B shares are a type of mutual fund share.  They are distinguished from A shares and C shares by their load (fee) structure.B shares have a "back-end load."  This means that the entir...

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Baby bells refer to the telephone companies that were created after the U.S. government required AT&T to divest assets in 1984 as part of a settlement for violating antitrust laws.In the early 198...

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A Baby Berkshire is a Class B share of Berkshire Hathaway (NYSE: BRK-B). The term also refers to the act of creating a portfolio of the same companies that Berkshire Hathaway invests in and then buyin...

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Baby bonds are bonds with a par value below $1,000. Additionally, the term also refers to savings bonds issued by the Treasury Department from 1935 to 1941. In the United Kingdom, the term r...

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A baby boomer is a member of the generation born between 1946 and 1964. The term baby boom refers to the increase in births after the end of World War II. Today, America’s 75 million baby boomers r...

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The baby boomer age wave theory, developed by economist Harry S. Dent, Jr., theorizes that the age of the baby boom generation can predict major changes in economic trends.A "baby boomer" is a...

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A back charge is an unpaid bill attributable to a prior period. For example, let's say that Company XYZ sells $1,000 worth of auto parts to Store ABC every month. Store ABC forgets to pay for its...

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A back door listing occurs when a private company acquires a publicly traded company and thus “goes public” without an initial public offering. For example, let’s assume that Compan...

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A back end load is a fee paid when an investor sells a specific investment. Back end load mutual funds are often referred to as "B Shares." Back end loads are expressed as a percentage, and they must...

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A back fee is associated with exercising a compound option. Many investors know that they don’t always have to make outright purchases or sales of securities; they can also use puts and calls. ...

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Also called a far month contract, a back month contract is a futures contract that has an expiration date that is the farthest beyond the next approaching expiration date (called the “front mont...

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Back months are the expiration dates of futures contracts that fall furthest from the nearest expiration date.   For example, let’s assume that John Doe wants to buy orange juice future...

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In the finance world, a back office processes the day-to-day paperwork and record-keeping associated with trades, confirmations, settlements and other financial transactions. For example, let’s...

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A back order is an order that cannot be filled in the usual time expected.   For instance, let’s assume John Doe purchases 10 tractors from a tractor dealer. The retailer has four on hand to ...

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A back stop is a person or entity that purchases leftover shares from the underwriter of an equity or rights offering. For example, let’s assume that Company XYZ is going public. It plans to is...

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Back taxes are state, federal, or local taxes that are past due. For example, let’s assume that John Doe forgets to file his tax return for 2011. He does not file for an extension past the Apri...

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With back to back loans two parties, each in a different country, lend money to each other in an effort to hedge against currency risk. They are also called "parallel loans." Company XYZ is in the Un...

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A back up is an increase in a security’s price, yield, or spread before issuance. In other circles, back up means replacing a long-maturity security with a short-maturity security in order ...

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Back up the truck is slang for bullish sentiment about a market or security. In the transportation world, drivers often back up the truck when they’re getting ready to get a load from a warehou...

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Banks use the back-end ratio to determine whether a mortgage applicant is a good credit risk. The formula for the back-end ratio, generally, is: Back-End Ratio = (All monthly loan payments +...

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Slang for a draft business model. Ideas often strike in odd places, and more than one entrepreneur has found himself jotting business ideas on any available surface -- including table napkins. Typica...

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A back-stop purchaser buys leftover shares from the underwriter of an equity or rights offering. Company XYZ is going public. It plans to issue 10 million shares in an initial public offering. It...

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Back-to-back letters of credit occur when a buyer gives a letter of credit to a seller, who then obtains a letter of credit for a supplier. A letter of credit is a bank's written promise that it ...

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In the finance world, backdating usually refers to the practice of changing the dates of option grants to one that is earlier than the actual grant date in order to place a lower exercise price on the...

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In the merger world, a backflip takeover occurs when an acquirer becomes a subsidiary of its target. For example, let's assume that Company XYZ is acquiring Company ABC, which is smaller. Company...

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An accounting method whereby the costs associated with producing a good or service are recorded only after the good or service is actually produced, completed or sold. For example, let's assume that ...

