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A high-quality, short-term negotiable discount note, drawn on and accepted by banks that are obligated to pay the amount at maturity.
- Browse Related Terms: Agency Securities, BA (Banker's Acceptance), Banker’s Acceptance (BA), CDs (Certificates of Deposit), Certificates of Deposit (CD), Commercial Paper, Corporate Bond, Coupon, Federal Funds Rate, Federal Reserve Board, Maturity Date, money-market fund, Moody's Corporate Ratings, Moody's Short-term Debt Ratings, Principal, Salomon Brothers Broad Investment-Grade (BIG) Bond Index, T-Bill (Treasury Bill), Treasury bill (T-bill), Treasury Bond or Note
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Bonds whose par values are less than $1,000 are often described as baby bonds, or, in the case of municipal bonds, as mini-munis.
Small companies that may not be able to attract institutional investors, such as banks and mutual fund companies, may offer baby bonds to raise cash from individual investors.
Some municipalities also use baby bonds to foster involvement in government activities by making it possible for more people to invest.
- Browse Related Terms: Baby bond, Blue sky laws, Corporate Bond, Disclosure, Investment Company, Issue, Municipal bond fund, State guaranty funds, STRIPS
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Baccalaureate bonds are tax-free zero coupon bonds issued by certain states specifically to help families accumulate assets to meet college tuition costs.
The bonds are usually sold in small denominations, so that you can buy several, with maturity dates that correspond with the dates that tuition payments are due.
In some states, baccalaureate bondholders receive a small tuition discount if they use the bonds to pay for attending an in-state school.
- Browse Related Terms: 529 college savings plan, 529 Plan (Prepaid Tuition Plan), 529 prepaid tuition plan, Baccalaureate bond, Certificate of Accrual on Treasury Securities (CATS), CollegeSureî CD, Coverdell Education Savings Account, Early withdrawal, Education savings account (ESA), Hardship withdrawal, Hope scholarship credit, Investment horizon, Lifetime learning credit, Prepaid college savings plan, Prepaid college tuition plan, Tax-exempt
A sales charge levied when mutual fund units are redeemed.
- Browse Related Terms: annual and semi-annual reports, Back-end load, expense ratio, front-end load, load, management company, management expense ratio, Mutual Fund, net asset value, net asset value per share, no-load fund, open-ended fund, Redemption, Sales charge, total return
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Some mutual funds impose a back-end load, or a contingent deferred sales charge, if you sell shares in the fund during the first six or seven years after you purchase them.
The charge is a percentage of the value of the assets you're selling. The percentage typically declines each year the charge applies and then is dropped.
However, the annual asset-based management fee is higher on back-end load funds, also known as Class B shares, than on front-end load funds, where you pay the sales charge at the time you purchase.
- Browse Related Terms: 12b-1 fee, Back-end load, breakpoint, Contingent deferred sales load, front-end load, Fund network, Level load, load, Load fund, Mutual Fund, No-load mutual fund, Redemption fee, Sales charge, Share class, Surrender fee
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Back-up withholding is triggered when a bank, brokerage firm, or other institution pays interest, dividends, or other income that must be reported on IRS Form 1099 to a payee who does not provide a tax identification number (TIN), typically a Social Security number, or provides an incorrect number.
While income that's reported on Form 1099 is not normally subject to withholding, in this instance, the payer must withhold 28% of the gross amount as income tax.
You can avoid back-up withholding in most cases by providing a correct TIN using IRS form W-9. But if the IRS determines you have underreported your investment income, it may require back-up withholding even if the payer has your TIN.
- Browse Related Terms: Back-up withholding, Custodial account, Estate, Estate tax, Gift tax, Income, Income in respect of a decedent, Income stock, National debt, Qualified domestic trust (QDOT), Revocable trust, Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA)
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The lender may promise one type of loan or interest rate but, without good reason, gives you a different one. Sometimes a higher (and unaffordable) interest rate doesn't kick in until months after you have begun to pay on your loan.
- Browse Related Terms: "Bait-and-switch" schemes, Alt-A Mortgages, Balloon Payment, cash-out refinancing, Collections, Delinquency, Home improvement scams, Loan flip, Loan modification, Mortgage Modification, Prepayment penalty, Prime, Prime Mortgages, Refinance, Subprime, Subprime Mortgages
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We put each charge on your account, including interest or fees, into a balance category. We use the different balances to calculate the correct interest charges on your account. If any type of charge has a separate interest rate, we will put it into a separate balance. This means that your account may have separate balances for purchases, cash advances, and balance transfers. It also means that if any charges are subject to an introductory or other promotional interest rate for a period, we will place such charges into a separate balance for the time period that you qualify for the special rate.
