Definitions Starting with "B"

B Shares

B shares are a type of mutual fund share.   They are distinguished from A shares and C shares by their load (fee) structure. Read more

Babcock School of Management

The Babcock School of Management is the business school at Wake Forest University. Located in Winston-Salem, North Carolina, the Babcock School of Management offers a full-time MBA program with an emphasis on group learning. Read more

Baby Bells

Baby bells refer to the telephone companies that were created after the U. S. Read more

Baby Berkshire

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 buying and selling proportionately when Berkshire Hathaway buys and sells. Read more

Baby Bills

Similar to how the U. S. Read more

Baby Bonds

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. Read more

Baby Boomer

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. Read more

Baby Boomer Age Wave Theory

The baby boomer age wave theory, developed by economist Harry S. Dent, Jr. Read more

Back Charge

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. Read more

Back Door Listing

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 Company XYZ is a privately held company with 150 shareholders and $25 million in cash. Read more

Back End Load

A back end load (also known as a sales charge or an exit fee) is a commission or sales fee. Investors pay back end loads when selling their investments, which are commonly associated with mutual funds and annuities. Read more

Back Fee

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. Read more

Back Month Contract

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 month contract). For example, let’s assume that John Doe wants to buy orange juice futures. Read more

Back Months

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 futures. Read more

Back Office

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 assume you visit your broker in her office at 123 Main Street in Anytown, USA. Read more

Back Order

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. Read more

Back Stop

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. Read more

Back Taxes

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. Read more

Back to Back Loan

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. Read more

Back Up

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 to capitalize on short-term interest rates that are higher than long-term interest rates. Read more

Back Up the Truck

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 warehouse. Read more

Back-End Ratio

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 + requested loan’s monthly principal and interest payment + monthly property taxes on proposed real estate + monthly homeowners insurance premium)/Gross monthly income For example, let’s assume John Doe wants to get a $500,000 mortgage that comes with a principal and interest payment of $2,400. Read more

Back-of-the-Napkin Business Model

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. Read more

Back-Stop Purchaser

A back-stop purchaser buys leftover shares from the underwriter of an equity or rights offering. Company XYZ is going public. Read more

Back-to-Back Commitment

A back-to-back commitment is an agreement to buy a construction loan on a future date or make a second loan on a future date. For example, let’s assume that Company XYZ applies for a construction loan from Bank ABC. Read more

Back-to-Back Letters of Credit

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 will make a customer's (the holder) payment to a vendor (called the beneficiary) if the customer does not. Read more

Backdating

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 options and thus enhance the potential profits from the exercise of those stock options. The practice sometimes also occurs in the insurance industry, whereby policy issuers make the effective date of a policy (or claim) earlier than the application date in order to obtain a lower premium for the customer (or obtain better claim results). Read more

Backflip Takeover

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. Read more

Backflush Costing

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 Company XYZ manufactures widgets. Read more

Backing Away

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. Read more

Backlog

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 XYZ Company is able to manufacture 10,000 widgets per day. Read more

Backorder Costs

Backorder costs are associated with not being able to fill an order. Company XYZ sells widgets. Read more

Backpricing

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 some corn. Read more

Backspread

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 a backspread strategy for some Company XYZ calls. Read more

Backtesting

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's assume you devise a model that you think consistently predicts the future value of the S&P 500. Read more

Backup Line

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. Read more

Backup Withholding

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 employer or entity that is making payments to the payee must withhold a percentage in federal income taxes (about 28%) from their payments. Read more

Backward Integration

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. Read more

Backwardation

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 today. Read more

Bad Bank

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 pay them back. Read more

Bad Check

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. Read more

Bad Debt

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. Read more

Bad Debt Expense

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. Read more

Bad Debt Recovery

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 customers. Read more

Bad Debt Reserve

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 not expect to actually collect. Read more

Bad Paper

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 bankruptcy. Read more

Badwill

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 strong enough to withstand a mild earthquake. Read more

Bag Holder

A bag holder is a person whose investment has become worthless or almost worthless. The investor is left "holding the bag. Read more

