concept describing the relationship between market price and how much of a product will be produced and put for sale by businesses.
Supplemental Nutrition Assistance Program (SNAP) A federal program that provides funding for food for needy families. SNAP benefits used to be on stamps distributed to families who qualify, and so it is sometimes called “Food Stamps”.
Supplemental Health Insurance A type of secondary health insurance used to pay for smaller costs incurred before primary health insurance kicks in. This would include things like deductible and co-pay fees. Supplemental health insurance is usually inexpensive but has very low limits on what it will pay out.
Subsidy An amount of money provided by the government to help pay for some good or service. Subsidies are used to fund projects that provide some public good but are too expensive under free market conditions.
Students Loans A type of loan taken out by a student to finance their education. Student loans are often subsidized by the government, and the borrower only starts to make payments after they begin work after finishing school.
Structural Unemployment A type of unemployment caused just by the fact that there is sometimes time between when someone leaves one job and starts another job. Structural unemployment is considered unavoidable – which is why an unemployment rate around 3% is still considered “Full Employment”.
Strike Price A dollar value on an options contract that specifies the price for which it can be exchanged for the underlying stock. For example, a “call” option with a strike price of $10 could be executed to buy that underlying stock for $10, no matter what the current market price is.
Strategic Planning A management activity that sets long-term goals for a company for how they believe it should be positioned (between products offerings, staff, and organizational goals) at some point in the future. The activities of the company should be aligned with this strategic plan, rather than unfocused activities that may be pulling in different Read More…
Stored Value The value represented by money. For example, “one dollar” can be exchange for any number of goods, with most people having a strong idea of what value that represents.
Stop Order An order type that is used to protect against loss. With a buy-stop order, the order would execute if the stock’s price went above the stop price. With a sell-stop order, the order would execute if the stock’s price fell below the stop price.
Stock Split The act of a company dividing (or merging) shares of its stock. A stock split has no impact on the shareholder’s equity. One reason a company may issue a stock split is because the stock’s price has increased to a point where investors may have a hard time purchasing just one share, so Read More…
Stock Screener A tool used by an investor to filter down stocks by specific criteria that they are looking for in their portfolio and compare several stocks that meet those criteria. For example, a stock screener can filter down stocks from a specific sector, worth more than $10 billion dollars, and have at least a Read More…
Stock Options A contract that gives the buyer the right, but not obligation, to buy a stock at a specific price at any time before the specified expiration date.
Stock Market Crash Of 1929 An event in the fall of 1929 when the stock prices on the New York Stock Exchange rapidly fell over a short time – losing nearly 25% of its value in just 2 days. There were many causes of the initial panic, but as prices started to fall it caused Read More…
Stock Market See “Stock Exchange”.
Stock Index A number that represents the combined value of several (usually dozens or hundreds) of stocks in a stock market’s prices. A stock index is used to measure how much the market as a whole is rising or falling. The S&P 500 is the most widely cited stock index.
Stock Exchange An organized place of exchange where investors buy and sell stock in publicly traded companies. Stock exchanges are very highly regulated to ensure investors have equal information and trading occurs under fair conditions.
Stock Crash A situation where investors broadly lose confidence in stock prices and try to sell all at once, causing the prices across an entire stock market to rapidly fall over a short period of time. This can be triggered by poor broad economic news, or a short-term panic by investors.