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Backing away occurs when a market maker does not honor a quoted bid or ask price for a minimum quantity of a particular security.   John Doe wants to buy 1,000 shares of Company XYZ. The market...

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Frequently used in manufacturing industries, backlog refers to unfinished work or to customer orders that have been received but are either incomplete or in the process of completion.Let's assume ...

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Backorder costs are associated with not being able to fill an order.   Company XYZ sells widgets. On Black Friday, it offers 30% off all widgets online, and it receives an unprecedented nu...

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Backpricing is a method for pricing commodities, whereby the buyer and seller agree to buy/sell a commodity but set the price at a later date. For example, let's assume that John wants to buy som...

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A backspread is a trading strategy whereby the investor buys a set of options with one strike price and sells a similar set of options with a lower strike price. For example, John Doe wants to adopt ...

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Backtesting is the process of applying a trading strategy or analytical method to historical data to see how accurately the strategy or method would have predicted actual results.For example, let'...

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A backup line is a bank promise that a commercial paper issuer will repay the maturing debt. For example, let’s assume Company XYZ wants to issue $10 million in commercial paper. The commercial...

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Backup withholding is a way for the Internal Revenue Service to withhold taxes from a taxpayer who does not provide or have a taxpayer identification number or Social Security number. In general, the...

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Backward integration refers to a company buying or internally producing parts of its supply chain. For example, let's assume that Company XYZ manufactures widgets. It needs 10 pounds of punched p...

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Backwardation describes a downward sloping forward curve in a commodity market. This means that as the price of a commodity for future delivery is lower than the spot price -- the price of a commodity...

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A bad bank is a new company created to buy poorly-performing assets from another bank. For example, let's assume that Bank XYZ has made an extraordinary number of loans to borrowers who can't...

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A bad check is a check written on an account that doesn't have enough funds to cover the amount of the check. For example, let's assume that John has $1,000 in his checking account today. He ...

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In business, bad debt is the portion of a loan or portfolio of loans a lender considers to be uncollectable. In personal finance, bad debt generally refers to high-interest consumer debt.For example, ...

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Bad debt expense is the portion of accounts receivable that became uncollectable during a given period. Let's assume that Company XYZ sells $1,000,000 worth of goods to 10 different customers. &#...

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Bad debt recovery is when a company is able to collect a payment that was previously classified as a bad debt.  Let's assume that Company XYZ sells $1,000,000 worth of goods to 10 different ...

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Bad debt reserve, also called an allowance for doubtful accounts (ADA), is a reduction in a company's accounts receivable. The bad debt reserve is the amount of receivables that the company does n...

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Bad paper refers to uncollateralized bonds (typically with short maturities) that are poorly rated and at high risk of default. For example, let's assume Company XYZ is teetering on the verge of ...

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Badwill is essentially damage to a company's reputation.  For example, let's assume that Company XYZ becomes aware that one of its factories in the Pacific Northwest is not structurally ...

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A bag holder is a person whose investment has become worthless or almost worthless. The investor is left "holding the bag." For example, let's assume that John invests $10,000 in Start-Up...

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A bag man is a person who solicits contributions to political parties or political causes on behalf of someone else. Let's say that Company XYZ wants to fight the passage of a new law that would ...

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Baidu is a large search engine in China. The word translates to "hundreds of times." Its ticker symbol is BIDU. Founded in 2000, Baidu is tailored to Chinese users. Similar to Google, the sit...

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A bailee is a person who has been entrusted with custody of a piece of property. A bailee does not have ownership of the property. Let's say John Doe owns a big piece of farmland on the eastern shore...

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Bailee's customers insurance covers any damage or destruction that a bailee might do to a bailor's property.Bailment is a transfer of custody of property rather than a transfer of ownership of propert...

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Bailment is a transfer of custody of a piece of property rather than a transfer of ownership of a piece of property. For example, let's say John Doe owns a big piece of farmland on the eastern shore ...

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A bailout is financial help for ailing companies. Company XYZ is in the newspaper industry and has seen a dramatic downturn in its advertising sales. The company's board believes that if it can l...