Bag Man

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 regulate its industry. Read more

Bagel Land

"Bagel land" is a slang term that describes where investments go when their prices approach zero. For example, let's assume that Company XYZ's stock falls from $10 per share to $0. Read more

Bagging the Street

"Bagging the street" refers to the strategy of profiting from price changes created by block trades. For example, let's assume that Pension Fund ABC wants to buy 100,000 shares of Company XYZ. Read more

Baidu

Baidu is a large search engine in China. The word translates to "hundreds of times. Read more

Bail Bond

Bail is a set amount of money (or property) required to be paid by a defendant for release from custody, with the promise of returning for an appointed court date.

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Bailee

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. Read more

Bailee's Customers Insurance

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 property. Read more

Bailment

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 of Maryland. Read more

Bailout

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. Read more

Bailout Bond

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. Read more

Bait and Switch

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. Read more

Bait Record

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 they are published, causing competitors to scoop them on several stories. Read more

Balance of Payments (BOP)

The balance of payments (BOP) reflects all payments and obligations to foreigners vs. all payments and obligations received from foreigners. Read more

Balance Protection

Also called overdraft protection, balance protection is a feature on a checking account that prevents a customer from bouncing checks. A bad check is a check written on an account that doesn't exist or that has insufficient funds to cover the amount of the check. Read more

Balance Reporting

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. Read more

Balance Sheet

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 shareholder’s equity to provide an overview of what a company owns, what it owes, and what is left over for the owners. Read more

Balance Sheet Reserves

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 products and issue refunds to customers. Read more

Balanced Budget

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. Read more

Balanced Fund

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-income funds, which mostly invest in dividend paying stocks). Read more

Balanced Investment Strategy

A balanced investment strategy is a method of portfolio allocation. Let's assume that John Doe has $500,000 in his portfolio. Read more

Balanced Scorecard

A balanced scorecard is a way to measure business performance. To make a balanced scorecard, company leaders select a set of measurements. Read more

Balloon Interest

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. Read more

Balloon Loan

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 during the life of the loan -- a balloon loan's principal is paid in one sum at the end of the term. Read more

Balloon Maturity

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's bonds become due at the same time. Read more

Balloon Mortgage

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 during the life of the loan -- most or all of a balloon mortgage's principal is paid in one sum at the end of the term. Read more

Balloon Payment

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 loan -- a balloon loan's principal is paid in one sum at the end of the term. Read more

Ballot

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 management and to vote on key issues, such as whether to merge with another company, whether to re-elect certain board members, and other issues. Read more

Ballpark Figure

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. Read more

Baltic Dry Index (BDI)

The Baltic Dry Index (BDI) is a leading economic indicator that measures demand for dry bulk shipping services worldwide relative to supply.   Every business day, researchers for the London-based Baltic Exchange survey prices of booking cargo around the world and compile the Baltic Dry Index. Read more

Bandwagon Effect

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. Read more

Bank Card

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 cards are credit cards and debit cards. Read more

Bank Card Association

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. Read more

Bank Credit

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. Read more

Bank Debits

Bank debits are reductions in customer accounts. Let's say you write a check at Target for $50. Read more

Bank Deposit Agreement

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 deposit for a fixed amount of time (usually several months to several years). Bank deposit agreements are similar to guaranteed investment contracts (GICs) except that they are issued by banks rather than insurance companies. Read more

Bank Deposits

A bank deposit involves the placement of funds into an account with a bank. There are two general types of bank deposits: demand deposits and time deposits. Read more

Bank Draft

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. Read more

Bank Efficiency Ratio

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 including interest expense For example, if Bank XYZ's costs (excluding interest expense) totaled $5,000,000 and its revenues totaled $10,000,000, then using the formula above, we can calculate that Bank XYZ's efficiency ratio is $5,000,000 / $10,000,000 = 50%. Read more

Bank Endorsement

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 wholesaler on the Internet. Read more

Bank Examination

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 banks. Read more

Bank Failure

A bank failure occurs when a regulator closes an insolvent bank. An insolvent bank can't meet its obligations to depositors (e. Read more

