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Glossary: T - Z
Tangible Asset: A tangible asset refers to anything that has a value and physically exists. Land, machines, equipment, automobiles, and even currencies are examples of tangible assets. On some financial statements, however, a nonmaterial item may often be listed as a tangible asset, such as, a payment to be made on products or goods already delivered.

Tax Credit:
A tax credit reduces a taxpayer's taxable amount due dollar-for-dollar. A $1,000 tax credit saves the taxpayer $1,000 in taxes. In many cases, tax credits offer incentive to support social change (e.g., renovation of historical property, jobs for the disadvantaged, research and development, and constructing low-income housing).

Tax Deduction:
A tax deduction reduces tax liability by the percentage of the marginal tax bracket for the taxpayer. For example, a $1,000 tax deduction for a taxpayer in the 25% marginal tax bracket saves only $250 in tax (0.25 x $1,000). Allowable deductions include charitable contributions, state and local taxes, and some interest expense.

Tax Lien: A tax lien is a claim against property for unpaid taxes (including city, county, school, estate, income, payroll, property, or sales taxes). A tax lien, which lasts until the claim is satisfied or a statute of limitations takes effect, may make other creditors aware of a delinquent's tax liability.

Tax-Exempt Bond: A tax-exempt bond is a bond issued by a municipal, county, or state government whose interest payments are not subject to tax from federal, state, or local authorities.

Tax-Sheltered Annuity:
This type of annuity, often called a TSA, allows employees of government and nonprofit organizations to make pretax contributions to a retirement plan, up to a predefined annual limit.

Taxable Income: Taxable income is a taxpayer's gross income less all allowable adjustments. Incorporated businesses derive net income before taxes after deducting total costs and expenses from gross sales.

Tenants by the Entirety:Spousescommonly use this form of ownership. Each spouse theoretically owns 100% of the property, but complete ownership will pass at the first death to the surviving spouse without tax and probate.

Tenants in Common: Two or more owners having undivided ownership (not necessarily equal) in property are referred to as tenants in common. This form of ownership does not have a "right of survivorship" in the event that one owner dies.

Term Certain:
In terms of an annuity contract, the term certain is a payout option that provides income for a specified period of time.

Term Insurance:
Term insurance is a type of life insurance that pays benefits only when the insured dies within a specific period. If the insured lives beyond the end of the period, no benefits are payable. Term insurance has no cash value, and premiums traditionally rise with age.

Time Horizon:
The time horizon is the projected length of time for which an investor plans to hold investments.

Title: A title is a document that identifies legal ownership of property, and it is used to transfer ownership from a seller to a buyer.

Title Insurance: Title insurance is a form of insurance that protects against loss due to a defect in a real estate title, such as an ownership dispute or a lien against property. A mortgage lender generally stipulates that a borrower must purchase a title insurance policy.

Title Search: A title search is the inspection of city, town, or county records to determine the legal owner of real estate property, as well as any applicable liens, mortgages, or future interests.

Total Disability: For insurance purposes, this classification indicates that a worker cannot complete most job requirements based on a physical or mental disability. In some cases, total disability is immediate subsequent to the loss of sight or limbs. In other situations, an "elimination" period provides a passage of time to confirm the disability status before an individual receives benefits. Private disability plans, employer group disability benefits, and Social Security will provide a percentage replacement of lost income for gainfully employed workers who are experiencing a total disability.

Total Return: Total return is defined as the gross annual yield on an investment, including capital appreciation or distributions, interest, dividends, and personal taxes.

Transaction Fee:
A transaction fee is a charge for various credit-related activities, such as receiving a cash advance or using an ATM.

Treasuries: Treasuries are negotiated debt obligations that the United States government regularly offers at public auction through the Federal Reserve Bank. Treasuries have varying maturities and yields. Treasury bills have maturities of less than one year, notes less than ten years, and bonds less than 30 years. Issued treasuries may be purchased in the public marketplace and reflect current yields to maturities.

Treasury Bill: Also called a T-bill, a treasury bill is a negotiable debt obligation, which is issued by the federal government and backed by its full faith and credit, has a maturity of one year or less, and is exempt from state and local taxes. Treasury bills have face values ranging from $10,000 to $1 million, and they sell at a discount based on current interest rates.