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A bailout bond is intended to help ailing companies. Bailout bonds were most common in the 1980s and 1990s when many savings and loans were failing; they are less common  now. Company XYZ is in ...

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Bait and switch is a sales tactic that tricks consumers into buying something other than an advertised item. John Doe sees an ad in the paper for $1 orange juice at a local retailer. He goes to the s...

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A bait record is a fake file on a computer that is used to see whether anyone is improperly accessing data. Let's assume Company XYZ's magazine covers keep leaking to the competition before t...

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The balance of payments (BOP) reflects all payments and obligations to foreigners vs. all payments and obligations received from foreigners. It's a record of all financial flows in and out of a countr...

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Balance reporting is the act of communicating the balance in an account. Banks do balance reporting when a customer inquires about the balance in an account. For businesses, balance reporting is ofte...

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A balance sheet (also called a statement of financial position) is a statement that provides a snapshot of a company’s financial situation at a given date. It reports assets, liabilities, and sh...

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Balance sheet reserves, also known as "claims reserves", are accounting entries that reflect money a company sets aside to pay future obligations. Let's assume Company XYZ has to recall one of its pr...

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A balanced budget exists when a household's (or country's) revenues are equal to its expenses. For example, let's assume that John Doe and his wife Jane Doe earn $100,000 a year. Jane ana...

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A balanced fund is a mutual fund that generally keeps to a 50-50 mix of stock and bond investments. Balanced funds are one of two general types of income funds (the other type is equity...

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A balanced investment strategy is a method of portfolio allocation. Let's assume that John Doe has $500,000 in his portfolio. He does not want to take on too much risk but is worried about not ta...

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A balanced scorecard is a way to measure business performance. To make a balanced scorecard, company leaders select a set of measurements. These measurements evaluate a variety of things, all of whic...

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In the bond world, balloon interest is an increase in the coupon rate of a bond issue corresponding to the maturity of the bond. Serial bonds often use balloon interest. To understand balloon interes...

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A balloon loan is a loan with a large payment made near or at the end of the loan term. Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally d...

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A balloon maturity is a the date on which a large payment is due, usually at or near the end of a loan term.In the bond market, a balloon maturity refers to the idea that a large portion of an issuer'...

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A balloon mortgage is a mortgage with a large payment made near or at the end of a loan term. Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally durin...

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A balloon payment is a large payment made at or near the end of a loan term. Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally during the life of the...

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A ballot reflects a shareholder's vote on a corporate decision. Most corporations have an annual shareholders meeting in which shareholders come to listen to presentations by the company's ma...

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A ballpark figure is an estimate. Let's say John Doe is at a cocktail party and meets Jane Smith, who runs a contracting company. John mentions that he wants to have his driveway repaved but does...

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The bandwagon effect is when people go along with what everyone else is doing. Let's say Fruit Computers launches a cellphone that is popular with hipsters. It even talks. Because the product is ...

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A bank card is a plastic card issued by a financial institution that allows the user to make purchases with funds either borrowed from or held at that financial institution. The most common bank card...

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A bank card association is a company owned by one or more financial institutions that licenses credit card programs. The two most popular bank card associations are Visa and MasterCard. They license ...

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Bank credit is an amount of funds that a person or business can borrow from a bank. All kinds of things can be bank credit: mortgages, credit card accounts and even overdraft lines. Added together, t...

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Bank debits are reductions in customer accounts. Let's say you write a check at Target for $50. Your bank, Bank XYZ, will debit your account by $50. This is a bank debit. Your bank may also debit...

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In the finance world, a bank deposit is the placement of funds in an account with a bank. In the banking world, there are two general types of deposits: demand deposits and time deposits. Demand depo...

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A bank deposit agreement, also called a Bank Investment Contract (BIC), is an agreement between a bank and an investor where the bank provides a guaranteed rate of return in exchange for keeping a dep...

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A bank deposit is the placement of funds in an account with a bank. There are two general types of bank deposits: demand deposits and time deposits. Demand deposits are the placement of funds into an...

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A bank draft is a check that a bank guarantees. Bank drafts are not common in the United States; they are more popular in Britain. The concept is similar to that of a cashier's check. To obt...