Bank for International Settlements (BIS)

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 ensuring capital adequacy, which is one of the biggest challenges among central banks. Read more

Bank Guarantee

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 letter of credit (see the differences between those two below). Read more

Bank Holiday

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 some limits on the timing and quantity of bank holidays. Read more

Bank Identification Number (BIN)

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 six- to nine-digit ID number. Read more

Bank Investment Contract (BIC)

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 keeping a deposit for a fixed period of time (several months to several years). BICs are similar to guaranteed investment contracts (GICs) except that they are issued by banks rather than insurance companies. Read more

Bank Rate

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 that banks derive income from making loans. Read more

Bank Reserve

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 Federal Reserve rules that require banks and other financial institutions to keep a strict percentage of their deposits on reserve at a Federal Reserve bank. Read more

Bank Run

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 a vault. Read more

Bankmail

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. Read more

Bankruptcy

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 of U. Read more

Bargain Purchase

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. Read more

Barrel of Oil Equivalent (BOE)

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. Read more

Barter

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 mutually perceived value. Read more

Basis

Basis refers to the original price of an asset. It is sometimes called cost basis or tax basis. Read more

Basis Points (bps)

A basis point is the smallest measure used in quoting yields on fixed income products. Basis points also pertain to interest rates. Read more

Basket of Goods

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. Read more

Bear

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 prosperity, called "bulls," and those with a pessimistic outlook who foresee decline, called "bears. Read more

Bear Market

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 sectors such as real estate, bond or foreign exchange. Read more

Bear Spread

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. Read more

Bearish Engulfing Pattern

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 occurs during an uptrend and is believed to signal the start of a bearish trend in the security. Read more

Bearish Harami

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 technical analysis, stock market trends are calculated using a number of different methods. Read more

Beginning Inventory

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 and sells 2,000 units. Read more

Behavioral Finance

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. Suppose a lawsuit is brought against a tobacco company. Read more

Beige Book

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 purpose of the Beige Book is to provide information to FOMC members about the economic changes and conditions occurring in each of the 12 Federal Reserve districts. Read more

Bellwether

A bellwether is a security or indicator that signals the market's direction. Let's assume Company XYZ is an auto manufacturer. Read more

Belly Up

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 series of internal scandals and product failures. Read more

Below Par

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. Read more

Belt and Suspenders

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. Read more

Ben Bernanke

Ben S. Bernanke was the chairman of the United States Federal Reserve (the Fed) from 2006 to 2014. Read more

Benchmark

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 of small-cap stocks and is managed by Company XYZ, with the Russell 2000 index, which you feel is an accurate universe of feasible alternative investments. Read more

Beneficial Owner

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 refers to two situations: 1. Read more

Beneficiary

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, Sally and Joe, are listed as his beneficiaries. Read more

Best Ask

The best ask is the lowest price offered by a stock's market makers. For stocks, the best ask is quoted in dollars. Read more

Best Bid

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. Read more

Best Efforts

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 issuer’s securities as possible to the public.   A best efforts agreement does not guarantee that all of the securities in the issue must be sold. Read more

Best Execution

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 to the investor rather than the agent. Let's assume you place an order to buy 100 shares of Company XYZ stock. Read more

Best-Price Rule

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 the shareholders in that class. Read more

Beta

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 period. Read more

Better Business Bureau (BBB)

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. There are more than 100 independently incorporated local BBB organizations spanning the U. Read more

Bid Price

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 security. Read more

Bid Size

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. Read more

Bid-Ask Spread

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. Read more

Big Box Store

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. Read more

Bill of Lading

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. Read more

Bitcoin

Bitcoin is a digital currency. Though the name includes the word "coin", there are no actual coins. It exists only on the Internet.

