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Glossary of Terms

A - B

Accrued Interest

For interest earning deposit accounts, the amount of interest earned but has not yet been paid.

Adverse Action Notice

A notice advising the consumer that the deposit account or credit on the terms requested has been declined based on credit reporting agency information.

Amortization

The reduction of debt by regular payments of principal and interest over a period of time.

Amount Financed

The amount of credit extended and listed on the retail sales contract or loan agreement.

Annual Percentage Rate (APR)

A term representing the total cost of credit. The APR disclosed on a retail sales contract or loan agreement is the total finance charge, including interest and fees, expressed as a yearly rate.

Annual Percentage Yield (APY)

A percentage rate that reflects the total amount of interest paid on a deposit account (e.g., checking, savings, CD or IRA). It is based on the interest rate earned on your account and the frequency of compounding for a 365-day period.

Automated Clearing House (ACH)

An electronic funds transfer system that moves money between depositary institutions across the United States.

Available Balance

The most current record of the amount of money available for your use or withdrawal.

Average Daily Balance

For checking and savings accounts, the daily ending balance divided by the number of days in the statement period.

Balance - loan products

The amount owed on a loan agreement or retail sales contract. The balance on a loan account is the amount remaining to be paid back.

Bill of Sale

A document that shows the details of a motor vehicle sale. The dealership will prepare a bill of sale to document the purchase of a vehicle.

Bill Pay

A Wells Fargo Online® service that offers the convenience and control of managing and paying bills online. With Wells Fargo Online Bill Pay, you can pay any payee approved by us in the continental US, Alaska and Hawaii, and the following US Territories: Guam, Puerto Rico and the Virgin Islands. You can schedule a one-time payment, recurring payments and choose to receive electronic bills from selected billers.

Billing Cycle

The number of days in the billing period. It includes the day after the previous close date through the current closing date of the account.

Borrower/Co-borrower

The individual(s) who are legally bound by the retail sales contract or loan agreement to fulfill the terms of the contract, includes making payments.

Business Day

Every day is a business day except Saturday, Sunday, and federal holidays.

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C - D

Canceled Check

A check that is marked paid after being presented for deposit or cash and paid by the bank on which it is drawn.

Cashier's Check

A check drawn on and issued by the bank.

Certificate of Deposit (CD)

A deposit product offered by a bank where the depositor agrees to leave an agreed-upon amount of money on deposit for a specified period of time in return for a rate of interest that may be higher than that available on savings account. CDs are FDIC-insured up to applicable limits.

Certificate of Title

A document that shows ownership of a vehicle as well as any applicable liens.

Check

A written order you have authorized instructing the bank to pay a specific person or entity a specified amount of money from your account.

Checking Account

A bank account that allows you to withdraw available funds at any time, without advance notice.

Chip Card

A debit or ATM card that has a chip on the front as well as the traditional magnetic stripe on the back. The chip provides added security when used at a chip-enabled terminal or ATM and greater global acceptance. Many countries worldwide have adopted chip technology, and it will become the standard for card payments in the U.S. If a merchant or ATM has not yet adopted chip technology, your transaction will be processed using the magnetic stripe as it is today.

Collateral (or Security)

Personal property, such as a house, car, Wells Fargo Savings account, stock, bond, or CD, pledged as a guarantee that a borrower will repay a loan.

Compound Interest

When interest is paid not only on your deposits, but also on the interest that has been earned on your account.

Comprehensive insurance

Insurance covering damage to a vehicle caused by events other than a collision, such as flood, fire, hail, theft, or vandalism.

Contractual obligation

The legal responsibility of a borrower to fulfill the terms of the loan agreement, including repayment of the loan.

Coverdell Education Savings Account

An investment account designed to assist with paying for education-related expenses. Contributions potentially grow tax-deferred and distributions are not taxed if used for qualified expenses. Distributions for non-qualified educational expenses are subject to income tax and an IRS 10% additional tax may apply.

Credit Agencies (or Credit Bureaus)

Organizations that collect individual consumer credit information and provide credit reports to potential lenders, employers, landlords, etc., for the purpose of aiding in their decision-making process.

Credit Report

A history of your personal and financial information collected and maintained by a credit reporting agency.  A consumer is entitled to a free credit report from AnnualCreditReport.com.

Dealer invoice

The price of a vehicle that is shown on the invoice that a dealer receives from the manufacturer of the vehicle. This price may not actually be the amount the dealer pays for the vehicle.

Debit

Any transaction that reduces the balance in your bank account. A check, ATM withdrawal, and debit card purchase are all examples of debits.

Debit Card

A card issued by the Bank for making purchases and payments at participating retailers and service providers – including online or by phone. You can also use it to access cash at ATMs. Purchases and payments are deducted from the primary checking account linked to the card. The debit card comes with a chip on the front as well as a traditional magnetic stripe on the back.

Debt Consolidation

Financial strategy in which you take out a low-rate loan to pay off one or more high-interest loans or credit cards.

Debt Security

A security representing money borrowed that must be repaid, usually at a certain time and with a certain rate of interest. For example a bill, bond, commercial paper or note.

Debt-to-income (DTI) ratio

A borrower's total monthly debt payments divided by the borrower's gross monthly income. This is one way lenders measure a borrower's ability to manage monthly payments for a given loan.

Deferment

The moving of a monthly payment or payments to the end of the loan, which extends the loan maturity date. Interest continues to accrue during a deferment, which results in additional costs to the borrower.

Delinquent

When a borrower is late or past due on a loan payment.

Depreciation

The decrease in the market value of a vehicle over time. The amount of yearly depreciation is affected by variables including car condition, resale market supply and demand, and reputation of the manufacturer, model, or both.

Digital Wallet

A digital wallet is a way to carry your credit and debit card information in a secure digital form on your mobile device (smartphone, smartwatch, tablet). Instead of using your physical plastic card to make purchases, a digital wallet allows you to pay in stores, in apps, or online.

Direct Deposit

An automatic electronic deposit of your salary, pension, Social Security, or other regular income deposited through the ACH network to your Wells Fargo deposit account by your employer or an outside agency.

Dormant Account

An account with a positive balance becomes dormant if you do not initiate an account-related activity (as determined by the laws governing your account) for a specified period of time.

Down Payment

The money paid by a borrower toward the purchase price of the vehicle to reduce the amount of the loan. This may be made by cash or by trading in the borrower's current vehicle.