We place interest charges into the balance that generated those charges. For example, we place interest charges on purchases into your purchase balance.
We place fees that result from a specific charge into the same balance as that specific charge. For example, we place a foreign transaction fee that we assess on a cash advance into your cash advance balance. We place fees that do not result from a specific charge, such as a returned payment fee, into your purchase balance.
- Browse Related Terms: "Go-to" rate, Average daily balance method with compounding, Average daily balance method without compounding, balance, Daily balance method with compounding, Daily balance method without compounding, Daily periodic rate (DPR), Default APR, Interest-free period, Introductory APR, Penalty APR, Periodic rate, Purchase APR
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The difference between the value of a country's imports and exports during a specific period of time is called the balance of trade.
If a country exports more than it imports, it has a surplus, or favorable balance of trade. A trade deficit, or unfavorable balance, occurs when a country imports more than it exports.
- Browse Related Terms: Arbitrage, Balance of trade, Decimal pricing, Downtick, Efficient market, Moving average, Odd lot, Round lot, Xenocurrency
A financial statement showing the nature and amount of a company's assets, liabilities and shareholders' equity.
- Browse Related Terms: balance sheet, Book value, Distribution, dividend, drips (dividend reinvestment plan), ex-dividend, guaranteed investment certificates, preferred shares, reinvestment, right, transfer agent
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A balance sheet is a statement of a company's financial position at a particular moment in time. This financial report shows the two sides of a company's financial situation - what it owns and what it owes.
What the company owns, called its assets, is always equal to the combined value of what the company owes, called its liabilities, and the value of its shareholders' equity. Expressed as an equation, a company's balance sheets shows assets = liabilities + shareholder value.
If the company were to dissolve, then its debts would be paid, and any assets that remained would be distributed to the shareholders as their equity. Bankruptcy occurs in situations where there is nothing left to distribute to the shareholders, and the company balance sheet is in fact unbalanced because the company owes more than it owns.
- Browse Related Terms: balance sheet, Common Stock, Cooperative (co-op), Cumulative voting, Holding company, Minority interest, Proxy, Proxy statement, Shareholder, Statutory voting, stock, Tracking stock, Voting right
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The process of moving an outstanding balance from one credit card to another. This transfer is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee.
- Browse Related Terms: ATM Card, Automatic Bill Payment, Available Balance, Balance Transfer, Billing Error, Debit card, Electronic benefits transfer (EBT), Previous Balance, Residual interest
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You make a balance transfer when you use a balance transfer check that we send you or when you contact us to transfer a balance electronically or by phone.
The act of transferring debt from one credit card account to another. Balance-transfer fees may apply.
- Browse Related Terms: Annual Percentage Rate (APR), Balance Transfer, Balance-transfer fee, Cash-advance fee, Interest rate, Membership fee, Participation fee
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- A fee charged when you make a balance transfer. It may be a flat fee or a percentage of the transfer.
- Browse Related Terms: Annual Percentage Rate (APR), Balance Transfer, Balance-transfer fee, Cash-advance fee, Interest rate, Membership fee, Participation fee
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Balanced funds are mutual funds that invest in a portfolio of common stocks, preferred stocks, and bonds to meet their investment goal of seeking a strong return while moderating risk.
Balanced funds generally produce more income than stock funds, though their total return may be less than stock fund returns in a strong stock market.
In a flat or falling stock market, however, disappointing returns on equity investments may be offset by a stronger performance from a balanced fund's fixed-income investments.
Balanced funds are sometimes described as a type of asset allocation fund, which provides the oportunity to spread your money among asset classes with one investment.
- Browse Related Terms: Asset allocation, Asset class, Balanced fund, diversification, Family of funds, Financial plan, Fund of funds (FOF), Lifecycle fund, Modern portfolio theory, Nonsystematic risk, Overweighted, portfolio, subclass, Synthetic investment, Target date fund, Target risk fund, Underweighted, White knight
A mutual fund that holds a mix of securities - usually money market, bonds and equities. The relative balance of these securities can be changed to take advantage of phases in the economic cycle.
- Browse Related Terms: balanced funds, Bond fund, custodian, dividend fund, equity fund, index fund, International fund, investment fund, investment manager, mortgage fund, real estate fund, small cap fund, specialty fund
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With a balloon mortgage, you make monthly payments over the mortgage term, which is typically five, seven, or ten years, and a final installment, or balloon payment, that is significantly larger than the usual monthly payments.
In some cases, you pay only interest on the loan during the mortgage term, and the entire principal is due in the balloon payment.
Many balloon mortgages offer a conversion feature that lets you extend the loan at a new interest rate. For instance, some balloon mortgages convert to a 30-year fixed-rate mortgage at the end of their original term.