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A bank efficiency ratio is a measure of a bank's overhead as a percentage of its revenue. The formula varies, but the most common one is: Bank Efficiency Ratio = Expenses* / Revenue *not includ...

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A bank endorsement is an assurance that it will stand behind a check or other negotiable instrument that one of its customers creates. Let's say you want to buy 1,000 cars from a Canadian wholesa...

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A bank examination is a regular process of ensuring that a bank or lending institution is financially stable and obeying regulations while avoiding excessive risk. The CAMELS is a system used to rate ...

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A bank failure occurs when a regulator closes an insolvent bank. An insolvent bank can't meet its obligations to depositors (e.g., it doesn't have the money to meet withdrawal demands) or to credi...

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Based in Basel, Switzerland, the Bank for International Settlements (BIS) acts as a bank for central banks around the world.The BIS's main role is setting capital adequacy requirements and ensurin...

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A bank guarantee is a promise from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. note that a bank guarantee is not the same as a l...

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A bank holiday is a day on which a bank or banking system is closed. In the United States, banks and financial markets generally cannot be closed for more than four calendar days in a row, which puts...

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A bank identification number (BIN) identifies and verifies parts of a bank transaction. For example, when you purchase something with your Visa card, the vendor and the payment processor receive a si...

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A bank investment contract (BIC), also sometimes called a Bank Deposit Agreement, is an agreement between a bank and an investor whereby the bank provides a guaranteed rate of return in exchange for k...

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Also called the federal discount rate, the bank rate is the interest rate at which a bank can borrow from the Federal Reserve.   To understand the bank rate, it is important to understand tha...

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A bank reserve is a portion of a bank's deposits that are set aside in a liquid account to ensure that the bank has enough cash on hand to fulfill withdrawal requests. Reserve requirements are Fe...

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A bank run occurs when a flood of depositors withdraws funds from a bank within a short time frame. It’s important to remember one thing about banks: They don’t keep your money in cash in...

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Bankmail is a bank's promise that it will finance a company's takeover bid and not help the other bidders. Let's say Company XYZ wants to buy Company ABC. Three other companies are also i...

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Bankruptcy is a legal process under which a borrower protects and/or liquidates assets in order to repay debts. In general, there are three "types" of bankruptcy, each named after a section o...

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The Barclays Capital U.S. Aggregate Bond Index is the most common index used to track the performance of investment grade bonds in the U.S.The Barclays Capital U.S. Aggregate Bond Index is weighted ac...

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Also called negative goodwill, a bargain purchase occurs when a company buys an asset for less than its fair market value. Negative goodwill is the opposite of goodwill. For example, let’s assu...

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A barrel of oil equivalent (or BOE) is a unit measure of unused energy resources. Expressed frequently in the financial statements of energy companies, BOEs are defined by the U.S. Internal Revenue Se...

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A barter (or bartering) is an exchange between two parties using goods and services for payment instead of currency. The barter system enables two parties to exchange goods or services based on mutua...

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Basis refers to the original price of an asset. It is sometimes called cost basis or tax basis. Let's assume you purchase 100 shares of Company XYZ stock for $5 per share and you pay a $10 commis...

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A basis point is one hundredth of one percent. There are one hundred basis points in one percent. Let's say Bank XYZ pays 2.54% interest on its savings accounts. A month later, it raises the rate ...

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A basis point is the smallest measure used in quoting yields on fixed income products. Basis points also pertain to interest rates. One basis point is equal to one one-hundredth of one percentage poin...

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In economics, a basket of goods is a group of items used for price comparisons or other analytical purposes. The consumer price index (CPI) is the most common measure of price levels. The CPI measure...

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A bear has a negative outlook on the market (belief that the value of an asset or market will decrease). Investors generally fall into two mindsets: those with an optimistic outlook who foresee prosp...

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A bear market is a period of several months or years during which securities prices consistently fall. The term is typically used in reference to the stock market, but it can also describe specific se...

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A bear spread is a strategy used in options trading. A trader purchases a contract with a higher strike price and sells a contract with a lower strike price. This strategy is used to maximize profit o...

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A bearish engulfing pattern occurs in the candlestick chart of a security when a large black candlestick fully engulfs the small white candlestick from the period before. This pattern usually occ...