Due date

An established date each month on which a loan payment is due. The due date is disclosed on the retail sales contract or loan agreement and on the monthly statement.

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E - F

Escheat

If you do not initiate an account-related activity within the time period specified by applicable state unclaimed property laws (generally, three or five years) and you fail to respond to any Wells Fargo outreach (when it’s required by law) to confirm your awareness of and interest in the account funds, Wells Fargo may be required by law to transfer your account funds to the appropriate state.

Extended warranty

A contract covering specified car-related problems after the expiration of the manufacturer's warranty.

Fair Credit Reporting Act

A United States federal law that governs the exchange of credit information.

Federal Deposit Insurance Corporation (FDIC)

Federal agency that insures deposits of member institutions for up to $250,000 per depositor per insured financial institution, for each account ownership category.

Finance Agreement

The legal document (retail installment contract) that includes disclosures, terms, and conditions of the retail sales contract.

Finance Charge

The cost of credit to the consumer, expressed as a dollar amount.

Fixed Interest Rate

An interest rate that does not change during the life of the loan or for a pre-determined period on a deposit account.

Franchised Dealer

A dealership that is authorized by an automobile manufacturer to sell that manufacturer's products. A franchise dealership normally has an affiliation with the manufacturer included in its name.

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G - H

Grace Period

For Time Accounts (CDs), the 7-day period after the maturity date where changes can be made to the account without a penalty, including depositing or withdrawing funds or making a change to the term.

Gross income

Income before taxes or other deductions.

Guaranteed Asset Protection (GAP)

An optional product that covers the "gap" between the amount owed on the loan and the vehicle’s value in the event of a total loss. Some exclusions apply, so it is important to review the coverage details to understand the limitations to GAP coverage.

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I - J

Interest

An amount paid on deposits or a fixed charge for borrowing money, usually a percentage of the amount deposited or borrowed. It does not include extra charges such as fees.

Interest Rate

The percent, per unit of time, that a bank or financial institution pays a customer for their deposits or charges a customer for borrowing money. See Annual Percentage Yield (APY) for deposit accounts or Annual Percentage Rate (APR) for credit accounts.

Interest-Earning

Bank deposit accounts that earn interest. An interest-earning account may earn interest at a variable or a fixed interest rate.

Joint Account

A bank account owned by two or more people.

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K - L

Kelley Blue Book (KBB.com)

Public website that reports market value prices for new and used automobiles of all types. This website is not affiliated with Wells Fargo.

Late fee

For auto loans, a charge assessed by a lender when the borrower fails to make a required payment on time.

Lemon law

Federal or state law that protects consumers against the purchase of vehicles found to be persistently defective.

Lien

A legal claim of ownership on a vehicle used as collateral for payment of a loan.

Linked

Linked refers to accounts or services that are tied to or connected to other accounts or services so that funds may be transferred electronically between accounts. For information about your specific accounts, please refer to your account terms.

Loan agreement

The written agreement between a borrower and a financial institution identifying the terms of the loan.

Loan-to-value (LTV) ratio

A ratio determined by dividing the loan amount by the sales price or appraised value, expressed as a percentage. For example, with a loan amount of $8,000 and a sales price of $10,000, the LTV ratio would be 80%.

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M - N

Manufacturer's suggested retail price (MSRP)

The manufacturer's recommended selling price for a vehicle plus any optional accessories.

Maturity Date

For auto loans, the final payment date of the loan if payments are made according to the loan agreement or retail sales contract.

For Time Accounts (CDs), the date on which the term ends and changes can be made to the account without a penalty.

Money Order

A negotiable instrument where the purchaser orders the issuing bank to pay a specified sum of money to a specified payee.

NADA

National Automobile Dealers Association. NADA provides consumers information about the value of vehicles and other automobile industry related services.

Negative equity

When the amount owed on a vehicle is greater than the vehicle's value. This situation is also referred to as "upside-down."

Non-sufficient Funds (NSF)

A term used to indicate when an item such as a check, or other transaction presented for payment is returned unpaid because the available balance in your deposit account is less than the amount of the item. Also called "returned item" or "bounced check." A fee may apply.

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O - P

Online Banking (Wells Fargo Online)

A service that allows you to handle most banking activities from your computer or mobile device via the Internet. Banking activities such as opening accounts, monitoring account activity, transferring funds, paying bills, etc., can be done quickly, easily and safely.

Overdraft

An available balance of less than $0.00 in your account.

Overdraft Protection

An optional service where you can link eligible savings and / or credit accounts to authorize or pay your transactions if you don’t have enough money in your checking account. Subject to applicable Overdraft Protection transfer or advance fees. Account eligibility requirements apply. To learn more, visit wellsfargo.com/overdraftservices.

Payoff amount

Amount required to pay off the remaining balance on the loan or finance agreement.

Personal Identification Number (PIN)

A unique code that is tied to your ATM or Debit Card that verifies your identity.

Point-Of-Sale (POS)

A merchant transaction (purchase or return) made through a store, telephone, or internet using an ATM card or debit card.

Principal balance

The unpaid balance owed on a loan which does not include interest or any fees.

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Q - R

Regulation D

A Federal Reserve Board regulation that sets an early withdrawal penalty on certain withdrawals from or closures of a time account (CD).

Returned Item

If you cash or deposit an item into your account and it is returned to the Bank unpaid, your account is charged a Cashed/Deposited Item Returned Unpaid fee. Also see Non-sufficient Funds (NSF).

Roth Individual Retirement Account (IRA)

This IRA offers tax-free growth potential. Investment earnings are distributed tax-free in retirement, if a five-year waiting period has been met and you are at least age 59½, or as a result of your disability, or using the first time homebuyer exception, or taken by your beneficiaries due to your death. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income.

Routing Number

The nine-digit number on the bottom left hand corner of your checks, to the left of your account number. The routing number identifies the bank that issued the check. Every bank in the United States has at least one routing number.

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S - T

Salvage/branded title

A note on the certificate of title that means a vehicle has been severely damaged and/or deemed a total loss by an insurance company that paid a claim on it. Each state has different regulations on the sale of salvaged vehicles. Wells Fargo Auto does not finance vehicles with salvaged or branded titles. Vehicles returned to the manufacturer under a lemon law, or other similar state laws, will have a branded title.

Savings Account

An FDIC-insured bank deposit account that earns interest. Unlimited withdrawals are permitted in person and at the ATM. Other withdrawals are subject to limits. Select Wells Fargo savings accounts permit limited check access.

