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Abstract of Title - A documented history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.
Accelerated Benefits Rider - A life insurance rider that allows for the early payment of some portion of the policy's face amount were the insured to suffer from a terminal illness as defined by the policy.
Acceptance - A time draft or bill of exchange that has been accepted but has not yet matured. The drawee becomes the "acceptor" by writing "accepted" over his signature on the face of the draft, along with the date and place of payment.
Accidental Death and Dismemberment - Insurance providing payment if the insured's death is a result of an accident or if the insured accidentally severs a limb above the wrist or ankle joints, or totally and irreversibly loses his or her eyesight. An accidental death benefit rider is a policy rider that provides for an additional benefit associated with this form of accidental death.
Accreting Swap - A swap with a known principal amount that decreases over time.
Accumulation - Another way of saying professional buying. A stock is under accumulation when volume expands on days when price increases.
Accumulation Period - The phase of a tax-deferred annuity during which the earnings are allowed to build-up on a tax-deferred basis, prior to annuitization or distribution.
ACH (Automatic Clearing House) - An electronic drafting system that debits an authorized bank account and electronically transfers funds scheduled for payment.
Acquisition Costs - The costs of purchasing property in addition to the purchase price -- for example, attorney fees, title insurance, lender's fees.
Addendum - An agreement or list that is added to a contract, agreement, or other document, such as a letter of intent.
Additional Principal Payment - A payment by a borrower of more than the scheduled principal amount due which is intended to reduce the remaining balance on a loan.
Adjustable Rate Mortgage (ARM) - An alternative mortgage instrument in which the interest rate adjusts periodically according to a predetermined index and margin. Mortgage payments generally increase or decrease as a result of the adjustment.
Adjusted Gross Income - An individual's total income, as reported on his or her IRS 1040 tax return form, after adjustments for allowable contributions, deductions and expenses (such as alimony).
Adjustment Period - The elapsed period between the adjustment dates for an adjustable rate mortgage (ARM).
Adobe® Acrobat® Reader® - Adobe® Acrobat® Reader® software is a utility for viewing Adobe PDF files and can be downloaded free of charge from Adobe's website (www.adobe.com)
Advance Against Documents - A lending type often used when acceptance financing is not appropriate. An advance can be made on the security of the documents covering the shipment.
Affiliate - A person or legal entity connected by common ownership or affiliated by corporate control.
Agricultural Property - Unimproved property available for activities relating to farming activities.
Alpha - The measure of a stock's average monthly change over the previous 12 months where the S&P 500 index is unchanged during this 12-month period. For example, a stock with an alpha of 7 would be expected to rise 7% in a month, provided that the S&P 500 index is unchanged.
American Depositary Receipt (ADRs) - A security that is created by a U.S. bank and represents a foreign security trading in the U.S. financial markets.
American Land Title Association (ALTA) - A national association of title insurance companies, abstractors, and attorneys that specialize in real property law. The association represents the title insurance and abstracting industry and establishes standard procedures and title policy forms.
American Stock Exchange (AMEX) - Stock exchange based in New York that competes with the New York Stock Exchange and NASDAQ to list companies' securities for trading.
American Style Option - An option that can be exercised at any time during its life up to and including the final trading day.
Amortization - Repayment of a debt in equal installments of principal and interest, calculated to retire the principal at the end of a fixed period and to pay accrued interest on the outstanding balance.
Amortization Schedule - A table showing the amounts of principal and interest due at regular intervals and the unpaid balance of the loan after each payment is made.
Annual Percentage Rate (APR) - The cost of credit on a yearly basis expressed as a percentage.
Annual Report - A report provided by a company at the end of its fiscal year. The report summarizes company operations and provides earnings, sales, balance sheets and financial footnotes.
Annual Return - The percentage of change in a mutual fund's net asset value over the period of one year, including income dividend payments, capital gains, and reinvestment of these distributions.
Annually Renewable Term - Renewable term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year without providing evidence of insurability. Also known as Yearly Renewable Term (YRT).
Annuitant - The individual upon whose life the annuity is based and the individual who will receive the annuity payments if the contract is annuitized. In most cases, the annuitant and annuity owner are the same individual.
Annuitization - A contractual agreement that entitles the annuitant to receive equal periodic payments (typically monthly) over a specified period of time.
