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A type of safe usually located in groups inside a financial institution vault and rented to customers for their use in storing valuable items.
- 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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Safekeeping occurs when a broker-dealer holds securities for a client that are registered in the client's name.
The advantage from the client's perspective is that the securities are safe and the broker-dealer has them available to sell at the client's instruction.
The disadvantage from the broker-dealer's perspective is that securities held in a client's name are not fully negotiable or fungible, so they can't be used to settle trades, for example. Thus, it's a service for which many firms charge a fee.
Instead of being registered in their own names, clients' securities may be registered in the broker-dealer's name or in the name of a depository. That's known as being registered in street name or nominee name.
With this type of registration, the client's ownership rights are fully protected but the stock is fungible. The broker-dealer may use a limited portion of the holding to settle trades or for other purposes.
- Browse Related Terms: Beneficial owner, Clearance, Clearing firm, Committee on Uniform Securities Identifying Procedures (CUSIP), Continuous net settlement, Delivery date, Netting, Nominee name, Post-trade processing, Safekeeping, Street name
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Compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly.
- Browse Related Terms: bonus, compulsory payroll tax, earned income, employee, flat tax, Form W-4, Employee's Withholding Allowance Certificate, formal tax legislation process, income taxes, independent contractor, salary, self-employment loss, self-employment profit, tip income, wages
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A salary reduction plan is a type of employer-sponsored retirement savings plan.
Typical examples are 401(k)s, 403(b)s, 457s, and SIMPLE IRAs.
A salary reduction plan allows you, as an employee, to contribute some of your current income to a retirement account in your name and to accumulate tax-deferred earnings on those contributions. In most plans, you contribute pretax income, which reduces your current income tax, and you pay tax at withdrawal at your regular rate.
With Roth salary reduction plans, you contribute after-tax income but qualify for tax-free withdrawals if you are older than 59 1/2 and your account has been open at least five years.
Your employer may match some or all of your contribution according to a formula that applies on an equal basis to all participating employees. All salary reduction plans have an annual contribution cap that's set by Congress and allow annual catch-up contributions for participants 50 and older.
- Browse Related Terms: 401(k), 401(k) Plan, 403(b), 457, After-tax contribution, After-tax income, Automatic enrollment, CAP, Catch-up contribution, earned income, Employee stock ownership plan (ESOP), Excess contribution, Health Savings Account (HSA), High deductible health plan (HDHP), Highly compensated employees, Independent 401(k), Individual retirement account (IRA), Individual retirement annuity, individual retirement arrangement (IRA), Keogh plan, Matching contribution, Money purchase plan, Pretax contribution, Pretax income, Profit sharing, Recharacterization, Required beginning date (RBD), Roth 401(k), Roth IRA, Salary reduction plan, SIMPLE, Simplified employee pension plan (SEP), Tax-Deferred
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In a sale-leaseback arrangement - also known as a leaseback - an owner sells his or her property, and then immediately leases it back from the buyer as part of the same transaction.
This way, the seller gets the profits from the sale while keeping possession and use of the property, while the buyer is assured immediate long-term income on the property.
Sale-leaseback transactions are most commonly used in commercial real estate, but can also apply to commercial vehicles and other types of property.
- Browse Related Terms: Bearer form, Book-entry security, Buyer's agent, Fair market value, Sale-Leaseback, security, Stock certificate
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A sales charge is the fee you pay to buy shares of a load mutual fund or other investment purchased through a financial professional.
The charge is typically figured as a percentage of the amount you invest. As the size of your investment increases, the rate at which you pay the sales charge may decrease.
Each dollar amount at which there is a corresponding reduction in the charge is known as a breakpoint. For example, the rate may drop from 4.5% to 4.25% with an investment of $25,000.
The sales charge on a mutual fund may be imposed as a front-end load when you buy (also known as a Class A share), as a back-end load when you sell (also known as a Class B share), or as a level load each year you own the fund (also known as a Class C share).
- 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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A sales tax is a tax imposed by state and local governments on transactions that occur within their jurisdictions.
The taxing authority determines which transactions are subject to tax and the flat rate at which the tax is calculated. Some countries, though not the United States, impose a national sales tax often called a value added tax (VAT).