Simple Interest

Interest that is calculated only on the principal amount, that is, the amount of the money that was originally deposited. (By contrast, compound interest is when a financial institution pays you interest, not only on your initial principal amount, but also on the interest your deposit has earned over time).

SIMPLE IRA

Savings Incentive Match Plan for Employees. Retirement plan designed for the employees who work for small companies with 100 or fewer employees. Contributions are made pre-tax.

Statement Period

The dates of your statement period are located on your account statement, which provides a record of all transactions posted during that statement period. Statement periods can be varying lengths including monthly, quarterly, semi-annual, or annual.

Stop Payment Order

A request to the bank to not pay a particular check that you have written against your account or a group of checks should they be lost/stolen. A stop payment can also be placed on future preauthorized automatic payments from your account.

Term

The amount of time to repay the loan disclosed on the retail sales contract or loan agreement, typically 24 – 84 months for auto loans.

Time Account, Time Deposit, or CD

An FDIC-insured bank deposit account where you agree to keep the money on deposit for a specified period of time, usually anywhere from three months to several years. In exchange, the interest rate paid is usually higher than the rate paid on savings accounts. Accounts with higher balances and longer terms may earn higher rates. Funds withdrawn prior to "maturity" are subject to an early withdrawal penalty. You can elect to let accrued interest compound in the account or have it paid to you monthly, quarterly, or annually. Wells Fargo's Time Account is also known as a CD.

Trade-in allowance

The amount the dealer agrees to pay for a buyer's trade-in vehicle when the buyer is purchasing a car from the dealer.

Traditional Individual Retirement Account (IRA)

This IRA offers tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement. Additionally, depending on your income, your contribution may be tax deductible.

Truth in Lending Act

A United States federal law that requires lenders to disclose the cost of the loan, among other information, which can be found in the loan agreement.

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U - V

Underwriting

The process of evaluating an applicant’s creditworthiness in order to decide whether or not to extend credit to that applicant, including verifying data and approving or declining an application for a loan.

Variable Rate

An interest rate that can change on a periodic basis or when certain conditions are met.

Vehicle identification number (VIN)

The vehicle's unique 17-digit identification number. This number can be found by looking at the dashboard on the driver’s side of the vehicle. It can also be found on the driver’s side door jamb of the vehicle or on the owner’s insurance card.

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W - X

Warranty

An agreement from a manufacturer to pay for certain types of repairs during a specified amount of time.

Wire Transfer

Wells Fargo's wire transfer system enables you to move money between financial institutions in the U.S. and throughout the world. Because wire transfers are immediate, they are also used for transactions requiring finality of payment.

Withdrawal

To take money out of your account. You can do this many different ways, including:

  • Writing a check
  • Debit card purchase – use your debit card to make everyday purchases and pay bills worldwide at participating retailers and service providers, including online or by phone
  • ATM withdrawals – get cash at ATMs worldwide
  • At any Wells Fargo banking location

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Y - Z

0 - 9

12b-1 fee

Part of the overall expense ratio of mutual funds, this is an annual fee to cover a mutual fund's marketing and distribution cost and is disclosed in a fund's prospectus. Not all funds charge this fee, but a fund that charges more than 0.25% in 12b-1 fees cannot advertise as a no-load fund.

401(k)

A defined-contribution or a profit sharing contribution retirement plan that allows employees of a company to defer salary pre-tax to invest for retirement. Employers can also make a matching contribution in the plan.

403 (b)

A defined-contribution retirement plan similar to a 401(k) plan that allows employees of a public school, college, university, church, public hospital or tax exempt entity under IRC Sec. 501(c)(3) to defer salary pre-tax to invest for retirement.

457

A retirement plan that allows employees of certain state and local governments and non-governmental entities tax exempt under IRC 501 to defer salary pre-tax to invest for retirement.

529 College Savings Plan

A savings plan sponsored by a state to assist with saving money to cover the cost of educational expenses. Earnings may grow tax-deferred, but contributions are not tax-deductible for federal tax purposes. Some states allow a deduction for contributions. Withdrawals for qualified education expenses may be tax-free. Withdrawals for non-qualified expenses may be subject to income tax and a 10% penalty.

52-Week High

The highest price of a security over the past 52 weeks (split-adjusted).

52-Week Low

The lowest price of a security over the past 52 weeks (split adjusted).

60-day rollover—IRA to IRA

You can take a distribution from an IRA and roll it back into that IRA or an IRA at another institution within 60 calendar days. Please note that only one distribution is eligible to be rolled over per 365 days per IRA owner. The assets rolled back into the IRA must be the same assets distributed.

 

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A - B

Accrued Interest

Interest accrued on a bond or other fixed income security since the last interest payment was made. At the time of a sale, the buyer of a bond pays the market price plus accrued interest to the seller. Accrued interest is calculated by multiplying the coupon rate by the annualized number of days that have elapsed since the last payment.

Actively Managed Mutual Fund

A type of mutual fund where a portfolio manager makes day-to-day decisions about what securities to buy, sell or hold in the portfolio in accordance with the fund's investment objective in an effort to outperform its benchmark index.

After-tax Return

The profit or loss made on the sale of an investment after all fees, commissions, and income and capital gains taxes have been deducted.

All or None (AON)

A stipulation applied to a buy or sell order which instructs the broker to fill the order completely or not to fill it at all. All or None orders are typically associated with large trades; investors use the restriction to prevent an order from being filled incrementally.

Alpha

A measure of risk-adjusted return, Alpha combines the volatility that the fund's price has experienced relative to the market, and the returns the fund has generated relative to the market to define the "excess return" of a fund. A negative Alpha means a fund has under performed its index relative to how much volatility it has shown vs the market.

Alternative Minimum Tax (AMT)

The AMT is a separate income tax that is imposed in addition to your regular tax. It applies to taxpayers who have certain types of income that receive favorable treatment, or who qualify for certain deductions, under the tax law. These tax benefits can significantly reduce the regular tax of some taxpayers with higher economic incomes. The AMT sets a limit on the amount these benefits can be used to reduce total tax.

American Depository Receipt (ADR)

ADRs are negotiable securities representing ownership of the stock of foreign corporations. U.S. banks hold the receipts in depository form, entitling investors to all dividends and capital gains. Even though ADRs do not represent direct ownership of the underlying shares, the certificate, transfer and settlement processes for ADRs are identical to those of U.S. securities. Also known as American Depository Shares.