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A bearish harami refers to a stock market trend indicating that the value of a stock is likely to experience a downwards, or bearish, momentum following a period of upward, bullish movement.In technic...

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Beginning inventory refers to the value of goods that a company has for its use or sale at the start of an inventory accounting period.Say Company XYZ produces 5,000 units during the course of a year ...

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Behavioral finance combines social and psychological theory with financial theory as a means of understanding how price movements in the securities markets occur independent of any corporate actions.S...

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The Beige Book is the informal name for the Federal open Market Committee's (FOMC) ongoing reports titled Summary of Commentary on Current Economic Decisions by Federal Reserve District.The purpos...

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A bellwether is a security or indicator that signals the market's direction.Let's assume Company XYZ is an auto manufacturer. If Company XYZ's stock typically falls before the rest of the ...

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In the finance world, a company goes belly up when it declares bankruptcy or goes out of business. Let’s assume Company XYZ’s stock falls from $10 per share to 50 cents per share due to a...

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In the bond world, below par means "below face value." Face value is the amount the issuer promises to pay the bondholder when the bond matures. Let's assume Company XYZ issues $10 m...

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Belt and suspenders is a term to describe a risk-averse person or situation. The term refers to the act of wearing redundant items to hold up a pair of pants.   For example, let's assume J...

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A benchmark is a feasible alternative to a portfolio against which performance is measured.Let's assume you compare the returns of your stock portfolio, which is a broadly diversified collection o...

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The beneficial owner is the individual or entity that enjoys the benefits of owning an asset, regardless of whose name the title of the property or security is in. Beneficial ownership commonly ...

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A beneficiary is any person or organization that receives assets from a person after that person’s death. For example, let's say John Smith dies and his will indicates that his two children, S...

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The best ask is the lowest price offered by a stock's market makers. For stocks, the best ask is quoted in dollars. For bonds, the best ask is quoted as a percentage of face value or (for Treasuri...

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The best bid is the highest price offered by a stock's market makers to buy a security. For stocks, the best bid is quoted in dollars. For bonds, the best bid is quoted as a percentage of face val...

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Best efforts is a legal agreement between a securities underwriter (usually an investment bank) and a securities issuer, whereby the underwriter agrees to do the best it can to sell as many of the iss...

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Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous ...

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The best-price rule refers to Securities and Exchange Commission (SEC) Rule 14d-10. This rule requires an entity making a tender offer for a certain class of shares to make the same offer to all ...

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Beta is a measure of a stock's volatility relative to the overall market. It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month per...

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The Better Business Bureau (BBB) was born out of so-called ‘vigilance committees’ which arose in the early 1900s to correct advertising abuses and help facilitate consumer trust in the marketplace...

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The bid price is the highest price that a prospective buyer is willing to pay for a specific security. The "ask price," is the lowest price acceptable to a prospective seller of the same secur...

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Bid size is the number of shares a buyer is willing to purchase at a given price. For bond trading, bid size is measured in dollars.Let's assume you place an order to purchase 100 shares of Compan...

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The bid-ask spread (also known simply as "the spread") is the difference between a security's bid price and its ask price. Let's assume you are watching Company XYZ's stock. If the bid price is $50 a...

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A big box store is a large company that is more efficient but less specialized than other firms in a particular niche or industry.Wal-Mart is a classic example of a big box store. By being cheaper, bi...

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A bill of lading is like a receipt -- it is an acknowledgement of the receipt of goods. A carrier often gives a shipper a bill of lading and an invoice when it is moving goods for the shipper. Compan...

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Black is slang for profit. Profit, also called net income, is the amount remaining after all costs, depreciation, interest, taxes, and other expenses have been deducted from total sales. Profit is als...

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In the investing world, Black Friday refers to the gold crisis of September 24, 1869. It sometimes also refers to the New York Stock Exchange crash of September 19, 1873.   In the retail world,...

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A black market is the illegal purchase and sale of goods and services. Drug dealing is one of the most prominent black markets in the United States. In this black market, people buy and sell drugs kn...

