Questions tagged [terminology]

For questions about the meaning and usage of specific terms used in personal finance, alternative names for concepts, etc.

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165
votes
3answers
686k views

Can someone explain a stock's "bid" vs. "ask" price relative to "current" price?

In my online brokerage account, I want to buy a particular stock and I see the following: Bid: 13.20 x200 Ask: 13.27 x1,000 the current stock price is 13.22. Can someone explain what ...
53
votes
3answers
20k views

Are all current world currencies 'decimal'?

Historically, non-decimal monetary systems were common. E.g. pound / shilling. Every currency I can think of or have ever used is 'decimal' (where a higher/lower unit of currency is either a ...
46
votes
9answers
18k views

Am I a billionaire if a friend gives me $1000 for 0.0001% of my "company"?

If my friend gives me a thousand dollars for 0.0001% of my "company", am I technically a Billionaire now?
34
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3answers
5k views

What is it called when you sell and reinvest to pay lower taxes?

Every year or so, I sell my investments and then immediately buy them again. I do this because I'm in a low enough tax bracket that I don't have to pay capital gains on my long term investments, so I'...
30
votes
3answers
1k views

What are "preferred" stocks? How are they different from normal (common) stocks?

What are "preferred" stocks? How are they different from normal (common) stocks that you can buy on a stock exchange?
29
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3answers
6k views

Are currency terms like USD, EUR, CNY used in all languages?

Currency codes like USD, EUR and CNY are well known in English. In accountancy documentation prepared in non-English languages, are these same terms used for foreign currency or are they translated? ...
27
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4answers
14k views

What is the meaning of "short selling" or "going short" a stock?

Can someone please explain the meaning of 'shorting' a stock with an example?
24
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3answers
10k views

What is a trust? What are the different types of trusts?

What is a trust? What are the different types of trusts? Are some better than others? What are the different roles involved in a trust?
23
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7answers
3k views

Better terms to use to understand Puts and Calls for options trading

I've been trying to learn a little about options trading, specially puts and calls. The term options works well for my brain because someone is buying or selling the option to buy or sell something. ...
23
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2answers
4k views

What is meant by one being in a "tax bracket"?

I've always wondered but just now asking: What is meant by one being in a "tax bracket"? Does that mean only Federal, or does it include State AND Federal? For example: I (would like to) make $100K a ...
23
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2answers
199k views

What's the difference between a certified check, a cashier's check, a money order, and a bank draft?

The question comes from reading this answer. I've heard these terms used somewhat interchangeably, but I have no idea what the differences are. What's the difference between a certified check, a ...
22
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9answers
4k views

What is the difference between "good debt" vs. "bad debt"?

This other question about home renovations makes reference to the concept of "good debt." Could somebody explain the concepts of good debt vs. bad debt, providing examples of each? Are there cases ...
21
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9answers
6k views

What are credit cards, debit cards, and other types of cards?

This question right here and the plethora of comments in it reminded me of something that I've found annoying for a long, long time. Seems that depending on where you come from the terms "credit card" ...
20
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4answers
6k views

Does the 'A' in IRA stand for "Account" or "Arrangement"?

From the comments at: https://money.stackexchange.com/a/85769/4522 One poster called an IRA an: Individual Retirement Account Another stated it was an: Individual Retirement Arrangement What ...
20
votes
2answers
273k views

What are "headwinds" and "tailwinds" in financial investments?

I've seen/heard these terms in various writings & broadcasts lately. What do they mean?
20
votes
2answers
552 views

What is a reverse mortgage?

What is a reverse mortgage? I hear these advertise often but don't understand how they are different from a regular mortgage! Can somebody explain please what they are and when they would be useful? ...
19
votes
1answer
5k views

What does "gross of" mean?

I'm reading a financial report summary of an investment and it says "The numbers below are presented gross of fees." Does that mean the numbers include fees, or don't include fees? Why don't they ...
19
votes
7answers
7k views

What is the difference between money and currency?

Money is a medium of exchange, according to 1,000 ways to make $1,000. Currency, on the other hand, is the "promissory note or coin". You may say that currency is a US dollar bill in the USA. But ...
19
votes
2answers
17k views

"Out of Pocket Maximum" and health insurance plan terminology & calculation?

I'm trying to understand the terminology on my health plan. I've read numerous websites, which have only confused me more, as they fail to use examples (more than one should be required) for people ...
19
votes
1answer
574 views

What's an Exchange-Traded Fund (ETF)?

I've been hearing a lot about exchange-traded funds, or ETFs. What exactly are they, and how would I use them?
19
votes
1answer
1k views

What's the differences between a discount broker and a regular broker?

What are the differences between a discount broker and a regular broker? "Discount" implies a price difference... but why can they be cheaper than regular brokers??
17
votes
2answers
7k views

What is "financial literacy" and how does one become "financially literate"?

How does one become "Financially Literate"? Also, on a side question; what does "Financially Literate" even mean?
16
votes
3answers
3k views

Why is the "discount rate", charged to merchants in card transactions, called that?

When accepting payment via a credit card or debit card, a merchant is charged a "discount rate" (or "discount fee") by the acquiring bank. For example, when a merchant receives a ...
16
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2answers
7k views

What is the difference between hedging and diversification? How does each reduce risk?

Hedging and diversification are both used for reducing financial risks, but what are the exact differences between these two?
14
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2answers
2k views

Mortgages: What is the terminology for how much I own and how much I still owe?

I'm looking for the terminology related to my home mortgage. The word or phrase for how much of my house I own. The word or phrase for how much I still owe. For example, suppose I bought a $500K ...
14
votes
3answers
530 views

What exactly is a credit default swap?