Annual Returns

The change in value of an investment usually calculated for a calendar year and year-to-date.

Annuity

A contract with an insurance company designed to provide tax-deferred growth of earnings for long-term goals, such as retirement savings. Annuity holders are taxed when taking distributions or withdrawals from the contract. Withdrawals of taxable amounts are subject to income taxes, and if taken prior to age 59½, a 10% IRS penalty may apply. Withdrawals also may be subject to surrender charges or contingent-deferred sales charges. All guarantees of annuities are based on the continued claims-paying ability of the issuing insurance company.

A fixed annuity earns a fixed interest rate that is guaranteed by the issuing insurance company for a specific period of time.

The return on a variable annuity is linked to the performance of the underlying investment sub-accounts — usually a combination of stocks, bonds, and/or money market securities — in which the contract owner chooses to invest. The principal value of variable annuities fluctuates in value, and may be worth more or less than originally invested when redeemed.

Ask

The price at which a security is offered for sale on an exchange or in the over-the-counter market. Asked price represents the lowest level at which a dealer will sell (as opposed to the bid price, which represents what a buyer wishes to pay).

Asset Allocation

The division of an investment portfolio across various types of securities, such as stocks, bonds, and cash alternatives, in an effort to help reduce risk.

Automatic Investment Plan

Also known as a systematic investment plan, a set arrangement where an individual invests in an investment on a periodic basis. Automatic investment plans do not assure a profit or protect against loss in declining markets.

Automatic Reinvestment

A program that allows shareholders to reinvest dividends and capital gains distributions automatically to buy additional shares.

Average Annual Total Returns

The annualized return for an investment, as measured over various intervals such as 1-, 3-, 5- and 10-year time periods.

Average Maturity

For a bond fund, the weighted average number of years until all negotiable instruments held by the fund become due and payable. Average maturity does not take into consideration the fact that some bond issuers may call bonds held by the fund before their maturity date.

Back-end Load

Also known as a contingent deferred sales charge (CDSC), a sales charge paid by a mutual fund investor when shares are redeemed. Based on the length of time an investor holds the shares, the CDSC may be reduced or eliminated over the time period that the fund is held.

Balanced Fund

See Asset Allocation Fund or Growth and Income Fund.

Bank Settlement Account

A Wells Fargo Bank checking account linked to your brokerage account for automated settlement of brokerage transactions and funds transfers.

Benchmark

A measurement, usually an unmanaged index, used for comparison when determining the performance of an investment.

Beta

A measure of risk based on the volatility of price of a security. The higher the Beta, the more sharply the fund's price has moved in relation to the market's movement. See also: Alpha and R-squared.

Bid

The highest price a prospective buyer is prepared to pay for a given security. On an exchange, bid price represents the highest price a market maker or specialist will buy.

Bloomberg Barclays Aggregate Bond Index

An unmanaged index that tracks the total U.S. bond market, which includes U.S. Treasury, government agency, investment-grade corporate bond and mortgage-backed securities with maturities of at least one year. The index includes reinvestment of interest. An investor cannot invest directly in an index.

Blue Chip

Stocks generally considered to be of large, stable and established companies that typically exhibit a measure of financial stability.

Bond

A long-term debt security that obligates the issuer to pay the security's face value amount on a specified future date. Issued primarily by governments and corporations. Also called fixed income securities, the issuer typically agrees to pay a specified interest rate at regular intervals until the bond's maturity date. Some bonds can be called, or redeemed, prior to maturity. See also: Callable.

Book Value Per Share

The accounting value of an outstanding share of stock calculated by subtracting a company's liabilities from its assets and dividing by the number of shares outstanding. Book value indicates to an investor how much a share of stock might be worth from an accountant's point of view; it is not the same as a stock's market price.

Breakpoint

The investment amount at which a load fee or sales commission is proportionally discounted. Breakpoints are typically associated with the purchase of Class A mutual fund shares. Larger purchases usually qualify for increasing discounts. See also: Load.

Brokerage Certificate of Deposit (CD)

A large-denomination CD sold by a bank to a brokerage, which then divides it into smaller pieces for sale to its customers. Brokerage CDs generally pay higher interest than CDs issued directly by banks, but their value can fluctuate on the secondary market. CDs are FDIC-insured up to $250,000 and are typically more liquid than bank-issued CDs.

Bulletin Board

An electronic quotation system for over-the-counter securities that are not part of the NASDAQ system. The term bulletin board usually refers to the OTC Bulletin Board, which is overseen by the FINRA even though the OTC Bulletin Board is not part of the NASDAQ market. Market makers of bulletin board stocks interact with others via phone, or other electronic media rather than through a centralized exchange.

Buying Power

The maximum valuation available to buy securities in a brokerage account without adding additional equity. For a non-margin account, buying power is the value of cash held in the account. For a margin account, buying power is the value of cash plus marginable securities, plus the value of the Special Miscellaneous Account.

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C - D

Callable

A term used to describe a security which may be redeemed prior to maturity by the issuer. The term applies primarily to bonds but also to preferred stock. U.S. government securities are generally not callable, whereas municipal and corporate bonds typically are not callable for the first 10 years after issue.

Capital

Accumulated money or goods used to produce income.

Capital Gain

The positive difference in valuation between the cost basis and sale price of an investment.

Capital Gains Distribution

Payments to mutual fund shareholders of net gains realized on the sale of securities owned by the fund. The distribution reduces the net asset value (NAV) on the day it is made. Capital gains generally are taxable to the investor unless the shares are held in a qualified retirement account, such as a 401(k) plan or IRA.

Capital Loss

The negative difference in valuation between the cost basis and sale price of an investment.

Cash Account

A brokerage account in which securities purchases are paid in full within settlement date (usually two business days for stocks) after the trade is executed. By law, some types of accounts such as Individual Retirement Accounts and Custodian for Minor accounts must be cash accounts. See also: Margin Account.

Cash Dividend

A cash distribution of earnings to shareholders. Cash dividends are distinguished from stock dividends, which are payments to shareholders in the form of stock.

Certificate of Deposit (CD)

A deposit product offered by a bank where the depositor agrees to leave an agreed-upon amount of money on deposit for a specified period of time in return for a rate of interest that may be higher than that available on savings account. CDs are FDIC-insured up to applicable limits.