Triple Net Lease:
A triple net lease is a lease in which the lessee assumes the payments of maintenance and upkeep, taxes, utilities, and insurance. The tenant bears the risks associated with these fluctuating expenses.

A trustee is an individual or party responsible for managing a trust on behalf of a beneficiary or beneficiaries. Duties often include holding title to property, distributing assets, and overseeing investments and payments.

Underwriting is the process by which an insurance company determines whether, and on what basis, it can assume the risk of a specific life insurance policy. Also, underwriting is the business of investment bankers, who purchase new issues of securities from a company or government and then resell them to the public.

Unemployment: When a previously employed worker is "laid off" or involuntarily "not ingainful employment," he or she is considered unemployed and possibly eligible for certain state and federal compensation and benefits.

Uniform Gift to Minors Act (UGMA): Also called Uniform Transfer to Minors Act (UTMA) in some states, these laws allow an adult to contribute to a custodial account in a minor's name without having to establish a trust or name a legal guardian.

Uniform Transfer to Minors Act (UTMA):
Also called Uniform Gift to Minors Act (UGMA) in some states, these laws allow an adult to contribute to a custodial account in a minor's name without having to establish a trust or name a legal guardian.

Universal Life Insurance:Universal life insurance allows the holder to vary the amount and timing of premiums and to change the death benefit, based on the policyholder's changing needs and circumstances. It is generally considered more flexible than traditional whole life insurance and includes a "cash value" savings feature that may allow certain premium funds the opportunity to earn tax-deferred interest.

Unsecured Debt: This type of debt is not guaranteed by collateral. If the borrower defaults, the issuer has no assets to back up the loan.

Variable Interest Rate: A variable interest rate is one that fluctuates with a measure or an index, such as current money market rates or the lender's cost of funds. Often, variable interest rate loans have a fixed rate for several years and then become variable. The borrower is usually protected from dramatic increases in the loan rate by a "rate cap."

Vesting: Vesting is the process leading to a future event at which time money or property held in trust belongs to a person, though it may not be available for distribution until a future date or occurrence. Vesting usually refers to the scheduled confirmation of ownership rights in qualified employee benefit retirement plans.

Volatility: Volatility refers to the relative rate at which the price of a security moves up and down, found by calculating the annualized standard deviation of daily change in price. The more volatile a security or mutual fund, the more it is subject to rapid and extreme price fluctuations relative to the market.

Voluntary Employee Contribution:
An employee may be permitted to make voluntary contributions to a retirement plan, usually unmatched by the employer, in excess of mandatory contributions to his or her plan account. Voluntary employee contributions may be deposited on a pre-tax or post-tax basis that is pre-arranged.

Waiver of Premium:
This insurance policy rider allows a policyholder to stop making premium payments if the insured suffers a permanent disability. Generally, there is an additional cost for this rider to become part of a policy.

Whole Life Insurance:
Whole life insurance provides coverage for the insured's entire life, provided the policyholder continues to pay the premiums. Premiums generally remain level for the life of the contract. In addition, there is also a cash value component that can be used to help supplement future financial needs.

Withholding refers to the process by which an employer deducts a portion of employee wages, usually for income taxes. Employers base the withholding amounts on Form W-4, Employee's Withholding Allowance Certificate, which employees submit when commencing employment. A Treasury account at a bank is the repository for withholding amounts and is a credit toward future tax liability for the calendar year.

Working Capital:
During the business life cycle, working capital or money ensures that the business will be able to operate on a daily basis.

Yield:The yield of an investment is its annual gain or loss, generally expressed as a percent. To determine the yield on a bond, divide the amount of interest received from the bond by the amount paid for the bond. For example, suppose an individual paid $5,000 for a bond. At 5% interest, he/she would earn $250 annually in interest income. The yield, $5,000 divided by $250, would be 5%. Similarly, to determine the yield on stocks, divide the dividend received per share by the amount paid per share.

Yield To Maturity (YTM): The return an investor will receive if a long-term interest-bearing investment, such as a bond, is held until the date it becomes due and payable (maturity date). A calculation to determine the YTM of a bond, for example, would account for the interest rate, the payment schedule, the market value, the face value, and the length of the term.

Zero Coupon Bond: A zero coupon bond is a bond that makes no periodic interest payments, but rather sells at a deep discount from its face value. At the maturity date, the investor will receive the face value of the bond, plus the interest that has accrued over a fixed term.
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