Financial Dictionary

What Is a Yield Curve? A yield curve is the relationship between interest rates and time, and is determined by plotting the yields of bonds with equal credit quality against their maturities. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Yield Curve", "description": "A yield curve is the relationship between interest rates and time, and is determined by plotting the yields of bonds with equal credit quality against their maturities.", "

Dividend Definition A dividend is a portion of a company’s profit paid to common and preferred shareholders. They provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Dividend", "description": "A dividend is a portion of a company’s profit paid to common and preferred shareholders. They provide an ince

What Is a Benchmark in Finance? Financial benchmarking involves running financial analyses in order to compare business practices and the standards of a firm to other firms within the same industry. A benchmark is a standard, or a baseline, that’s used for comparative purposes when assessing a portfolio or mutual fund. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Benchmark", "description": "Financial benchmarking involves running financi

What Is Inflation? Inflation is an increase in the average price of goods or services in an economy. Each month, the Bureau of Labor Statistics reports on the average level of prices when it releases the Consumer Price Index (CPI). Inflation is measured as the percentage increase in average level of prices over a select period of time. In a stable economy, an average inflation rate is typically around 2%. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm",

What Is an Annuity? An annuity is a contract with an insurance company that guarantees current or future payments in exchange for a premium or series of premiums. The interest earned on an annuity contract is not taxable until the funds are paid out or withdrawn. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Annuity", "description": "An annuity is a contract with an insurance company that guarantees current or future payments in exchange

What is a Mid-Cap Stock? Mid-cap refers to the market capitalization of stocks of companies with market values between $2 and $10 Billion. Companies and their stocks are generally classified, based on valuation size, as large cap, mid-cap, or small cap. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Mid Cap", "description": "Mid-cap refers to the market capitalization of stocks of companies with market values between $2 and $10 Billion. Co

What is a Small Cap Stock? Small cap refers to the market capitalization of stocks of companies with market values less than $2 Billion. Company’s stocks are generally referred to as large cap, mid cap, or small cap. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Small Cap", "description": "Small cap refers to the market capitalization of stocks of companies with market values less than $2 Billion. Company’s stocks are generally referred t

What is a Money Market Fund? A money market fund is a mutual fund with investments in high-yield money market instruments such as federal securities, CDs, and commercial paper. The intent is to make such instruments (normally purchased in large denominations by institutions) available indirectly to individuals. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Money Market Fund (MMF)", "description": "A money market fund is a mutual fund with

What are Capital Gains? Capital gains are the difference between a security’s purchase price and its selling price, when the difference is positive and sold at a profit. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Capital Gains", "description": "Capital gains are the difference between a security’s purchase price and its selling price, when the difference is positive and sold at a profit." "inDefinedTermSet": "https://www.wealthspire.

What are Share Classes? Share classes represent ownership in the same fund that charge different fees. This can enable shareholders to choose the type of fee structure that best suits their particular needs. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Share Class", "description": "Share classes represent ownership in the same fund that charge different fees. This can enable shareholders to choose the type of fee structure that best suit

What are Fixed Income Investments? A fixed income investment is a fund or portfolio in which bonds are primarily purchased as investments. There is no fixed maturity date and no repayment guarantee. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Fixed Income Investment", "description": "A fixed income investment is a fund or portfolio in which bonds are primarily purchased as investments. There is no fixed maturity date and no repayment gu

Index Fund Definition An index fund is a type of mutual fund with a portfolio designated to match or track the components of a market index. How To Invest in Index Funds Firstly, it is important to know that investing in index funds, or “indexing,”  is a form of passive fund management. Consequently, this means that instead of choosing securities to invest in and strategize their buy and sell periods, you want to create a portfolio that mimic the securities of a particular index - this is