glossary

GLOSSARY

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Accrued market discount

Accrued market discount is the rise in the market value of a discounted bond that occurs as its maturity date approaches. For example, a bond with a face value of $100 might be purchased for the discounted price of $50. Over time, the market value of this bond will gradually rise from $50, reaching $100 at the maturity date, when it's redeemable for the full face value. This increase in market value is not related to a change in market interest rates.

Accumulation

Accumulation refers to the investment practice of buying securities over time, while reinvesting dividends and related income, with the objective of building a sizeable portfolio. With reference to corporations, accumulation can mean the reinvestment of earnings to fund business growth.

Accumulation period

Accumulation period is the timeframe during which an individual contributes regularly to a retirement plan that will provide income payments at some future date. The term is typically used in reference to deferred annuities.

Accumulation phase

Accumulation phase is the timeframe during which an individual contributes regularly to a retirement plan that will provide income payments at some future date. The term is typically used in reference to deferred annuities.

Accumulation plan

An accumulation plan is the investment practice of buying securities over time while reinvesting dividends and related income, with the objective of building a sizeable portfolio. The term is generally used in reference to retirement investing.

Accumulation unit

An accumulation unit measures the value of contributions made to a variable annuity account and documents a contributor's share of participation in that account. The term is also used to measure shares of funds within a unit trust; those shares, or units, can either be reinvested or issued to the investors in the trust.

Acquiring financial institution

An acquiring financial institution is contracted by a merchant to facilitate the merchant's acceptance of credit card payments. The acquiring financial institution acts as the go-between in the transaction, collecting funds from the card company and depositing funds in the merchant's account.

Acquisition fee

A charge in most auto leasing companies for originating the loan, just as mortgage lenders charge points as an origination fee. This could be called a bank fee or an administrative fee and can be paid up front or it is included or ̢

Acquisition indebtedness

A loan you get to build your house, a loan to buy your house or any loan you take out to facilitate major home improvements. The interest that you pay on such a loan is, in most cases, tax-deductible.

Acre

An acre is a unit of measurement for land that is equal to 43,560 square feet.

Acre foot

An acre foot is a unit of volume used to measure large bodies of water. An acre foot is equal to 43,560 cubic feet, or roughly 325,851 gallons. This volume of water will cover one acre of land at a depth of one foot.

ACRES (accelerated cost recovery system)

Commonly referred to as ACRS (pronounced "acres"), a method of depreciating property rapidly for tax purposes. ACRS property is divided into classes and each class has a predetermined time period over which it may be depreciated. ACRS generally is used for property placed in service after 1980 and by Dec. 31, 1986. The modified system that has replaced ACRES is known as MACRS, or Modified Accelerated Cost Recovery System.

ACRS

ACRS is the abbreviation for accelerated cost recovery system, a depreciation method that was introduced and defined in the Economic Recovery Tax Act of 1981. ACRS allows for rapid depreciation (for tax purposes) of property placed into service between 1981 and 1986.

Active income

Active income is money earned for services, including salaries, wages, tips, and commissions. Business profits are considered active income only where there is material participation in the business operations.

Active Investing

Active investing is the practice of constantly buying and selling securities in order to profit from temporary conditions that cause short-term pricing and value changes.