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Black Monday, also called "The Crash of 1987," refers to the 509-point fall in the Dow Jones Industrial Average on October 19, 1987. It also refers to October 28, 1929, when the DJIA fell 12.8...

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Black Thursday refers to October 24, 1929, when panicked sellers traded nearly 13 million shares on the New York Stock Exchange (more than three times the normal volume at the time), and investors suf...

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Black Tuesday, also known as the Wall Street Crash of 1929, was the worst stock market crash in US history. Black Tuesday was an abrupt end to the rapid economic expansion of the roaring 20’s, a...

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The Black-Scholes model is a formula used to assign prices to European options.The model is named after Fischer Black and Myron Scholes, who developed it in 1973. Robert Merton also participated ...

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A blackout period is a time period of roughly 60 days during which a company's employees are unable to make changes to their savings or retirement plans.Nearly every organization offers employees ...

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Blank check preferred stock refers to the issuance of a class of preferred shares where the board of directors has authority determining voting rights, dividends, and conversion without separate share...

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Blanket bond refers to insurance coverage carried by banks and brokerage houses that protects against any losses incurred by unlawful or dishonest activity on the part of employees. It is also ca...

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A blend fund, also called a hybrid fund, is a mutual fund composed of a combination of securities from different asset classes designed to increase diversification with just a single fund.A blend fund...

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A blue chip is a nationally recognized, well-established and financially sound company. The term comes from blue poker chips, which have the highest value in the game. Blue chip companies have severa...

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Blue sheets are petitions for information from the Securities and Exchange Commission (SEC) to investment companies whose trading activity has resulted in significant price movements.Blue sheets are r...

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Blue sky laws require the registration of brokers, brokerage firms and investment professionals in order to provide transparency of financial offerings and protect investors from investment fraud. Eac...

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A blue-chip stock is a stock of an established company that has consistently shown qualities like generating consistent earnings, paying generous dividends or increasing revenue.Blue-chip stocks ...

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A "Bo Derek" is a so-called perfect investment. The term comes from the 1979 movie "10," starring the actress Bo Derek, who depicted "the perfect woman." The term is less comm...

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A board of directors consists of elected individuals who serve as advisors to a corporation and act as a proxy (representative or substitute) for shareholders. Both for-profit and nonprofit corporatio...

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The Board of Governors is the decision-making body at the Federal Reserve. The Federal Reserve system is the United States' central bank. It manages the economy's money supply, regulates the ...

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A boardroom is a place in which a board of directors meets. A board of directors is a team of people elected by a corporation's shareholders to represent the shareholders' interests and ensur...

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A boiler room is a call center in which salespeople call potential investors in an attempt to sell risky, or even falsified, investment opportunities using aggressive and unethical tactics.The term ca...

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Bollinger Bands are used as a technical analysis indicator. They are formed by using a 20-day moving average as a centerline and then tracing two bands, each one standard deviation wide, on either sid...

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A bond is an agreement between an investor and the company, government, or government agency that issues the bond. When investors buy a bond, they are loaning money to the issuer in exchange for i...

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The bond equivalent yield (BEY) is a formula that allows investors to calculate the annual yield from a bond being sold at a discount.The bond equivalent yield enables investors to compare the yield o...

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A bond fund is a mutual fund or exchange traded fund (ETF) composed of bonds.Bond funds come in many shapes and sizes. Some of the major bond-fund categories are:U.S. Treasury bond fundsMunicipal bond...

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A bond ladder is an investment strategy whereby an investor staggers the maturity of the bonds in his/her portfolio so that the bond proceeds mature and can be reinvested at regular intervals. For ex...

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A bond option is a derivative contract that allows investors to buy or sell a particular bond with a given expiration date for a particular price (strike price). For example, a call bond option h...

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A bond quote refers to a bond's market price.The market prices of bonds are quoted as a percentage of the bonds' par value. Bonds issued by companies are quoted in increments of 1/8th (0.125) ...

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A bond rating is a "grade" assigned to a bond. These ratings can also be assigned to bond issuers, insurance companies or other entities or securities to indicate riskiness. Bond rating agencies like...

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A bondholder is a person who owns a bond issued by a borrower, typically a company or a government. They are considered a creditor of a company. A bond represents a loan agreement between an issuer a...