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Black

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. Read more

Black Friday

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. Read more

Black Market

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. Read more

Black Monday

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. Read more

Black Thursday

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 suffered $5 billion in losses. The years preceding Black Thursday were filled with irrational exuberance. Read more

Black Tuesday

Also known as the Wall Street Crash of 1929, Black Tuesday 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. Read more

Black-Scholes Model

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. Read more

Blackout Period

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 non-taxable retirement savings option. Read more

Blank Check Preferred Stock

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 shareholder approval. The most common reason a company will issue blank check preferred stock is to create a "poison pill" whereby the rights associated with the stock make a takeover unattractive. Read more

Blanket Bond

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 called a blanket fidelity bond or a fidelity bond. Read more

Blend Fund

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 differs from a traditional fund, which usually focus exclusively on one asset class such as value stocks or highly rated domestic bonds. Read more

Blue Chip

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. Read more

Blue Sheets

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 requests from the SEC that are sent out to investment companies which have executed a trade that considerably affected the price of a security. Read more

Blue Sky Laws

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. Each state has its own blue sky law. Read more

Blue-Chip Stock

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 are shares of stock issued by companies which have a reputation for financial stability and a record of successfully weathering any economic condition. Read more

Bo Derek

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. Read more

Board Certified In Estate Planning (BCE)

The Board Certified in Estate Planning (BCE) certification is earned by brokers, advisors and financial planners who have demonstrated expertise in dealing with estate planning. In order to earn the BCE certification, you must first pass the BCE Credentialing Program offered by the Institute of Business & Finance (IBF). Read more

Board of Directors

Consisting of elected individuals who serve as advisors to a corporation, a board of directors acts as a proxy (representative or substitute) for shareholders. For-profit and nonprofit corporations – as well as some government agencies – have a board of directors. Read more

Board of Governors

The Board of Governors is the decision-making body at the Federal Reserve. The Federal Reserve system is the United States' central bank. Read more

Boardroom

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 ensure that the company's management acts on their behalf. Read more

Boiler Room

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 came about as a result of the high pressure sales environment it creates. Read more

Bollinger Bands

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 side of the moving average. Read more

Bond

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 interest and the return of principal at maturity. Read more

Bond Equivalent Yield (BEY)

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 of a short-term security purchased at a discount with that of a bond with an annual yield. Read more

Bond Fund

A bond fund is a mutual fund or exchange traded fund (ETF) composed of bonds. Bond funds come in many shapes and sizes. Read more

Bond Ladder

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 example, say you have $75,000 to invest. Read more

Bond Laddering

Bond laddering is a bond investment strategy whereby an investor staggers their portfolio with bonds according to their maturity so that the bond proceeds can be reinvested at regular intervals. For example, say you have $75,000 to invest. Read more

Bond Option

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 hedges that the value of a bond will increase at a future date. Read more

Bond Quote

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. Read more

Bond Rating

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. Read more

Bondholder

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. Read more

Book Value

When referring to assets, the term book value means the original cost of an asset minus accumulated depreciation. What Is the Book Value of a Company? The book value of a company is the company’s total assets minus its outstanding liabilities. Read more

Book Value of Equity Per Share (BVPS)

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 amount the company has invested in its assets, but not their current market value. Read more

Book-Entry Savings Bond

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. Read more

Book-Entry Securities

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 only in the investor's account records at his or her financial institution, brokerage firm or dealer. Read more

Book-to-Bill Ratio

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 measuring the strength of the technology sector. Read more

Bootstrapping

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 acquires a controlling interest in a company, financing the transaction by using the assets of the company as collateral for the loan. Read more

Bottom Fishing

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 “bottom fishers,” hunt for securities that they believe are undervalued in the market or that recently have experienced a significant price drop. Read more

Bottom Line

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 company's total revenue.   The bottom line is also referred to as net income, net profit, or net earnings. Read more

Bottom-Up Investing

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 means becoming fully familiarized with the company you are considering investing in. Read more

Bounced Check

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 the checking account balance at the time the check is deposited or cashed by the recipient. Read more

Bovespa Index

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 Portugese name for the exchange. Read more

Bracket Creep

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. Read more

Brady Bonds

Brady bonds are U. S. Read more

Breadth of Market Theory

Breadth of market theory refers to a concept that the number of securities rising or falling in a market can predict the future strength of that market. The breadth of market theory is employed in technical analysis to predict market strength. Read more

