The Most Comprehensive Financial Dictionary with over 1000 Financial Terms Explained - Clear and Concise Article Style Description with Practical Examples
Financial Words Starting with A 2017-08-15T10:43:01+00:00
AAA Rating
AAA Rating refers to the maximum potential credit rating that a credit ratings bureau can award to an issuing entity’s bonds. Such a credit rating represents a superb level of creditworthiness. It means that the issuing entity is easily capable of meeting its various financial obligations. The three major ratings agencies of Moody’s, Standard & Poor’s, and Fitch Ratings all [...]
Absorption Rate
Absorption rate is a term used in real estate. It represents the speed with which homes available in a real estate market are sold in a certain amount of time. Real estate professionals figure out this absorption rate by taking the number of houses that are available and dividing this by the average number of sales in a month. The [...]
Accountants are professional financial personnel whose careers are centered on dealing with money and figures. Their responsibilities cover compiling financial records, certifying them, and recording them for businesses, individuals, government organizations, and not for profit organizations. As such, they track a company or individual’s money through the development of reports. Managers of companies and organizations and other individuals read these [...]
An acquisition refers to a corporate act where it purchases either controlling interest or complete interest in another company. Companies do this by buying out the stock shares in order to gain control of it. Technically, acquisitions happen as the buyer is able to acquire an over 50 percent ownership stake in the target firm. Typically the acquirer will buy [...]
Ad Valorem Taxes
An ad valorem tax refers to taxes that governments assess on an item like personal or real estate property. While the most usual types of such taxes prove to be real estate transaction levied ones, they can also be issued on other kinds like foreign goods in the form of import duties. Such real estate taxes are usually one of [...]
Adam Smith
Adam Smith wrote the economic and political world shaking book The Wealth of Nations. This book marked the original birth of free market economics. It also spelled the doom of mercantilism, the dominant economic system of the day. March 9, 1776 marked the publication of An Inquiry into the Nature and Causes of the Wealth of Nations that became known [...]
Adjustable Rate Mortgage (ARM)
Adjustable Rate Mortgages, also known by their acronym ARM’s, are those mortgages whose interest rates change from time to time. These changes commonly occur based on an index. As a result of changing interest rates, payments will rise and fall along with them. Adjustable Rate Mortgages involve a number of different elements. These include margins, indexes, discounts, negative amortization, caps [...]
Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) refers to a means of calculating income off of an individual’s actual gross income. People use this figure in order to determine the amount of their income which the Internal Revenue Service will subject to tax assessment. It is ultimately the United States tax code which creates this AGI figure. This number should never be confused [...]
An Affidavit is a declaration in writing which includes a sworn oath or positive confirmation that written contents are factual and true. These declarations and statements could be made related to court cases. They also could be made to support an important document as with mortgage applications or tax returns. Though many people may not be aware of it, a [...]
Agency Bonds
Agency bonds are those bonds that are actually issued by United States’ government sponsored entities. This means that these bonds are not government guaranteed, as they are created by private companies. They are backed up implicitly by the United States government, since these organizations were created to permit some categories of individuals to have the ability to receive lower cost [...]
Alan Greenspan
Among the various Chairmen of the Board of Governors for the Federal Reserve System over the years, Alan Greenspan stands out as a living legend. He began his nearly two decade term as Federal Reserve Chairman on August 11, 1987 and then served all the way through January 31, 2006. An unprecedented four different sitting presidents appointed Alan Greenspan as [...]
Algorithmic Trading
Algorithmic trading has many names. Users also know it as black box trading and algo trading. This system of trading works with complicated and highly advanced mathematical formulas. It takes these models and engages in rapid decisions to execute transactions in various financial markets. This type of trading is only possible with super fast computers and programs. It combines these [...]
American Bankers Association (ABA)
The American Bankers Association, or ABA, is a trade association of the U.S. banks large and small conveniently located in Washington, D.C. This powerful lobbying organization hails back to 1875 when it was established by several bankers. Today, the ABA has grown to represent banks of all stripes and sizes and encompasses more than 95% of all bank assets in [...]
