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Financial glossary 4
MARGIN
The cash sources less the cash uses. The amount you have left to spend as you desire after all living expenses, mandatory commitments, and taxes are met.
MARGINAL RATE
The tax bracket
percentage from which your income tax is
calculated. For example, in the case of a person in the 31% tax bracket,
31 cents
of each additional dollar earned would go to the government in taxes.
MARITAL DEDUCTION
In calculating
estate tax, a deduction allowed by law against the estate of the first
spouse to die. The amount of the qualifying property or deduction under
the new Economic Recovery Tax Act of 1981 is the
entire estate of the first to die.
MINIMUM DEPOSIT
When the cash value increases in the insurance policy are used to pay the premiums of the policy.
MONEY MARKET FUND
A mutual fund that invests in money market instruments such as Treasury Bills, U. S. Government agency issues, commercial bank certificates of deposit, commercial paper, and the like. The interest rate on a money market fund fluctuates with the prime interest rate.
MORTGAGE
Usually refers to the balance of the loan on a home. The amount of money borrowed to purchase a home.
NONLIQUID
Investments not easily converted to cash at their current fair market value.
PREFERRED STOCK
Similar to common stock. Generally less dividend and appreciation potential but receives a higher priority or preference over common stock in dividend payments or in the event of liquidation.
PREMIUM
The payment an insurance policy holder agrees to make for coverage.
PRESENT VALUE
The value of a sum of money to be received in the future in today's dollars taking into account either interest rates, inflation, or both.
PRIME RATE
The interest rate charged by large U. S. money center commercial banks to their best business borrowers.
PRINCIPAL
A person's capital or money. Used for investments. Sometimes referred to as equity when talking about a house.
PROSPECTUS
A circular that describes securities or investments being offered for sale to the public.
PURCHASING POWER
The ability of a dollar to buy a product or service. As prices increase, purchasing power decreases. Today's dollar will not buy as much today as it would in 1970.
UNIFIED CREDIT
A credit, established by law, applied to tentative federal estate taxes owed upon death of an individual.
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