• The classification of an option contract as either a put or a call.
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| ||401 k plan: Is a retirement plan that the employee can set aside a portion of his or her income. The actual dollar amount is subject to annual change. Benefits of the plan are that it affords portability, reduces the employee's annual gross income for tax purposes, and the employee's contributions are immediately vested. Balances are allowed to grow on a tax-free basis and there are provisions for employer contributions as well.A Type of retirement savings plan, used by private firms or nonprofit employers. Also known as a cash-or-deferred.A tax-deferred defined contribution retirement plan offered by an employer.|
| ||403 b plan: A Type of retirement savings plan, used mainly by non-profit employers. Also known as a tax- deferred annuity.A tax-deferred annuity retirement plan available to employees of public schools and certain nonprofit organizations.|
| ||457 plan: A Type of retirement savings plan, used mainly by governmental employers. Also known as an eligible deferred compensation plan.|
| ||Adverse selection problem: Banks have to be aware of a particular Type of borrowers. Some borrowers will have hidden negative information not available to the bank. As the bank demands a higher interest rate, borrowers with safe projects will drop out. Hence, the fraction of borrowers with risky projects will depend on the interest rate. The higher the interest rate, the higher risk will be the pool of applicants. This is called the adverse selection problem.|
| ||Annuity: Fixed number of identical cash flows that start one period from today. Typically, annuity products are used to provide income in retirement.Is an insurance product which comes in two basic forms: fixed and variable. The fixed version can make a lump sum or periodic lifetime payments to the annuitant. The variable version has a separate account attached to the annuity contract. This Type of contract is considered a security because it is dependent on equities and its total value is subject to fluctuate due to market risk. There are many annuity varieties. Some are: Annuity Certain, Annuity Due, Deferred Annuity, Fixed Annuity, Life Annuity, Ordinary Annuity, Perpetuity, and Variable Annuity. Also, see Interest Impact on Present Value of Ordinary Annuity of 1 Per Period.A regular periodic payment made by an insurance company to a policyholder for a specified period of time.A finite stream of equal and periodic (regular) cash flows. These cash flows can be inflows of returns earned on investments or outflows of funds invested to earn future returns.(1) A series of periodic payments. (2) A contract under which an insurance company promises to make a series of regular payments to a named individual for life.|
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What to Know Before Declaring Your Financial Independence: Twenty-somethings may not realize it, but every time they enter a new phase of their life as young adults - perhaps starting college, a career or a family - they're also venturing into a new world of money management. Here are ways to be prepared. More...
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