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Glossary » B









Glossary: B

Balloon Mortgage: This mortgage type has a final payment that is considerably larger than the preceding payments. Balloon mortgages are typically used when borrowers anticipate receiving a large sum of extra cash to pay the balance or when they expect to refinance before the balloon payment comes due.

Bankruptcy: An inability to pay outstanding debt, in full or in part, or declaring insolvency may lead to bankruptcy. Bankruptcy is an expensive process and may adversely affect future credit opportunities. Some more recognizable bankruptcy applications include the following:

Chapter 7: A debtor (individual) is declared bankrupt, and a court appointed trustee initiates a liquidation process and a dischargeof all eligible debts. The debtor has no financial sources to attempt a reorganization. A separate taxable entity is created.

Chapter 11: A debtor (business, individual, or partnership) is declared bankrupt but is allowed reorganization to attempt debt repayment. Creditor approval is required. A separate taxable entity is created.

Chapter 13: A debtor (individual or sole proprietor) is declared bankrupt but is allowed to retain estate-related assets and to restructure debt obligations for eventual payment. No creditor approval is required.

Basis: The original cost and any additional outlays represent the cost basis in equity investments or property. The Internal Revenue Service computes the taxable gain, profit, or appreciation on the difference between the basisand the actual amount of sale. Therefore, defining basis as original price, and not as total cost, may incorrectly result in an inflated tax liability.

Basis Point: Basis points measure the variation in financial instruments that often fluctuate in very small increments. One basis point is equal to .01%; therefore, 100 basis points are equal to 1%. For example, a yield that has increased from 5.46% to 5.58% has increased 12 basis points.

Bear Market: A bear market is characterized by an extended period of declining prices, usually by 20%, in the financial markets. A prolonged downturn of general economic activity is often the catalyst for a bear market in stocks, whereas rising interest rates are typically responsible for a bear market in bonds. The bear market is the opposite of a bull market.

Beneficiary:  This person or entity named in a will, life insurance policy, a qualified retirement plan, or an annuity is eligible, by the terms of such a policy or plan, to receive benefits upon the death of the insured or the plan participant.

Beta:
A beta is a measure of a security's price fluctuations (volatility) relative to an appropriate market index. For example, the Standard & Poor's 500 Stock Index (S&P 500) has a beta of 1. Stocks with betas greater than 1 are subject to more rapid and extreme price fluctuations than the market. Conversely, price fluctuations for stocks with betas less than 1 are less frequent and smaller than the market. Conservative investors generally seek securities with lower beta values, while aggressive investors seek those with higher beta values.

Blue-Chip Stock:
A blue-chip stock is the common stock of a company with a reputation for quality products, services, and management, and a long history of earnings growth and dividend payments. Examples of blue-chip companies include General Electric, International Business Machines, and DuPont.

Bond: This debt security issued by a corporation, government, or governmental agency obligates the issuer to pay interest at pre-determined intervals and repay the principal at maturity. Every bond has a set face value, also known as a par value, which names the amount of money the bondholder will receive when the bond reaches the date of maturity. The face value will never change, but the market value of a bond may fluctuate. If a bondholder sells a bond before its date of maturity, he or she may receive more or less than the face value.

Broker: This financial professional mediates between the buyer and seller during the trading of services or property, such as securities, real estate, insurance, or commodities. In return for services, the broker generally receives a commission.

Budget: Projected income and expenses for a given period is called a budget. A surplus budget indicates profits are expected, a balanced budget anticipates that revenues will equal expenses, and a deficit budget suggests expenses will exceed expenses.

Bull Market:
A bull market is characterized by an extended period of rising security prices, usually by 20% in financial markets. A high volume of trading often occurs in a bull market, which is the opposite of a bear market.

Business Succession:
Business succession is theprearranged process that addresses thefuture orderly transfer of a business entity and plans for every alternative contingency that would affect any transfer. Business succession broadly involves legal, financial, tax, and family concerns.

Buy-and-Hold:
This investment strategy advocates holding securities for the long term, while ignoring short-term price fluctuations in the market. Unlike market-timing investors, who actively buy and sell securities hoping to turn quick profits on short-term price fluctuations, investors who buy and hold securities hope for substantial gains over time.

Buy-Sell Agreement: This written, legal contract provides for the purchase of all outstanding shares from a business owner who wishes to sell, wants to terminate involvement, is permanently disabled, or has died. A buy-sell agreement generallyallows for a different, future ownership structure. The agreement may be funded with life and disability income insurance, and it may contain specific purchase arrangements.
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This site has been published for residents of the United States. The site has been prepared for informational purposes only. It is not an offer or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular strategy. ChartMark Investments is a Registered Investment Advisor in the states of Oklahoma, Louisiana and Texas. If you are not a resident of one of these three states we will not be able to share investment advice and related services with you at this time. Should you desire information on ways in which our company may help you with your financial service interests please feel free to contact us. We may be able to become registered in your state or qualify for a de minimis exemption at which time we would be able to further discuss how our services may meet your needs.



This communication is strictly intended for individuals residing in the state(s) of LA, OK and TX. No offers may be made or accepted from any resident outside the specific states referenced.
 


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