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The meaning of book value varies, depending on the context. When referring to assets, the term book value means the original cost of an asset minus accumulated depreciation. However, when refer...

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Book value of equity per share, abbreviated as BVPS, is a company’s available equity to common shareholders apportioned by the number of outstanding common shares. "Book value” is based on the ...

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A book-entry savings bond is a savings bond issued in electronic form rather than in paper form. Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to $10,000....

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Book-entry securities are securities issued in electronic form rather than in paper form. The commercial book-entry system is a system whereby the investor's ownership of the security is reflected...

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A company's book-to-bill ratio measures the company's number of outstanding orders as compared with the number of shipped or fulfilled orders. The book-to-bill ratio is a valuable tool for mea...

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Bootstrapping refers to the efforts of an entrepreneur to start a business using his own assets as the source of capital.Bootstrapping can also refer to a highly-leveraged transaction when an investor...

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Bottom fishing is an investment strategy in which investors seek out securities whose prices have recently dropped and are considered undervalued.Investors that engage in bottom fishing, called &ldquo...

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The bottom line represents the number of sales dollars remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a ...

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Bottom-up investing focuses on individual securities rather than on the overall movements in the securities market or the prospects of particular industries.Taking a bottom-up approach to investing me...

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When a check is refused by a bank and returned to the person who wrote it due to insufficient funds, it is called a bounced check.Checks should be written for an amount that is less than or equal to t...

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The Bovespa Index tracks around 50 stocks traded on the São Paulo Stock, Mercantile & Futures Exchange. The term Bovespa is derived from BOlsa de Valores do Estado de São Paulo, the Portuge...

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In the tax world, bracket creep occurs when inflation drives income up and into higher tax brackets. Let's say John Doe makes $100,000 a year and is in the 28% federal income tax bracket. Let'...

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Brady bonds are U.S. Treasury bonds issued by developing countries in an effort to reduce these countries’ external debt.Named for former U.S. Treasury Secretary Nicholas Brady, Brady bonds were...

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A break-even analysis is a calculation of the point at which revenues equal expenses. In securities trading, the break-even point is the point at which gains equal losses. The basic idea behind doing...

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In accounting, economics, and business, the break-even point is the point at which cost equals revenue (indicating that there is neither profit nor loss). At this point in time, all expenses have been...

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The break-even price is when the money received from the sale of a product covers the expenses associated with producing that product. The basic idea behind a break-even price is to calcula...

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In the mutual fund world, a breakpoint is the size of an investment that qualifies the investor for a lower load. Let's assume you are interested in making a $10,000 investment in the Company XYZ ...

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Under the Bretton Woods Agreement of 1944, the world's allied industrial countries established a fixed currency exchange rate based on the gold standard.  The Bretton Woods Agreement als...

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Brick and mortar is a term used to describe physical locations or outlets, typically in retail or other consumer facing businesses. The use of the term “brick and mortar” has evolved over the last...

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A bridge loan is a short-term, high-interest loan that provides a quick source of cash for commercial or individual needs.  It is called a bridge loan because it serves as a bridge between one pe...

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Broken dates, also known as "odd dates," are arbitrary maturity dates that do not necessarily match the duration of the bond, option, futures contract, forward contract or other maturing instrume...

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A broker is a person or a company that acts as an intermediary between buyers and sellers. Brokers exist not just in the financial markets, but in the real estate market, the commodities market, the a...

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A broker loan is a loan that the lender can obligate the borrower (a brokerage house) to repay at any time. Also known as a call loan or demand loan, a broker loan is granted to a brokerage house in ...

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A broker of record is an insurance agent who manages an insurance policy with a carrier on behalf of a policyholder. Let's assume John Doe buys a whole life insurance policy. He hires Nancy Smith to ...

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A broker-dealer is an individual or company that buys and sells securities for its clients and for itself. Broker-dealers differ from plain-vanilla brokers, which can only buy and sell for their clien...

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A brokerage fee compensates a broker for executing a transaction. It is usually, but not always, a percentage of the transaction value. In finance, stockbrokers most often come to mind, but real estat...

