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What is an Option?

Basically, an option is an advanced investing strategy to bet on the price movement of an underlying security. Technically, an option is a financial derivative that represents a contract sold by one party (option writer) to another party (option...

What is Net Worth?

Net worth is the value of assets minus liabilities. Net worth is a key measure of financial health applicable to individuals and businesses. In the business context, net worth is also known as book value or shareholders' equity.   See Also: How to...

What is a Mutual Fund?

A mutual fund is an investment portfolio operated by an investment company that raises money from shareholders and invests in a group of assets with a particular investment objective in mind. Common assets in a mutual fund include stocks, bonds...

What is a Fixed-rate Mortgage?

A fixed-rate mortgage is a loan with an interest rate that does not change during the entire term of the loan.   See Also: Ask An Advisor: Which Debt Should I Pay Off First? Ask An Advisor: What Is a Reverse Mortgage? Will You Get Any Mortgage...

What is an Adjustable-rate Mortgage (ARM)?

An Adjustable-rate mortgage (ARM) is a loan with an interest rate that changes on a periodic basis. The change is usually tied to the movement of an economic indicator, most commonly the prime interest rate.   See Also: Ask An Advisor: Which Debt...

What is a Mortgage?

A mortgage is a loan to finance the purchase of real estate, usually with a specified term, monthly payment and interest rate. With a mortgage, the borrower gives the lender a "lien" on the property as collateral for the loan. In the case of...

What is a Money Market Account?

A money market account is a savings account that is highly liquid and insured by the Federal government. Because of these features, they pay a lower interest rate than most other investments. Money market accounts offer many of the same services...

What is Microfinance?

Microfinance is an area of financial services focused on empowering and providing lower income individuals with the necessary means to become self-sufficient and creditworthy. The loans provided to these individuals are typically small, but may be...

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