Glossary.
The ultimate financial dictionary. Plain English definitions for complex financial terms.
A
2 termsAmortization
The process of spreading out a loan into a series of fixed payments over time. While the payment amount remains equal, the ratio of principal to interest changes each month.
Asset Allocation
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.
C
2 termsCapital Gains
A capital gain is an increase in a capital asset's value and is considered to be realized when the asset is sold. It is the difference between the selling price and the original purchase price.
Compound Interest
Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods. Often called 'interest on interest'.
E
2 termsEBITDA
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's overall financial performance and is used as an alternative to net income in some circumstances.
Expense Ratio
An expense ratio is the annual fee that all funds or ETFs charge their shareholders. It represents the percentage of a fund's assets used for administrative and other operating expenses.