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A brokered certificate of deposit (a brokered CD) is a CD sold by a brokerage firm.A CD is a time deposit with a bank or financial institution. The investor agrees to leave the deposit with the instit...

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The Buffett Rule is a tax rule change included in President Barack Obama's 2013 budget proposal. If implemented, the rule would ensure that individuals who earn more than one million dol...

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A bull has a positive outlook on an asset class or an entire market. In investing terminology, bull is the opposite of bear. Investors have perceptions and expectations about the securities markets a...

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A bull market is a period of several months or years during which asset prices consistently rise. The term is usually used in reference to the stock market, but it can describe specific sectors s...

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The bull/bear ratio indicates overall investor sentiment in the market by comparing the number of bullish and bearish investors. This market indicator is calculated and published weekly by the Investo...

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Bullet is usually short for bullet payment, which is typically a large payment made near the end of a loan that does not amortize over time. Unlike a loan whose total cost (interest and principal) is...

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A bullet loan is a loan that does not amortize over time and must be repaid with a single large payment (also called a balloon payment) at the end of the term of the loan.Unlike a loan whose total cos...

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A bullish engulfing pattern occurs in the candlestick chart of a security when a large white candlestick fully engulfs the smaller black candlestick from the period before. This pattern usually o...

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A bump-up certificate of deposit (CD), also called a step-up CD, is a certificate of deposit that allows the owner to “bump up” the interest rate if rates should rise during the CDs’ holding per...

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The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor is a Federal agency that measures and reports labor market activity, working conditions and price changes in the economy.The Bureau...

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The Bureau of Public Debt is responsible for borrowing the money needed to run the U.S. government. They are also responsible for tracking the total amount of U.S. soverign debt. The Bure...

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Burn rate is the amount of time it will take a company to exhaust its capital cushion. Burn rate is usually expressed in terms of cash burned per month, but can be expressed according to any time...

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The business cycle refers to an economy's periodic patterns of growth, recession, and recovery.An expanding economy is characterized by low unemployment, high productivity, and high consumer spend...

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Business development company (BDC) is a designation specific to public firms that invest in small, upcoming businesses. BDCs hope their stakes in the businesses will increase in value as the business ...

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A business model helps shape a company's marketing and sales plans, its growth potential, and its ability to attract investors. Investors use business models to assess a company’s profit potenti...

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Buy and hold is an investment strategy whereby an investor holds securities for the long-term, regardless of short-term market fluctuations.Let's assume you have $100,000 to invest. Based on your ...

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A buy limit order is an order to purchase a security at or below a given price. Let's assume you want to buy 100 shares of Company XYZ, but you don't want to pay more than $5 per share for th...

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Firms that buy securities and assets for their own or their clients' accounts are said to be on the buy side. Institutional investors like mutual funds, pension funds, hedge funds, private equity ...

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A buy-write is an options strategy whereby an investor writes (sells) a call option at the same time he/she buys the underlying.In a buy-write, which is very similar to a covered call, an investor sel...

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A buydown, also known as paying points, is a way to lower the interest rate on a mortgage. Let's say John Doe wants to borrow $100,000 to buy a house from Jane Smith. The lender says the interest...

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A buyer's market exists when there are more sellers than buyers in the market for a certain good or service. Housing is a common place to find a buyer's market. Let's say that ABC Town ha...

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Buying on margin refers to borrowing from a brokerage firm (through a margin account) to make an investment. You want to buy 1,000 shares of Company XYZ for $5 per share but don't have the necessa...

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In the financial world, the phrase "buying power" has two meanings. One is the amount of money a person can use to invest in securities (and that can include  money the investor borrows i...

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A buyout is the purchase of at least 51% of a company. Under a buyout, the previous ownership loses control over the company in exchange for compensation.The buyout process usually begins when an...

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Buzzword Bingo is a game involving business jargon. Buzzword Bingo is a lot like regular bingo, in which a caller draws random numbers and players vie to be the first to match them in a row, column o...

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A bypass trust, also called a "credit shelter trust", is a method of passing assets to beneficiaries without subjecting those assets to estate taxes. Let's say John Doe owns a horse farm wo...

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