Closed-end Fund

Closed-end funds issue a fixed number of shares that usually trade on an exchange, just as stocks do. The share price of closed-end funds is set by supply and demand in the market. This contrasts with open-end mutual funds, which stand ready to issue and redeem shares at net asset value on a continuous basis. Closed-end funds may be thinly-traded or trade at a discount or premium to NAV.

Commission

Fee charged by a broker for executing a trade. Commission rates are usually based on the number of shares traded or the dollar amount of the transaction.

Common Stock

A class of securities representing units of ownership in a public corporation. Holders of common stock are entitled to receive dividends and — in most cases — to vote on the selection of directors and certain other corporate matters. In the event of liquidation, holders of common stock have rights to a company's assets only after creditors, bondholders and preferred stockholders have been satisfied.

Convertible Security

A security such as a convertible bond or convertible preferred stock that can be exchanged at the option of the holder into common stock at a preset ratio and at a pre-stated price.

Corporate Bond

A debt instrument issued by a public or private corporation that pays a specified interest rate. Most corporate bonds have par value of $1,000 which is redeemable at maturity, and pay a specified semi-annual interest.

Cost Basis

Cost basis is usually the original cost of an asset (including commissions and other fees) and is used to determine the gain or loss. Depending on the type of investment you hold, the basis may be adjusted up or down while you hold it. The basis could also be determined by a value other than original cost if the investment was received by gift, inheritance, or through employment.

Coupon Rate

The interest rate on a debt security that the issuer promises to pay until maturity. Usually expressed as a percentage of the face value. See also: Face Value

Coverdell Education Savings Account

An investment account designed to assist with paying for education-related expenses. Contributions potentially grow tax-deferred and distributions are not taxed if used for qualified expenses. Distributions for non-qualified educational expenses are subject to income tax and an IRS 10% additional tax may apply.

Credit Quality

A term that refers to the perceived likelihood of default by the issuer of a bond. Credit quality is usually determined by credit ratings, which range from AAA (default highly unlikely) to D (in default). Credit ratings are published by independent bond rating services. In a mutual fund, the term credit quality refers to the average rating of the fund's underlying securities, and does not apply to the stability or safety of the fund's shares.

Credit Risk

The likelihood that an issuing entity (e.g. country, state, municipality or company) would default on interest or principal payments of a debt security.

Cumulative Preferred

A class of preferred stock having a provision that if dividends are not paid out on time — due to poor earnings or other factors — the resulting obligation must be met before dividends may be paid on the company's common stock. Most preferred stock issued today is cumulative.

Current Yield

A measurement of the yield associated with an investment, expressed as a percentage of the security's current (or market) price. For bonds and notes, current yield is the annual interest rate divided by the market price. For equities, it is the annual dividends divided by the market price.

CUSIP

A unique nine-character alpha/numeric identifier for each stock certificate or registered bond. The identifer is used to expedite clearance and settlement. CUSIP stands for the Committee on Uniform Securities Identification Procedures.

Custodial Account

An account that is created for the benefit a minor at a bank, brokerage firm or mutual fund company.

Day Order

A buy or sell order that automatically expires if it is not executed or cancelled during the current trading session. Typically, all orders are day orders unless otherwise specified. See also: good till cancelled (GTC)

Debt Security

A security representing money borrowed that must be repaid, usually at a certain time and with a certain rate of interest. For example a bill, bond, commercial paper or note.

Defined Benefit Plan

A retirement plan that promises participants a specified benefit, usually a monthly amount, at retirement. The benefit usually is based on some combination of the participant's years of credited service, salary, and age.

Defined Contribution Plan

An employer-sponsored retirement plan in which contributions are made to individual participant accounts, and the final benefit consists solely of assets (including investment returns) that have accumulated in those individual accounts.

Derivative

A financial contract whose value depends in part upon the value of an underlying security or asset (typically a commodity, bond, equity or currency, or a combination of these).

Direct Rollover

This is when your employer sends your retirement plan distribution directly to your IRA provider. There are no taxes or IRS withholdings, which helps preserve your retirement savings.

Direct Transfer

This money movement occurs when your IRA provider sends your IRA assets to another IRA custodian. There are no taxes, penalties, or IRS reporting for this method. You can do an unlimited number of trustee-to-trustee direct transfers per year.

Distribution

For mutual funds, a distribution is the payment of dividends or realized capital gains to shareholders. Withdrawals from a retirement plan are also known as distributions. Dividends and capital gains may be taxable, unless the mutual fund shares are held in a qualified employer-sponsored retirement account, e.g. a 401(k) plan or IRA. Income tax will apply to taxable amounts when distributions are taken from retirement plans and IRAs. An IRS 10% additional tax on early or pre-59 ½ distributions may apply.

Diversification

The allotment of an investment portfolio across various types of investments in an effort to help reduce risk.

Dividend

A distribution of corporate earnings to stockholders, usually in cash or stock. The dividend amount is declared by the company's board of directors and is usually paid quarterly.

Dividend Reinvestment Plan (DRIP)

A program offered by companies that automatically reinvests shareholder dividends into additional shares of the company's outstanding stock.

Dollar Cost Averaging

A method of accumulating assets by purchasing securities at regular intervals with a fixed dollar amount. Since prices may rise or fall over time, the fixed dollar amount buys more shares when prices are low, fewer shares when prices are high.

Dow Jones Industrial Average (DJIA)

A price-weighted stock market index based on 30 designated company stocks that are mostly listed on the New York Stock Exchange generally representing a range of industries. Stocks in the DJIA are often referred to as "blue-chip" stocks. An investor cannot invest directly in an index.

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E - F

Earnings Per Share (EPS)

The portion of a company's earnings theoretically allocated to each share of outstanding stock. EPS can be useful when assessing a stock's relative investment value, but should be used along with other measures, as companies may use different approaches when accounting for various expenses and sales. Current EPS is calculated as total earnings for the prior 12 months ending with the last calendar quarter divided by the average number of shares outstanding for the period.

Emerging Markets

Financial markets of developing countries that usually have smaller and more volatile economies than more mature and developed countries.

Equity

In a brokerage account, equity refers to the market value of securities held in a given account. Equity is determined by deducting market value of short positions from the market value of long positions. Any outstanding debit balances or credit balances are also factored in.

When referring to corporate ownership, equity is the ownership interest of common and preferred shareholders in a corporation.

For auto loans - the value of the vehicle that serves as collateral for the loan less the outstanding loan balance.

Exchange-Traded Fund (ETF)

These are investment vehicles that combine the diversification of mutual funds with the trading characteristics of individual securities. ETFs typically track an index and are traded like an individual stock on an exchange, enabling it to be bought and sold at any time during market hours.