American Express
The American Express Company proves to be the New York City headquartered multinational financial services outfit. It was established in 1850 and today is among the 30 constituents of the Dow Jones Industrial Average. The company is world renowned for its various traveler’s checks, chard card, and credit card businesses. The Amex cards make up around 24 percent of all [...]
American Institute of Banking (AIB)
The American Institute of Banking (AIB) is a venerable educational and training institution for the United States based banking industry which was established by the American Bankers Association (ABA) back in 1907. This AIB offers continuing training and a full range of banking career education for parties who are interested in the banking field or who are already participants within [...]
American International Group (AIG)
American International Group is one of the largest insurance companies in the world. It boasts over 90 million customers living in over 100 countries around the globe. The company has provided risk management and insurance services for customers for almost a hundred years. Today the company is changing to try to meet their clients’ needs better. They are simplifying the [...]
American Stock Exchange (AMEX)
The AMEX is the acronym for the American Stock Exchange. This exchange proves to be the third biggest such stock market in all of the United States when trading volume is considered, after the NYSE and the NASDAQ national exchanges. Located in the American financial center of New York, the AMEX carries around ten percent of every security that is [...]
The word amortization is one that is commonly utilized by financial officers of corporations and accountants. They utilize it when they are working with time concepts and how they relate to financial statements of accounts. You typically hear this word employed when you are figuring up loan calculations, or when you are determining interest payments. The concept of amortization possesses [...]
Angel Investor
An Angel Investor refers to an accredited investor (with over a million dollars net worth) which invests funds into entrepreneurs and smaller startups. These special investors are commonly from the friends or family of the entrepreneur. This capital which they deliver is often in the form of a lump sum one-time payment to help get the business going or to [...]
Annual Percentage Rate (APR)
The annual percentage rate, or APR, is the actual interest rate that a loan charges each year. This single percentage number is truthfully used to represent the literal annual expense of using money over the life span of a given loan. Annual percentage rate not only covers interest charged, but can also be comprised of extra costs or fees that [...]
Annual Percentage Yield (APY)
APY describes the amount of compound interest which individuals or businesses will earn in a given year (or longer time period). Investments in money market accounts, savings accounts, and CD Certificates of Deposit all pay out such interest. It is the annual percentage yield that demonstrates precisely the amount in interest individuals will receive. This is helpful for people or [...]
An annuity is an investment contract that an insurance company sells to individuals. This agreement promises that it will make a regular series and dollar amount of payments to the buyer. This can be either for the rest of his or her life or for a set amount of time. The payments out are typically made after the individual retires. [...]
Appraisals are professionally done estimates of a property’s real value. These are conducted by appraisers. Many things can have an appraisal done on them, including smaller items like artwork or jewelry, as well as larger things like businesses, commercial buildings, or homes. Appraisals are commonly required before many different transactions can be performed. In advance of getting a house, piece [...]
Appraised Value
Appraised Value refers to the property value evaluation from a certain frozen moment in time. Professional appraisers perform these appraisals when the origination process of the mortgage is underway. Lenders themselves typically select specific property appraisers to do them. It is the borrowers who are expected to pay for getting the appraisal. Home appraised value proves to be a critical [...]
Arbitrage refers to the practice of taking advantage of the price imbalances sometimes arising in two or even more markets. People who work in foreign money exchange run their whole businesses on this model. As an example, they look for tourists who require a rapid exchange of their cash for the local currency. Tourists agree to accept this local money [...]
Assessed Value
Assessed Value refers to the specific dollar value amount which a municipality assigns to a certain property. They do this for the purpose of determining the relevant taxes for the property and owner. These assessed valuations actually create a given residence’s tax purpose value. They do this through considering inspections and any comparable home sales in the area. Once this [...]