Break-Even Analysis

Break even analysis is a calculation of the quantity sold which generates enough revenues to equal expenses. In securities trading, the meaning of break even analysis is the point at which gains are equal to losses. Read more

Break-Even Point

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 accounted for, so the product, investment, or business begins to generate profit. Read more

Break-Even Price

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 calculate the point at which revenues begin to exceed costs. Read more

Breakpoint

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 mutual fund, which has a 4% front-end load (a fee for buying the shares). Read more

Bretton Woods Agreement

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 also led to the creation of the International Bank for Reconstruction and Development (what is now the World Bank) and the International Monetary Fund (IMF). Read more

Brick and Mortar

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 two decades as the geometric proliferation of online shopping, or e-commerce, has changed the landscape of global consumerism. Read more

Bridge Loan

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 period of funding and another, more permanent source of funding. Read more

Broken Date

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 instrument. For example, let's assume that a futures contract for shares of Company XYZ is three months long and is issued on April 1. Read more

Broker

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 art market -- even the boat market. Read more

Broker Loan

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 need of short-term capital for financing clients' margin portfolios. Read more

Broker of Record

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. Read more

Broker-Dealer

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 clients. Read more

Brokerage Fee

A brokerage fee compensates a broker for executing a transaction. It is usually, but not always, a percentage of the transaction value. Read more

Brokered Certificate of Deposit

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. Read more

Buffett Rule

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 dollars per year pay a minimum effective tax rate of at least 30 percent. Read more

Build to Rent (BTR)

Sometimes referred to as B2R, build to rent is a type of residential new construction, purpose-built to be rented out, rather than sold to homebuyers.

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Bulge Bracket

Bulge bracket is a term used to describe the investment company(ies) with the highest volume of sales of an initial public offering (IPO) When a company issues new securities in the market, groups of investment companies called "underwriting syndicates" offer the security to the public for the first time. The company in the underwriting syndicate that issues the highest volume of the new security in the market is called the bulge bracket. Read more

Bull

A bull has a positive outlook on an asset class or an entire market. In investing terminology, bull is the opposite of bear. Read more

Bull Market

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 such as real estate, bonds or foreign exchange. Read more

Bull/Bear Ratio

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 Investors Intelligence Sentiment Survey. Read more

Bullet

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 amortized – that is, paid incrementally during the life of the loan -- a bullet loan's principal is paid in one sum at the end of the term. Read more

Bullet Loan

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 cost (interest and principal) is amortized -- paid incrementally during the life of the loan -- a bullet loan's principal is paid in one sum at the end of the term. Read more

Bullish Engulfing Pattern

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 occurs during a down trend and is thought to signal the beginning of a bullish trend in the security. Read more

Bump-Up Certificate of Deposit (CD)

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 period. A bump-up CD will typically offer a slightly lower rate than a CD without the option, due to its flexibility. Read more

Bureau of Labor Statistics (BLS)

The Bureau of Labor Statistics (BLS) of the U. S. Read more

Bureau of Public Debt (BPD)

The Bureau of Public Debt is responsible for borrowing the money needed to run the U. S. Read more

Burn Rate

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 period the analyst finds useful. Read more

Business Cycle

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 spending. Read more

Business Development Company (BDC)

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 grows. Read more

Business Model

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 potential while entrepreneurs use them to shape their ideas into a sound business structure. Read more

Buy and Hold

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. Read more

Buy Limit Order

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 the stock. Read more

Buy Side

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 funds, trusts, insurance companies and proprietary traders make up the vast majority of the buy side. Read more

Buy-Write

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 sells a call option and buys the underlying simultaneously. Read more

Buydown

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. Read more

Buyer's Market

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. Read more

Buying on Margin

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 necessary $5,000 -- you only have $2,500. Read more

Buying Power

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 in order to buy securities). Read more

Buyout

A buyout is the purchase of at least 51% of a company. Under a buyout, the previous ownership loses control of a company in exchange for compensation. Read more

Buzzword Bingo

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 or diagonal on their cards. Read more

Bypass Trust

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 worth $11 million. Read more