I hear a lot about credit default swaps (CDSs) and I do not really know what they are. Can you please explain it to me? What are they good for?
13
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2answers
7k views

What's the meaning of the word 'less' in this tax table?

Our government introduced a new Payee tax scheme. Can someone please explain how does the word 'less' work in this context?
13
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5answers
2k views

What is this type of risk-free investment called?

My mother told me that in 1994, she had $10K to put into a savings account or CD. She went to the local Citibank and didn't like the interest rates that they were offering on their savings/CD ...
13
votes
4answers
4k views

Making your first million... is easy! (??)

I've seen several people claim "making a million dollars isn't THAT hard these days". Heck, I've seen it here on this forum. Being a complete beginner with investing, business and finance, I wonder ...
13
votes
4answers
725 views

What is the theory behind diversification? Why does it work?

We are told always that diversification in a portfolio is good. "Don't put all your eggs in one basket." But is there mathematical theory behind diversification to back up the advice?
12
votes
4answers
534 views

What is title insurance, and should I get title insurance for my home?

I have just sold my house and bought a new one. The lawyer I am working with to do all the necessary paperwork has sent me something about "Title Insurance". I am not quite sure exactly what this is....
12
votes
2answers
7k views

Why do futures traders write months in a strange way?

I was reading up a bit on futures and found that futures clearing merchants write months in a very unexpected way: Month Month Code January F February G March H April J May ...
12
votes
4answers
59k views

What does "more buyers than sellers" in technical analysis of stocks actually mean?

I often hear/read technical analysts looking at volume and price action on a chart and claiming that there are "more buyers than sellers" or vice versa. Since every trade requires a buyer and a ...
12
votes
2answers
4k views

What is a stock warrant? How do warrants work?

What is a stock warrant? How do warrants work? I've been told they are similar to options; how? Then why not just call them options - what makes them different?
12
votes
2answers
986 views

What is value investing? What are the key principles of value investing?

What is value investing? What are the key principles of value investing? Is there evidence indicating whether value investing results in higher returns, or lower risk, compared to other styles of ...
12
votes
1answer
5k views

Currency values: Are there names for the parts before and after the decimal point?

What is the collective name / term given to the part of a currency value before and after the point? e.g. $123.99 So in the example above I'm after the name of the part '123' and the name of the ...
11
votes
1answer
4k views

What does the letter "c" mean with a number in an annual report (UK)

I had a question when reviewing an annual report of a company Wood PLC. In their report they have used the letter "c" in lowercase after different types of numbers. E.g., basic EPS is ...
11
votes
7answers
2k views

What is the difference between speculating and investing?

I keep hearing people saying that a speculation is NOT an investment, but isn't it really just investment with high risk?
11
votes
3answers
7k views

What is the difference between fund and portfolio?

I am new to the finance world, and I keep hearing fund and portfolio. What is the meaning of these words and how are they related? Can someone please explain with examples? Is there any difference ...
11
votes
3answers
9k views

Is there a term that better describes a compound annual growth rate (CAGR) when it is negative?

When calculating rates of return for an investment or portfolio over time, whether to report or compare performance, one frequently calculates the Compound Annual Growth Rate (CAGR). I've got a ...
11
votes
4answers
896 views

What does the term "second mortgage" mean? Can I easily get one?

Are these loans easy to get if you have enough equity in your current home? Is there any negative connotation associated with getting a second mortgage
11
votes
2answers
74k views

What is the difference between a Loan, a Lien, and a Mortgage?

I recently heard someone talk about a Lien as thought it was similar to a Loan. I googled various things for a while and came to no concrete, concise answer. If a Lien or a Mortgage is a "type of ...
11
votes
2answers
2k views

Is there a country that uses the term "dollar" for currency without also using "cents" as fractional monetary units?

I'm wondering if there exists a country that uses the specific name "dollar" for their currency, without also using the concept where 1/100 of one dollar is called a "cent". Does such a currency ...
11
votes
2answers
24k views

What does CAGR mean when it is used in relation to a company stock?

I saw this abbreviation CAGR related to stocks and financial statements and I am not sure what it is. Can you please explain it to me?
11
votes
1answer
377 views

What is a "closed-end fund"? How is a closed-end fund different from a typical mutual fund?

I recently ran across the term "closed-end fund", but the author didn't explain what it was. What is a "closed-end" fund vs a typical mutual fund, and are there advantagets/disadvantages to each?
11
votes
3answers
6k views

What does market cap (or market capitalization) mean?

When I look at my Google finance page, and I look at a company, lets say Citigroup for example, and I see that the market cap is 83.45 billion, what does that mean? Does that mean Stock Price X ...
11
votes
1answer
534 views

What is long-term care insurance ? How does long-term care insurance work?

What is long-term care insurance? How does long-term care insurance work? Who should consider getting long-term care insurance and why?
10
votes
1answer
72k views

What does "first, last and deposit" mean when looking for an apartment?

I was online looking for an apartment. It says, "we'll only need first, last, and deposit once your application is approved." What does this mean?
10
votes
3answers
422 views

Is there a term for the situation where we will over-think small purchases, but not large ones?

I was recently at the record store thinking "I dunno, $10 is a bit much for this. $7...I'd probably buy it. But not for $10." That would be contrasted with a recent house we purchase where I'm sure I ...
10
votes
3answers
6k views

What is the difference between a bad/bounced check and insufficient funds?

I was reading the answer to another question, and read this statement which basically states that writing a bounced check can land you in jail: you're committing a fraud, namely offering someone a ...

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