Ex-dividend date

Date on which a stock's price drops by the amount of a declared dividend. Ex-dividend is the time interval between the announcement and the payment of the next dividend; an "x" will appear next to the name of a stock trading ex dividend. An investor who buys shares during this interval is not entitled to the dividend.

Expense Ratio (%)

Annual management fees and operating expenses paid by shareholders of mutual fund companies. The expense ratio of a fund can be found in its current prospectus.

Face Value

The value of a debt security, such as a bond or note, that appears on the face of the certificate or instrument. Face value is ordinarily the amount the issuing company promises to pay at maturity. Also referred to as Par Value.

Federal Call (Reg T)

This Federal Reserve Board regulation covers the extension of credit to customers in a margin account by securities brokers, dealers, and members of the national securities exchanges.

Federal Deposit Insurance Corporation (FDIC)

Federal agency that insures deposits of member institutions for up to $250,000 per depositor per insured financial institution, for each account ownership category.

Fill or Kill (FOK)

An order to buy or sell securities that must be executed immediately and filled completely or cancelled. FOK applies only to Limit Orders.

Financial Industry Regulatory Authority (FINRA)

A self-regulating organization for the investment industry that enforces standard investing practices and ethical standards among its members.

Fixed-Income Security

An investment, typically a bond, that returns periodic payments at a fixed rate of interest.

Freeriding

Practice in which a brokerage client buys a security in a cash account and (prior to the settlement) sells the same security without putting up money for the purchase. This type of activity may encourages speculation and violates the credit extension provisions of the Federal Reserve Board. The penalty for freeriding requires that the customer's account be frozen for 90 days.

Front-End Load

Sales charge assessed at the time of purchase, with the amount often depending on the dollar amount of the purchase. Also see: Breakpoint

Fund Family

An investment company that issues shares of mutual funds.

Futures Contract

A standardized, exchange-traded contract to buy or sell a particular commodity at an agreed upon price and date in the future.

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G - H

GNMA (Ginnie Mae)

Government National Mortgage Association, a government-owned agency that securitizes mortgages. These mortgage-backed bonds are backed by the “full faith and credit" guaranty of the United States government. The market value of these securities prior to redemption is not guaranteed and may fluctuate.

Good-till-Canceled (GTC)

An order to buy or sell securities — usually at a particular price — which remains in effect for 180 calendar days unless filled, canceled or modified.

Government Bond

Bonds issued by the U.S. Government, typically regarded as the highest-grade securities issues with the least amount of default risk. The major types include: Treasury bills, Saving bonds, Treasury notes, Treasury bonds.

Growth and Income Fund

A fund that seeks to provide both growth of investment and current income usually containing a mix of stock and bond securities. Growth and Income funds are subject to financial and market risks affecting stock and bond investments.

Growth Strategy

An investment strategy that seeks capital appreciation over time, typically in the form of capital gains.

HIFO

"Highest In, First Out". When a customer owns multiple lots of an investment but only sells a portion of shares owned, an instruction to sell the shares that cost the most first, generally in an effort to reduce capital gains or generate capital losses.

House Maintenance Requirement

The level of equity that brokerage firms require on a customer's margin account. Usually higher than the level required by FINRA. House maintenance requirements are set and enforced internally.

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I - J

Inception Date

The date a mutual fund commenced operations.

Income Strategy

An investment strategy that seeks current income and steady cash flow, typically in the form of interest and/or dividends.

Index

For investors, an index represents a hypothetical, unmanaged portfolio of securities, the performance of which is used as a benchmark in measuring performance of actual securities or of markets in general. Investors cannot directly invest in an index although they can invest in mutual funds or exchange-traded funds that seek to match the holdings of an index. Common examples of an index include the Dow Jones Industrial Average and the Standard & Poor's 500. An investor cannot invest directly in an index. See also: Index Funds.

Index Funds

Mutual funds that strive to invest in companies that comprise a market index in an effort to generate similar returns. Indices are unmanaged and investors cannot invest directly in an index. All mutual funds are subject to risks, which can be found in the current prospectus.

Indirect rollover—Retirement Plan to IRA

If you receive a check made payable in your name from either a former or a current employer’s retirement plan, you have 60 days to roll over those assets by having them deposited into a retirement account. The amounts must be eligible to be rolled over. Failure to complete a rollover during that 60-day time frame will trigger taxes, and depending on your age, the 10% additional tax. You can roll over more than one distribution from a retirement plan within a year.

Individual Retirement Account (IRA)

This account allow you to save for retirement and take advantage of tax benefits. There are two main types of IRAs—Traditional and Roth—each with distinct features.

Industry

The main category of the type of business of a company. Examples include: Apparel Retail, Oil and Gas Drilling, and Steel.

Inflation

An ongoing increase in the level of consumer prices as measured by the Consumer Price Index economic indicator.

Initial Public Offering (IPO)

A company's first sale of stock to the public.

Investment Objective

A financial goal - usually expressed in terms of growth, income and safety of principal - that can be used by an investor to determine which types of investments are appropriate.

Joint Tenants with Rights of Survivorship

With this type of account, the account title is registered in two or more names and upon death of one party, the survivors automatically gain ownership of the decedent's interest.

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K - L

Leverage

Using borrowed money to make an investment. Leveraging has a higher return potential as well as a higher loss potential.

Limit Order

An order to buy or sell a stated quantity of a security only at a specified price (the limit) or better. A limit order to sell would be at the limit or higher. A limit order to buy would be at the limit or lower.

Limited Access Investment Accounts

These accounts are investment accounts you do not own. Access is authorized by the account owner and is defined by one of the following levels: Limited Trading or Online View-only.

Liquidity

The capability of easily converting investments into cash.

Load

Sales charge or commission paid by an investor in a load mutual fund. Loads can be charged when shares are purchased (front-end loads), when shares are sold (back-end loads) or at regular intervals over time (level loads). Funds that do not levy a sales charge and have 12b-1 fees of 0.25% or less are called no-load mutual funds.

Long-term Capital Gains

Profit from selling or exchanging an investment that has been held more than 12 months. Generally long-term gains are taxed at a lower rate than short-term gains.

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M - N

Maintenance Call

A call from a broker demanding the immediate deposit of cash or marginable securities to satisfy exchange requirements and/or the minimum house maintenance requirement.