Asset Allocation
Asset allocation involves diversifying an investor portfolio into a variety of different assets based on the appropriate level of risk. This procedure has investors divide up their investments between varying types of assets. Among these might be stocks, real estate, bonds, and cash. The goal is to maximize the reward and risk balance using the investors’ own goals and scenarios. [...]
Asset Backed Security (ABS)
An Asset Backed Security is also known by its acronym ABS. This refers to a type of financial security. These are commonly backed up using either a lease, a loan, or receivables against company assets (which would not include either mortgage backed securities or real estate). With the world of investing, such ABS provide other choices for those who wish [...]
Asset Classes
Asset classes are different groups of securities which demonstrate characteristics in common, are governed by similar regulations and laws, and behave similarly in the markets. There are five principle classes which include equities (stocks), fixed income (bonds), money market instruments (cash equivalent), commodities (like gold and oil), and real estate (including land, houses, and commercial buildings), as well as some [...]
Asset Management
Asset Management refers to an organization, institution, or individual asset manager directing a client’s securities, assets, and cash. It is commonly a financial services company that will do this, and especially an investment bank like Morgan Stanley, Barclays, UBS, Julius Baer, or Goldman Sachs. Such a financial institution will provide highly researched and sought after investment advice and a wide [...]
Asset Protection
Asset Protection and planning refers to strategies and practices for protecting personal wealth. It happens through deliberate and involved planning processes that safeguard individuals’ assets from the potential claims of any creditors. Both businesses and individuals alike can employ these specific techniques to reduce the ability of creditors to seize personal or business property within the legal boundaries of creditor [...]
Assets are any thing that can be owned by a company or an individual person. These are able to be sold for cash. Commonly, assets produce income or give value to the owner. In the world of financial accounting, assets prove to be economic resources. They can be physical objects or intangible concepts that can be utilized and owned to [...]
Assets Under Management (AUM)
Assets under management (AUM) refer to the aggregate market value of all assets which an investment management firm or other financial institution (such as a bank) manages for its investor clients. The exact definition of AUM varies from one company to another. Each of them has their own distinctive proprietary formula for figuring up this all important statistic. There are [...]
Assumable Loan
An assumable loan is one that permits a home buyer to take over, or assume, a home seller’s contract on their mortgage. This is not permitted by every mortgage lender in the place of a typical home purchase. Loans that do not have Due On Sale clauses, such as the majority of VA and FHA types of mortgages, can usually [...]
An audit refers to a third party evaluation and review of a business or individual’s financial statements. The goal is to ensure that the financial records are both accurate and reflective of the transactions for the entity they represent. Such a review can be carried out by an external auditing firm or by accounting employees within an organization itself. There [...]
Austerity proves to be an unpopular group of government economic policies which a country engages in usually unwillingly in order to reign in public deficits and to reduce government owed debts. These drastic measures turn out to be the response from the government in question to their public debt which becomes so big that the default possibilities on debt service [...]
Australian Dollar
The Australian Dollar is the official national currency for the country of Australia. It is also considered to be one of the eight main trading and exchange currencies of the world, alongside the U.S. dollar, Eurozone euro, British pound sterling, Japanese Yen, Swiss franc, New Zealand Dollar, and Canadian Dollar. The most popular currency pair for the Australian dollars is [...]
Austrian Economics
Austrian Economics arose as a challenge to the then-dominant British tradition of economics originally championed by Adam Smith in his influential across the centuries work The Wealth of Nations. It was Carl Menger and his Principles of Economics published in 1871 that presented the first alternative to the Imperial British ideas on the workings of the free market system. Menger [...]
Automated Underwriting
Automated underwriting proves to be one of the biggest changes that has come to the mortgage lending business in the last several years. The process uses computers to handle the process of underwriting mortgage loans. There are numerous benefits to the concept. Among them are lower closing costs, quicker loan approvals, fewer requirements for documentation, and approval for applications which [...]