Term Of The Day (Investment Related)

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1. The economic costs that a business incurs through its
operations to earn revenue. In order to maximize profits,
businesses must attempt to reduce expenses without also cutting
into revenues. Because expenses are such an important indicator
" E8 r4 ]* a  u" Y% V- eof a business's operations, there are specific accounting rules
0 a5 r* l1 {8 W2 a' @on expense recognition.

# N9 m6 _+ ]* }# {2. Money spent or costs incurred that are tax-deductible and
. N: C1 j. f- j( g1 Ureduce taxable income.

A type of credit card issued to people with substandard credit scores or limited credit histories. These cards will typically carry much higher interest rates than credit cards granted to prime borrowers; they also come with extra fees and lower credit limits.

: W2 y% O, e: I4 ]9 gSubprime credit cards are issued by both major issuers and smaller financial institutions that focus only on subprime lending.

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The costs involved with a company paying increased health-care
1 a4 v3 E5 U3 gfees and other benefit-related costs for its current employees
+ L$ L- o- [# ?and retired pensioners. It is believed that escalating legacy
costs can be a very large contributing factor towards limiting
a company's competitiveness.

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An exchange-traded fund (ETF) that is constructed by using
$ ], }' I4 Y  t. h* v, \+ j, H( Evarious derivatives for the purpose of profiting from a decline
( ~$ ~( ~$ T+ ?5 @6 Bin the value of an underlying benchmark. Investing in these
+ Q- L3 L+ R) @1 X: V% Y+ P' t" ~ETFs is similar to holding various short positions, or using
! g& E" d& @% v7 m, o0 F& Ra combination of advanced investment strategies to profit
from falling prices.
8 }) b- c2 Q1 \6 F/ I& G' M
Also known as a "bear ETF".

What Does it Mean?
7 g; m) ]+ z/ jA tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

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A market hypothesis stating that investors and traders react
disproportionately to new information about a given security.
This will cause the security's price to change dramatically,
6 L8 P- A5 p3 Z: S5 W6 O3 F$ }' Qso that the price will not fully reflect the security's true
1 G( ?1 e4 g7 o5 Z5 x6 kvalue immediately following the event. Typically, the price
+ i0 w# q- c( y. J, }3 u- e* Hswing from overreaction is not long lasting, as the stock
price will tend to return back to its true value over time.

% {. Z7 u  w, N" @The overreaction hypothesis is not consistent with the
2 z# L* }' f$ f; h% K" qefficient market hypothesis.

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Selling securities at a loss to offset a capital gains tax
liability. Tax gain/loss harvesting is typically used to limit
# j" @9 }8 ~1 ?2 V6 r/ a' h( _the recognition of short-term capital gains, which are normally
8 p& T* j8 c0 h1 [9 T# Y$ [taxed at higher federal income tax rates than long-term capital
4 ]6 W7 }" t# A* q* i" Y, k& ]gains.

( M1 P3 @! ^+ d! d& vAlso known as "tax-loss selling".

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A tax credit that can't reduce the amount of tax owed to less
than zero. If the credit were able to reduce the amount of tax
* G) {3 }# {; c/ W5 Qowed to less than zero, the taxpayer would be entitled to a
payment from the government.

Also referred to as a "wastable tax credit."

A merger, a sale or an agreement in which one party in the deal presents the other party with very attractive terms and conditions. The terms of a sweetheart deal are usually so lucrative that it is difficult to justify turning the offer down.

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: [4 X# B6 v& d# A  M5 R' G3 ^A type of retirement savings contribution that allows people
+ ^$ i2 ~3 S* _2 o' qover 50 to make additional contributions to their 401(k)s
5 \9 E& X. Q2 n5 w' |and/or individual retirement accounts. The Economic Growth
2 ~! n, K( x: s& ^/ ~, r5 ^8 land Tax Relief Reconciliation Act of 2001 (EGTRRA) created
this provision so that older individuals would be able to set
aside enough savings for retirement.