Management Fee

A charge paid to a mutual fund's investment manager for services including portfolio management. This fee, a fixed percentage of the fund's assets, is disclosed in the prospectus.

Margin Account

A brokerage account which allows customers to purchase securities with money borrowed from a broker/dealer. Margin accounts are governed by rules of the Federal Reserve Board, the NYSE, FINRA, and the brokerage house itself. A signed and approved Margin Agreement is a prerequisite to trading on margin.

Margin borrowing may not be appropriate for all investors. When you use margin, you are subject to a high degree of risk. Market conditions can magnify any potential for loss. The value of the securities you hold in your account, which will fluctuate, must be maintained above a minimum value in order for the loan to remain in good standing. If it is not, you will be required to deposit additional securities and/or cash in the account or securities in the account may be sold.

Please carefully review the margin agreement, which explains the terms and conditions of the margin account, including how the interest on the loan is calculated.

Margin Call

A demand that a customer deposit enough money and/or securities with the broker to meet the house minimum requirements established for a margin account. Securities in an account may be liquidated to cover a margin call if the client does not respond. Terms and conditions of margin calls are governed by The Federal Reserve Board's Regulation T.

Market Capitalization

The market value of an entire company as determined by multiplying the stock price by the number of outstanding shares. Generally, small-cap companies are under $1 billion, mid-cap are $1 billion to $5 billion, and large-cap is greater than $5 billion.

Market Order

An order to buy or sell a security at the best possible price at the time the order is received at an exchange.

Maturity Date

The date on which the face value (or principal amount) and last interest payment of a debt security (such as a bill, note, bond, or CD) becomes due and payable. The maturity date of a bond is the date when the bond’s principal and final interest payment are paid.

Minimum Initial Investment

The lowest amount of money that one can invest in a security at the time of first purchase. Generally associated with mutual fund investing.

Minimum Maintenance Requirement

A specified level of equity that must be maintained in a customer's margin account. Required by the FINRA, NYSE, and individual brokerage firms.

Minimum Subsequent Investment

The smallest additional amount of money that can be invested into a security after an initial investment. Generally associated with mutual fund investing.

Modern Portfolio Theory

Modern Portfolio Theory statistics measure a securities historical volatility, risk, and correlation. See also: Alpha, Beta, R-Squared and Standard Deviation.

Money Market Fund

A fund that seeks to provide higher degree of relative safety as well as some current income while generally striving to maintain a constant net asset value of $1 per share. Money market funds invest in short-term (less than thirteen months), highly liquid debt securities including certificates of deposits, U.S. Treasury bills, and commercial paper. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds generally seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.

Mortgage-backed Securities

Securities backed by a pool of mortgages. Often issued by agencies such as GNMA "Ginnie Mae", FNMA "Fannie Mae", and FHLMC "Freddie Mac".

MSCI EAFE Index

The MSCI Europe, Australasia, Far East (EAFE) Index is an unmanaged, free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. An investor cannot invest directly in an Index.

Municipal Bond ("Muni")

A debt obligation issued by a county, city, district or authority, typically for day-to-day governmental needs or for special projects like building roads, schools and hospitals. Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal Alternative Minimum Tax (AMT).

Mutual Fund

An open-ended investment company that pools money from shareholders for investing in stocks, bonds, or money market securities in accordance with a stated investment objective. Mutual funds offer investors diversification and professional management. Shares can be redeemed daily at the current net asset value (NAV).

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O - P

Odd Lot

In stock trading, a purchase or sale of less than 100 shares (typically). See also: Round Lot.

Offer

Price at a security is offered for sale. Also know as the Ask price.

Open-end Mutual Fund

A mutual fund that continually issues new shares to investors on demand. The share price of an open-end fund (net asset value) is determined by the value of the securities the fund owns. See also: Net Asset Value (NAV).

Operating Expenses

A mutual fund's annual expenses including operating expenses, management fees and 12(b)-1 fees that are deducted from its assets.

Order

In a brokerage account, an instruction to a broker to buy or sell securities. See also the four basic order types: Market, Limit, Stop, Stop Limit.

Ordinary Income

Generally, all income that cannot be considered capital gains such as wages, rental income, retirement plan distributions, and interest on savings and checking accounts.

Over the Counter (OTC)

A market, regulated by FINRA, for trading securities that are not listed or traded on an organized exchange but instead through OTCBB (Bulletin Board) or PinkSheets.

Par

See Face Value

Penny Stocks

Shares that typically trade below $5 a share on the over-the-counter market. Penny stocks are generally issued by companies with a history of short or erratic revenues, and most brokerages have special precautionary rules about trading in them.

Preferred Stock

A class of stock that pays a fixed dividend. This class of stock has preference over common stock in the payment of dividends and the liquidation of assets, but generally has no voting rights.

Price/ Earnings Ratio (P/E)

The current price of a stock divided by its earnings per share over the last 12 months. P/E is a measure may be useful in assessing the company's relative valuation.

Primary Beneficiary

A person or entity named to retirement accounts, IRAs, annuities, and life insurance. The primary beneficiary is entitled to receive the inherited balance first, upon death of the plan participant, IRA holder or policy owner.

Primary Market

Market for new issues of securities, as distinguished from the secondary market, in which previously issued securities are traded. These issues are known as initial public offerings or IPOs. Mutual fund shares are also traded in the primary market.

Principal

In an investment, the basic amount invested, exclusive of earnings.

Prospectus

A document that describes a mutual fund or security and offers its shares for sale. It contains information about investment objectives and policies, investment restrictions, officers and directors, charges and financial statements, and purchasing and selling shares.

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Q - R

Quote

The highest bid and lowest offer price currently available on a security. Bid and asked quotes assume round lot transactions - 100 shares of stock, for example.

Reinvestment

Purchasing additional shares of a company or mutual fund with dividends, interest, or capital gains earned.

Rights

An entitlement granted to existing shareholders of a company to subscribe to shares of a new issue of common stock before it is offered to the public. The new shares are usually offered below the current public offering price and for a limited amount of time, allowing shareholders to maintain a proportionate share of ownership.

Risk

The potential for losing money invested due to factors such as the volatility of a security's price, and changing market and economic conditions.

Roth Individual Retirement Account (IRA)

This IRA offers tax-free growth potential. Investment earnings are distributed tax-free in retirement, if a five-year waiting period has been met and you are at least age 59½, or as a result of your disability, or using the first time homebuyer exception, or taken by your beneficiaries due to your death. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income.

