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What is Disinflation? Disinflation is a term used for an interim slowdown of inflation rate. For example, a reduction of inflation growth from 3.5%...

What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...

What is Above Full Employment Equilibrium? Above Full Employment Equilibrium happens when an economy is basically doing more than it realistically...

What are lenders? Lenders are parties which can be individuals, groups or institutions that are engaged in making liquid funds that they either own...

What is interest? In order to create an incentive for a lender, a borrower usually repays debt with interest, a percentage of overpayment for the l...

What is AMBAC? AMBAC stands for American Municipal Bond Assurance Corporation. It provides insurance for municipalities that sell muni bonds, such...

How do you judge the performance of an index fund? For index funds, they're really just a reflection of the stocks and bonds they, uh... reflect. S...

What is Bond Amortization? Bond amortization is simply the spreading out of the cost of the bond over time. Bonds have amortization schedules and t...

What is the Relative Strength Index? The Relative Strength Index is a technical analysis indicator that measures trading direction trends over the...

NAV isn't a cool new navigation app...it's how mutual fund shares are valued or priced at the end of each trading day.

What is amortization? Amortization tracks the decline in value of a contract or service, usually paid for in advance. You received $10,000 in advan...

What is a basis point? Basis points are how changes in financial securities are described. “The stock dropped 100 points” actually means that t...

What is inflation, and if we poke it with a pin, will it pop?

What is the process of a loan? Collateral. Do you have it? The bank lending you money wants to be sure that A) they get paid back, and B) they char...

With a reverse mortgage, payments go in the opposite direction of a normal mortgage, where you pledge your home as an asset, and receive $ each month.

When you realize a gain or loss, it means that you turn an investment into cash. Thrilling, we know.

What is a Holding Company? A holding company is a company that controls enough voting stake in another company to have control over operations. Usu...

Tax basis is your cost for assessing how much you owe in taxes, and is determined by multiplying your gains by your tax rate.

What is Cost Basis? For accounting purposes, the cost basis is the amount invested at the time of asset purchase. That is subtracted from the sale...

What is the loan-to-value ratio? Loan us some of your time and watch this handy video.

What is a mortgage? A mortgage is a loan on property. Obviously not many individuals, or companies for that matter, can or want to pay cash for their homes or business buildings, so mortgages exist. They act like other loans, in that banks charge interest on them. A typical home mortgage lasts 30 years and can have a wide range of interest rates depending on the owner’s ability to pay back the loan, as is standard in any loan. If someone owns a house or building, they almost always have a mortgage.

What is Debt-to-EBITDA? Debt to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a ratio that calculates Debt to net earnings before the accountants step in. EBITDA divided into debt gives a very quick estimate of a borrower’s ability to service debt principal as then interest can quickly be calculated and debt is deductible against taxes.

Who invests in stocks? 401k plans, pension funds, institutional investors, banks, traders, clients of Schwab, Fidelity, and Franklin. Joe Blow buys stocks. It's likely you own stocks. They are the retirement investment vehicle of the masses.

What is a zero coupon bond? Zero coupon bonds are an interesting investment because they don’t pay any interest. They are only desirable because they can be bought at huge discounts, so after the investor waits it out and cashes in at maturity, they usually make a decent profit.

What is Balloon Interest or a Balloon Payment? Balloon interest happens when bonds with growing interest are held for a long time. A balloon payment happens when the largest payment (substantially larger than the others) occurs at the end of the loan.

Forced conversion: the idea that the issuer of a bond has the right to force the conversion of that bond into common stock.

What are Convertible Bonds? Convertible bonds are bonds that have a provision to be converted into equity common shares at a predetermined strike price. It is a means by which an investor can hedge a downside position by receiving coupon income and a return of principal at maturity on the bond, but benefit on the upside of stock appreciation via conversion if the listed market price rises beyond the strike price.

A merchant account is a banking account owned by...a merchant, i.e. someone selling something. Or just someone with a few grand in the bank and decent credit.

What is the Arms Short Term Trading Index? The Arms Index is used to predict future market behavior. It gives investors an idea of what may happen in the market on a very short-term basis, typically within a day or the span of a few days. Its predictions come from an analysis of trading volumes of stocks but are meant to reflect the market as a whole.

What are accounts receivable and accounts payable? Accounts receivable and payable are figures that show up on a company’s balance sheet. Accounts receivable includes all payments the company is owed (like purchasers buying on credit). On the other hand, accounts payable includes what they owe to others.

What does a financial analyst do? Financial analysts research the market and recommend investments. There are quite a few licenses required to be a financial analyst, so the beginning period of this job requires a lot of studying. After a few years, ideally the analyst is spending their time making investment recommendations.

What do investment bankers do? Investment bankers help corporations make smart financial decisions, in the simplest terms. They help them make investments in different securities, as well as help with things like mergers, acquisitions, and any other big financial undertakings.

What are Collection Agencies? Collection agencies are debt collection companies that specialize in recovery of overdue or defaulted debt obligations. Sometimes they are subsidiaries of the creditor; other times, they are a third party company that may have ought the debt outright at a steep discount from the creditor or an independent contractor. If the former, they are compensated by whatever they can coerce the debtor into settling. In the latter, the creditor pays a percentage of whatever is collected as a fee.

What is an Adjustable-Rate Mortgage (ARM)? An adjustable-rate mortgage is a mortgage that has a changing interest rate. Whatever it changes to is based on a pre-specified index and happens on a consistently periodic basis (monthly, yearly).

What's a second mortgage? Easy: it comes after a first mortgage. Hit play for more details.

An interest-only mortgage is a mortgage on which you only pay the rent on money borrowed, rather than on the principal.

What is Average Down, or Dollar Cost Averaging? Average down just means that an investor has bought more shares of a stock at a lower price than what they originally bought at. By doing this, their average share cost is lower. It’s more of a feel-good strategy than anything else, as the whole point is just to lower the average share cost (looks like the investor got a discount).

What is capital expenditure (CAPEX)? Capital expenditure refers to the money that is used to buy or fix the physical parts of a business like land, buildings, and production equipment or vehicles.

What Does "Capital Intensive" Mean? “Capital Intensive” refers to those industries that require a high level of capital investment before business can commence, basically making the barrier of entry for entrepreneurs high. The capital investment is usually for fixed assets, such as machinery and other supplies, without which it would be impossible to enter the business in any capacity.

What is a sell side analyst? Hit play to find out.