Glossary

Term of the Week: Creditworthiness

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1035 Exchange

1035 Exchange is the Internal Revenue Code that allows for tax-free exchange of insurance products.

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401(k)

A 401(k) is a retirement plan offered by for-profit corporations allowing employees to save pretax income.

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403(b)

A 403(b) is a retirement plan offered by some nonprofit organizations, similar to a 401(k) plan.

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AAA

AAA refers to the top ranking a bond can receive from credit rating corporations.

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Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage is a loan with an interest rate that varies based on an index.

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Annuity

An annuity is a contract sold by insurance companies that traditionally is used to provide a sequence of payments to the holder.

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APR

APR (Annual Percentage Rate) represents the actual costs per year over the term of a loan.

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Ask Price

The ask price is the minimum price for which a broker is prepared to sell a security.

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Asset

In financial terms, an asset is an item with exchange value.

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Asset Allocation

Asset allocation refers to the strategy of investing in multiple asset classes to reduce risk of loss.

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