R-Squared

R-squared indicates how closely correlated the fund's performance was to the index. The higher the R-squared (out of a possible 100), the more relevant the Alpha and Beta figures may be.

Russell 2000 Index

An unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. An investor cannot directly invest in an index.

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S - T

S&P 500 Index

A widely recognized, capitalization-weighted stock market index of 500 publicly traded stocks that includes the reinvestment of dividends. An investor cannot invest directly in an index.

Sales Charge

Load or commission paid by an investor in a mutual fund. A sales charge can be charged when shares are purchased, sold, or at regular intervals over time. Funds that do not levy a sales charge are called no-load mutual funds.

Sector Fund

A mutual fund that invests in securities within a specific industry. Being less diversified, these funds are often considered to be riskier investments.

Securities and Exchange Commission (SEC)

A federal regulatory agency created by the Securities and Exchange Act of 1934 to protect investors from fraud within the securities market.

Securities Investor Protection Corporation (SIPC)

Non-profit corporation established by Congress to insure securities and cash in customer accounts of member brokerage firms against loss from the failure of firms. Overall maximum is $500,000 of coverage per customer, with a limit of $250,000 for cash. It does not protect against market risks.

Self-directed Retirement Account (SDA)

A retirement account that allows a participant to make his/her own investment decisions with regards to the contributions.

Settlement Date

The date on which an executed order is settled, either by a buyer paying for securities or by a seller receiving the proceeds for the sale. In most stock transactions, the regular way settlement date is two business days after the execution of the trade (T+2).

Share

A unit of equity interest in a corporation. Also unit of ownership in a mutual fund.

Sharpe Ratio

A measure of risk-adjusted performance. The Sharpe Ratio is similar to alpha except that it measures risk and performance in excess of a risk-free investment (the 90-day Treasury bill) instead of the benchmark index. Higher values are desirable and indicate greater return per unit of risk.

Short Sale

A market transaction in which an investor sells borrowed securities. This technique is employed when the investor believes that the price of the security will fall. If the price of the security rises, however, a loss results.

Short-term Capital Gains

Profit from selling or exchanging an investment that has been held 12 months or less. Generally taxed as ordinary income, at rates higher than the long-term capital gains tax rate.

Short-term Redemption Fee

A fee assessed when a shareholder sells mutual fund shares within a specified time period from the date of purchase. Generally charged to discourage market timing.

SIMPLE IRA

Savings Incentive Match Plan for Employees. Retirement plan designed for the employees who work for small companies with 100 or fewer employees. Contributions are made pre-tax.

Simplified Employee Pension Plan (SEP)

The SEP is an IRA-based plan to which employers may make tax-deductible contributions on behalf of eligible employees, including the business owner.

Standard Deviation

A statistical measure of the average volatility of a security's returns in relation to its average value. Money-market securities, which generally have stable asset values, have standard deviations of zero. More volatile, aggressive-growth portfolios usually have a higher percentage of deviation. Standard deviation gives the investor an idea of how much a security's price can be expected to fluctuate based on past results.

Stock Exchange

An organized marketplace in which stocks are traded by members of the exchange, acting both as brokers (agents working on behalf of a client) and as principals (dealers who trade for their own account).

Stock Index Fund

A mutual fund that invests in securities that attempt to match the composition and weighting of a particular stock index.

Stock Split

Increasing the number of outstanding shares of stock without any change in shareholder's equity. A shareholder who owns 100 shares at $50, for example, would own 200 shares at $25 after a 2-for-1 split.

Stop Limit Order

A specialized order to a broker containing instructions to buy or sell at a specific price or better, but only after a given price has been reached or passed. It is a combination of a Stop Order and a Limit Order.

Stop Order

An order to buy or sell a security when it begins to trade at a designated price. A stop order guarantees execution but not price; once the stop target has been reached, a stop order becomes a market order.

Symbol

The letter combination used to identify a particular stock, mutual fund, etc. Also referred to as "ticker symbol" or "trading symbol."

Tax Advantaged

An investment that has tax benefits such as tax-free or tax-deferred income.

Tax Deferred

An investment or investment vehicle, such as a savings bond or retirement plan, in which the taxation of income or capital gains realized is postponed until the investment is redeemed or the assets are distributed from the investment vehicle.

Tax Exempt

An investment that generates income which is not subject to taxation at the federal level and/or state level.

Tax Free

See: Tax Exempt

Ticker Symbol

The letter combination used to identify a particular stock or mutual fund, etc. Also referred to as "symbol" or "trading symbol."

Total Return

A measure of performance, total return is composed of share price appreciation plus interest or dividends and capital gains, if any.

Traditional Individual Retirement Account (IRA)

This IRA offers tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement. Additionally, depending on your income, your contribution may be tax deductible.

Transaction Fee

A fee charged when no-load mutual fund shares that are subject to a transaction fee are bought or sold. See also: No-Load No-Transaction Fee Funds

Treasury Bond

See Treasury Security

Treasury Security

Debt obligations of the U.S. government. Treasury securities are considered to be among the more conservative investments because they are backed by the full faith and credit of the U.S. government for the timely payment of interest and principal if held to maturity. The interest on Treasury securities is exempt from state and local taxes but is subject to federal income tax. There are three types of Treasuries: Treasury Bills, with maturities of one year or less; Treasury Notes, with maturities ranging from one to 10 years; and Treasury Bonds, long-term instruments with maturities of 10 years or more.

Trust

A contract naming a trustee to manage the investments or property within the trust for another person or entity, the trustor, for the benefit of a named beneficiary.

Turnover Ratio

A measure of the amount of buying and selling within a portfolio or mutual fund. A turnover of 100 percent, for example, implies that positions are held, on average, for about a year.

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U - V

Volatility

The degree of fluctuation of a security's price.

Volume

Total daily number of shares of a security that are traded.

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W - X

Warranty

An agreement from a manufacturer to pay for certain types of repairs during a specified amount of time.

Wire Transfer

Wells Fargo's wire transfer system enables you to move money between financial institutions in the U.S. and throughout the world. Because wire transfers are immediate, they are also used for transactions requiring finality of payment.

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Y - Z

Yield (%)

The rate of return, usually dividend or interest payments, on an investment, expressed as a percentage of market price.

Zero Coupon Bond

A bond that makes no periodic interest payments but instead is sold at a deep discount from its face value. The buyer receives a rate of return by the gradual appreciation. It is then redeemed at face value on a specified maturity date.

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