- Browse Related Terms: Business Day, Bylaws, Debt Elimination Scheme, Domicile, Incorporation, Limited liability company, Nonprofit, Recapture, sales tax, Sole proprietor, Tenancy-in-common
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A tax on retail products based on a set percentage of retail cost.
- Browse Related Terms: Commission, excise tax, Progressive tax, proportional tax, Regressive tax, sales tax, transaction taxes
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This corporation purchases student loans from various lenders, such as banks, and packages the loans as bonds or short-term or medium-term notes. After issue, these debt securities trade on the secondary market.
Sallie Mae guarantees repayment of the bonds and notes, and uses the money it raises through the sale of these securities to provide additional loan money for post-secondary school students. Sallie Mae also arranges financing for state student loan agencies. Its shares trade on the New York Stock Exchange (NYSE).
- Browse Related Terms: Agency bond, Fannie Mae, Freddie Mac, Government bond, Government National Mortgage Association (Ginnie Mae), Quasi-public corporation, Sallie Mae, Scripophily
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Named after its main Congressional sponsors, Senator Paul Sarbanes and Representative Michael Oxley, the Sarbanes-Oxley Act of 2002 introduced new financial practices and reporting requirements, including executive certification of financial reports, plus more stringent corporate governance procedures for publicly traded US companies and added protections for whistleblowers.
Also known as the Corporate and Auditing Accountability, Responsibility, and Transparency Act, or more colloquially as SarbOx or SOX, the law was passed in response to several high-profile corporate scandals involving accounting fraud and corruption in major US corporations.
The law also created the Public Company Accounting Oversight Board (PCAOB), a private-sector, nonprofit corporation that regulates and oversees public accounting firms.
The law has seen its share of controversy, with opponents arguing that the expense and effort involved in complying with the law reduce shareholder value, and proponents arguing that increased corporate responsibility and transparency far outweigh the costs of compliance.
- Browse Related Terms: 10-k, 8-k, Acquisition, Audit committee, Closely held, Conglomerate, Depositary bank, Diluted earnings per share, Insider trading, Merger, Privatization, Retained earnings, Reverse stock split, Sarbanes-Oxley Act of 2002, Spin-off, Stock split
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A document signed by a lender indicating that a mortgage has been fully paid and all debts satisfied. The document must be filed with the County Recorder (or Recorder of Deeds) to clear the title.
- Browse Related Terms: Closing Costs, Closing Statement, Deed, Escrow, Good faith estimate, Real Estate Settlement Procedures Act (RESPA), Refund, Satisfaction of mortgage, Settlement (or Closing) Costs, Settlement agent, Title, Title Insurance, Title Search
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A savings account is a deposit account in a bank or credit union that pays interest on your balance-though some institutions require that you have at least a minimum amount in the account to qualify for earnings.
You can deposit and withdraw from savings accounts as you wish, but you can't transfer money from the account directly to other people or organizations.
While savings accounts typically pay interest at a lower rate than other bank accounts, that may not always be the case. Savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund.
You're covered up to $100,000 in each of three different categories of account in a single bank, or up to $250,000 if an account is a self-directed retirement account (IRA). Different branches of the same bank count as one bank.
- Browse Related Terms: Annual percentage yield (APY), certificate of deposit, Certificate of deposit (CD), Compound Interest, Escheat, Eurodollar, Individual Account, Interest Rate (High/Low), Jumbo CD, Passbook, Savings account, Simple interest, Time deposit
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The US government issues two types of savings bonds: Series EE and Series I.
You buy electronic Series EE bonds through a Treasury Direct account for face value and paper Series EE for half their face value. You earn a fixed rate of interest for the 30-year term of these bonds, and they are guaranteed to double in value in 20 years. Series EE bonds issued before May 2005 earn interest at variable rates set twice a year.
Series I bonds are sold at face value and earn a real rate of return that's guaranteed to exceed the rate of inflation during the term of the bond. Existing Series HH bonds earn interest to maturity, but no new Series HH bonds are being issued.
The biggest difference between savings bonds and US Treasury issues is that there's no secondary market for savings bonds since they cannot be traded among investors. You buy them in your own name or as a gift for someone else and redeem them by turning them back to the government, usually through a bank or other financial intermediary.
The interest on US savings bonds is exempt from state and local taxes and is federally tax deferred until the bonds are cashed in. At that point, the interest may be tax exempt if you use the bond proceeds to pay qualified higher education expenses, provided that your adjusted gross income (AGI) falls in the range set by federal guidelines and you meet the other conditions to qualify.