You might choose a balloon mortgage if you anticipate being able to refinance at a favorable rate at the end of the term or if you're confident you'll have enough money to pay off the loan in a lump sum. But you may risk losing your home when the balloon payment is due if you can afford to buy the home only because of the comparatively smaller monthly payments that may be available with a balloon mortgage.
- Browse Related Terms: Adjustable-Rate Mortgage (ARM), balloon mortgage, Ceiling, Co-maker, Fixed Rate Loan, fixed-rate mortgage, Home Equity Loan, Hybrid mortgage, Interest-only mortgage, Loan note, Negative amortization, Payoff, Payoff statement, Prepayment penalty, Principal balance, Refinancing, Rule of 78, Usury
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A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term.
a mortgage loan that requires a large payment due upon maturity (for example, at the end of ten years).
Departments of the Treasury & Housing and Urban Development, Making Home Affordable Program - Cite This Source - This Definition- Browse Related Terms: Adjustable-Rate Mortgage (ARM), amortization, balloon mortgage, Convertible ARM, Debarment, Fixed-Rate Mortgage (FRM), Interest-only mortgage, Lock-In, Lock-in agreement, Mortgage life insurance, Negative amortization, Payment Cap, Right of rescission, Self-Amortizing Loans, Swap, term, Weighted Average Life (WAL)
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A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date prior to the end of the amortization period.
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition
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A payment the borrower must make to the lender at the mortgage term’s end. This final payment is comparatively much larger than the payments that preceded it.
- Browse Related Terms: "Bait-and-switch" schemes, Alt-A Mortgages, Balloon Payment, cash-out refinancing, Collections, Delinquency, Home improvement scams, Loan flip, Loan modification, Mortgage Modification, Prepayment penalty, Prime, Prime Mortgages, Refinance, Subprime, Subprime Mortgages
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A high-quality, short-term negotiable discount note, drawn on and accepted by banks that are obligated to pay the amount at maturity.
- Browse Related Terms: Agency Securities, BA (Banker's Acceptance), Banker’s Acceptance (BA), CDs (Certificates of Deposit), Certificates of Deposit (CD), Commercial Paper, Corporate Bond, Coupon, Federal Funds Rate, Federal Reserve Board, Maturity Date, money-market fund, Moody's Corporate Ratings, Moody's Short-term Debt Ratings, Principal, Salomon Brothers Broad Investment-Grade (BIG) Bond Index, T-Bill (Treasury Bill), Treasury bill (T-bill), Treasury Bond or Note
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In general, a banking day is any business day (up to the financial institution’s cut-off time) when the institution is open for substantially all of its banking activities.
- Browse Related Terms: Audit, Banking day, Consumer Reporting Agency, Correspondent, custodian, Direct Dispute, Financial Accounting Standards Board (FASB), Gift, Lender, Remittance Transfers, Safe (or Safety) Deposit Box
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A person, firm, or corporation, which has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee.
- Browse Related Terms: Bankrupt, bankruptcy, Embezzlement, Fiduciary, Financial planner, Guardian, Payor, Personal Hospitality of any Individual, Personal Residence, Real property, Trustee
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Bankruptcy means being insolvent, or unable to pay your debts. In that case, you can file a bankruptcy petition to seek a legal resolution.
Chapter 7 bankruptcy, which allows you to discharge your unsecured debts but may result in your losing your home, car, or other secured debt, is available only to those whose earn less than the median for their state or qualify because of special circumstances.
With Chapter 11 bankruptcy, also called reorganization bankruptcy, you work with the court and your creditors to repay debt over three to five years.
However, some debts are not reduced by a declaration of bankruptcy, including past due federal income taxes, alimony, and higher-education loans. Similarly, when you hear that a company is reorganizing or is "in Chapter 11," it means it has filed for bankruptcy.
The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types of bankruptcy:
- Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt.
- Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.
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When you use a barbell strategy you invest equivalent amounts in short-term and long-term bonds, creating the shape that gives the strategy its name. The goal is to earn more interest than intermediate-term bonds would provide without taking more risk.
For example, you might buy a portfolio of bonds, with some that mature within a year or two and an equal number that mature in 30 years. When the shorter-term bonds come due, you replace them with other short-term bonds.
It's a different approach from laddering your bond investment, often with a portfolio of intermediate-term bonds, so that your bonds mature in a rolling pattern every few years.
- Browse Related Terms: Barbell strategy, bond, Bond swap, Buy-and-hold, Collateralized mortgage obligation (CMO), Fixed-income investment, Intermediate-term bond, Laddering, Market risk, Note, Reinvestment risk, Systematic risk, term, Tranche