Personal Finance
This is the amount of money you earn before taxes and deductions.
What is gross income?
This is the term for spreading investments across asset classes to reduce risk.
What is diversification?
This financial statement shows a company’s revenues, expenses, and profits over a specific period.
What is the income statement?
This form is used by employees to determine how much federal income tax to withhold from their paycheck.
What is a W-4?
This government institution is responsible for controlling U.S. monetary policy.
What is the Federal Reserve?
This is the standard recommended percentage of your income to allocate toward emergency savings.
What is 20% (or 3–6 months of expenses)?
This type of market facilitates the issuance of new securities.
What is the primary market?
This is the present value of expected future cash flows minus the initial investment.
What is Net Present Value (NPV)?
Roth IRA contributions are made with this type of money.
What is after-tax money?
This economic condition is defined as two consecutive quarters of negative GDP growth.
What is a recession?
This type of account, often used for short-term savings goals, typically offers higher interest rates than a regular savings account but may limit withdrawals.
What is a money market account?
This risk metric indicates how sensitive a stock is to movements in the market.
What is beta?
This is the minimum return a company must earn on an investment to satisfy its investors.
What is the Weighted Average Cost of Capital (WACC)?
This is the maximum amount you can contribute to a traditional IRA in 2025 if you're under 50.
What is $7,000?
This type of policy involves government changes to taxation and spending to influence the economy.
What is fiscal policy?
This type of life insurance builds cash value over time and can be borrowed against.
What is whole life insurance?
Treasury bills are typically issued with this maturity or less.
What is one year?
This valuation method estimates a company’s worth by discounting its future cash flows to their present value.
What is Discounted Cash Flow (DCF) analysis?
Withdrawals from a traditional IRA before age 59½ typically incur this additional IRS penalty.
What is a 10% early withdrawal penalty?
The Consumer Price Index (CPI) is a common measure of this economic factor.
What is inflation?
This personal finance ratio measures your monthly debt payments divided by your monthly gross income, often used by lenders to assess creditworthiness.
What is the debt-to-income ratio?
This type of derivative contract obligates the buyer to purchase, and the seller to sell, an asset at a set future date and price.
What is a futures contract?
This model, used to estimate the cost of equity, incorporates a stock’s beta, the risk-free rate, and the market’s expected return.
What is the Capital Asset Pricing Model (CAPM)?
This IRS rule requires individuals over age 73 to withdraw a minimum amount from their traditional IRAs annually, based on life expectancy tables.
What is a Required Minimum Distribution (RMD)?
This economic concept, illustrated by a U-shaped curve, suggests that beyond a certain point, higher tax rates lead to decreased government revenue due to reduced incentives to work.
What is the Laffer Curve?