Financial Glossary

AFTER-TAX RETURN

The yield of an investment after taxes have been taken out.

ANNUITY

An individual pays an insurance company a specified capital sum in exchange for a promise that the insurer will, at some time in the future, begin to make a series of periodic payments to the individual for as long as he/she lives or for some other specified period of time.

APPRECIATION

An increase in fair market value.

ASSETS

Everything a person owns, including cash, investments, accounts receivable, real property, and autos.

BALANCE SHEET

A condensed financial statement showing the amount and nature of an individual's assets and liabilities at a given time. A "snapshot" of what a person owns and what he owes. Sometimes referred to as net worth statement.

BASIS

The price paid for an asset. Used to figure capital gains tax.

BENEFICIARY

One who is designated to receive a benefit. Example: person who would receive the proceeds of a life insurance settlement.

BID AND ASKED

The "bid" is the highest price anyone is willing to pay for a security at a given time; the "asked" is the lowest price anyone will take at that time. Stocks are usually purchased at "bid" and sold at "asked."

BOND

A promise of a corporation, municipality, government, church, and the like, to pay interest at a stated rate and repay face value of the bond
(which is actually a loan from you to the corporation or other entity) at a
specified maturity date.

BUDGET

A plan or guideline for spending.

CAPITAL GAIN

Profit or loss from the sale of a capital asset such as real estate, stock, commercial property, land, or equipment. Any capital asset held at least one year is classified as long-term and may receive favorable income
tax treatment.

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