Annuity - An insurance contract between an insurance company and the purchaser which provides for the tax-deferred accumulation of the premium amount during the accumulation phase, and a variety of payout options during the annuitization phase.
Annuity Benefits - The guaranteed periodic payments paid to the annuitant during the annuity payout period.
Annuity Contract - The agreement between the customer and the insurance company which stipulates the guidelines by which each must operate. The features of the annuity are detailed in the specifics of the contract.
Annuity Payout Period - The period of time over which the annuity payments are designated to last. Generally, the payout period cannot be revised once it has been chosen.
Annuity Start Date - The date guaranteed annuity payments are scheduled to start. Also known as the annuity commencement date.
Applicable Exclusion Amount - A federal tax credit that offsets gift and estate tax liability. A credit of $220,550 in 2000-2001 offsets gift and/or estate taxes on cumulative transfers of $675,000. The Taxpayer Relief Act of 1997, has allowed the applicable exclusion amount to increase. The act will shelter transfers up to $1 million by 2006.
Applicant - A prospective borrower who has completed an application. A series of steps, usually including the completion of documents, is required by a lender of those individual(s) seeking a loan.
Application Fee - A fee that is paid to the lender upon application for a loan. An application fee may include charges for property appraisal and credit report.
Appraisal - A report, by a qualified person, providing an opinion or estimate of property value. The term also refers to the process by which this estimate is developed.
Appraisal Fee - A charge for the expense of performing an appraisal.
Appraised Value - The value of the collateral as determined by the lender, based upon current market conditions. An appraiser's opinion of value based upon knowledge, experience, and a study of pertinent data.
Appreciation - An increase in the value of property due to either a positive improvement of the area or the elimination of negative factors.
Arbitrage - The simultaneous purchase and sale of the same (or equivalent or related) securities to take advantage of price differences prevailing in different markets. A pure arbitrage involves trading effectively the same instruments for different prices at the same time. The term is now used widely in connection with the concurrent purchase and sale of securities related to proposed acquiring and acquired companies involved in pending tender offers and other acquisitions.
Arm's-Length Transaction - A transaction in which the parties involved are entirely independent of each other, deal with each other as strangers, and have no reason for collusion.
Ask - The quoted ask, or the lowest price an investor will accept to sell a stock. The term may also refer to the price at which an investor can buy shares of stock.
As Separate Property - Ownership in real property that is excluded from community property.
Assessed Valuation - The value that a taxing authority places on real or personal property for the purpose of taxation.
Assessment - A charge against a property for purpose of taxation. It can be a levy for a special purpose or a tax that the property owner pays to share the cost of community improvements according to the valuation of his or her property.
Asset-Liability Management - Matching the amounts of assets and liabilities by term and interest rate type. Financial institutions practice asset-liability management when they match the maturity of their deposits with the length of their loan commitments in an attempt to eliminate the adverse affects caused by rapid changes in interest rates.
Assignment - The legal transfer of one person's right in a contract to another. Assignment is not allowable for a tax-deferred annuity used to fund an IRA or a pension account. (Note: there may be tax consequences associated with an assignment.)
At-the-Market - An order to buy or sell a financial instrument (e.g. futures, options, etc.) at trading price when the order is executed.
At-the-Money - An option that has an exercise price equal to the market price of the underlying stock, index or other security.
Attorney Fees - Charges, often included in closing costs, to pay for the services of an attorney conducting the closing of a loan transaction.
Authority to Pay - An advice from the buyer's bank to the seller's bank authorizing the seller's bank to pay the seller's draft up to a specified amount. The seller has no protection against cancellation or modification of the instrument until the issuing bank makes payment on the draft drawn.
Authority to Purchase - Similar to an "Authority to Pay" except that the seller's drafts are drawn directly on the buyer. The buyer's bank purchases the drafts with or without recourse to the drawer. (This type of draft is limited to Far East trade.)
Authorization - Approval, by or on behalf of the credit card issuer, to complete a transaction for a merchant or another affiliate.
Automatic Investment Plan - A program that allows an individual to have as little as $50 per month electronically deducted from his/her checking account and invested in the mutual fund of his/her choice.
Available Credit - The credit line limit less the current balance, plus any outstanding authorizations for transactions that have not yet been posted.
Average Daily Balance - Calculated by dividing the outstanding balance at the close of each day during the billing cycle by the number of days in that cycle.