- Browse Related Terms: Budget, Consumer price index (CPI), Cost-of-living adjustment (COLA), Emergency fund, Holding period, Imputed interest, Savings bonds, Spending plan, US savings bond
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One who holds a Federal appointment for a position that is excepted from the competitive service because of its policy-determining nature or because it involves a close and confidential working relationship with the agency head or other top appointed official. Persons with this type of appointment range from secretaries and chauffeurs to policy advisors.
- Browse Related Terms: Alternate Designated Agency Ethics Official (ADAEO), Designated Agency Ethics Official (DAEO), Ethics Counselor (EC) or Ethics Official, OGE 450 Filer, Reporting Individual, Reviewing Official, Schedule C Employee, SF 278 Filer, Special Government Employee (SGE)
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A screen is a set of criteria against which you measure stocks or other investments to find those that meet your criteria.
For example, you might screen for stocks that meet a certain environmentally or socially responsible standard, or for those with current price-to-earnings ratios (P/E) less than the current market average.
A socially responsible mutual fund describes the screens it uses to select investments in its prospectus.
- Browse Related Terms: Consensus recommendation, index, Inflation rate, Overvaluation, R-squared, Real rate of return, Russell 1000 Index, Russell 2000 Index, screen, Standard deviation
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Scrip is a certificate or receipt that represents something of value but has no intrinsic value. What's essential is that the issuer and the recipient must agree on the value that the scrip represents.
For example, in the past, after a corporate stock split or spin-off, a company might issue scrip representing a fractional share of stock for each share you owned. On or before a specific date, you could combine the certificates and convert the value they represented into full shares.
But most companies today make a cash payment for fractional shares based on the closing price of the stock on a specific date.
- Browse Related Terms: Dilution, Preferred Stock, Rights offering, Scrip, Stub stock, Subscription price, Subscription right, Treasury stock, warrant
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Scripophily is the practice of collecting antique stocks, bonds, and other securities.
The most valuable documents are usually the most beautiful, or those that have some historical significance because of the role the issuing company played in the economy. Sometimes those with distinctive errors are also especially valuable.
- Browse Related Terms: Agency bond, Fannie Mae, Freddie Mac, Government bond, Government National Mortgage Association (Ginnie Mae), Quasi-public corporation, Sallie Mae, Scripophily
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program that provides homeowners a way to modify their second mortgages to make them more affordable when their first mortgage is modified under the HAMP.
Departments of the Treasury & Housing and Urban Development, Making Home Affordable Program - Cite This Source - This Definition- Browse Related Terms: Deferred payments, Foreclosure, Home Affordable Foreclosure Alternatives Program (HAFA), Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), Home Owners’ Loan Act, Loss Mitigation, Second Lien Modification Program (2MP), Trial Period or Trial Period Plan, Work Out
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a loan with a second-priority claim against a property in the event that the homeowner defaults. The lender who holds the second mortgage gets paid only after the lender holding the first mortgage is paid.
Departments of the Treasury & Housing and Urban Development, Making Home Affordable Program - Cite This Source - This Definition- Browse Related Terms: First Mortgage, Guarantee, Hazard Insurance, Lender-Placed Insurance, Lien, mortgage, Mortgage Insurance (MI), second mortgage, Suspension
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When investors buy and sell securities through a brokerage account, the transactions occur on what's known as the secondary market.
While the secondary market isn't a place, it includes all of the exchanges, trading rooms, and electronic networks where these transactions take place.
The issuer - company or government - that sold the security initially receives no proceeds from these trades, as it does when the securities are sold for the first time.
- Browse Related Terms: Electronic communications network (ECN), Fourth market, Instinet, National Association of Securities Dealers Automated Quotation System (NASDAQ), NYSE Arca, Off-board, Secondary market, Third market
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The market for buying and selling existing mortgages; this could be in the form of whole mortgage or MBS sales. Both the primary and secondary mortgage markets are over-the-counter markets — there is no central exchange. Rather, loans are bought and sold through personal and institutional networks.
- Browse Related Terms: Chapter 7 Bankruptcy, Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), Investment Property, Mortgage-Backed Securities (MBS), Preferred Stock, Primary Mortgage Market, Secondary Mortgage Market, Securitization
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