Category: Financial Terms

Buy-and-Hold Investing Buy-and-hold is a passive investment strategy in which an investor purchases stocks, ETFs, or other securities and retains them for a long period regardless of short-term market fluctuations. Instead of attempting to time the market, buy-and-hold investors focus on long-term growth potential and the fundamentals of the businesses or funds they own. How…

Butterfly Spread What is a butterfly spread? A butterfly spread is a market‑neutral options strategy that combines bull and bear spreads to create a position with limited risk and capped profit. It uses four option contracts at three strike prices and can be built with calls or puts. Butterflies are typically used when you expect…

Business Valuations What is a business valuation? A business valuation is an analysis that estimates the economic value of a company or business unit. It’s used to set sale prices, allocate ownership, support tax reporting, inform mergers and acquisitions, settle divorce or estate matters, and guide strategic decisions. Why valuations matter Establishes a defensible dollar…

Business to Government (B2G): How Businesses Sell Goods and Services to Government Agencies What is B2G? Business to Government (B2G) refers to transactions in which private firms provide goods or services to federal, state, or local government entities. It is a distinct commercial model alongside business to consumer (B2C) and business to business (B2B). Government…

Business-to-Consumer (B2C) Key takeaways B2C refers to companies that sell goods or services directly to individual consumers rather than to other businesses. The model evolved from in-person retail and TV-based sales to widespread e-commerce during the dotcom era, then toward mobile commerce. Common online B2C models include direct sellers, online intermediaries, advertising-based sites, community-based platforms,…

Business-to-Business (B2B): What It Is and How It’s Used Business-to-business (B2B) refers to commercial transactions between companies — for example, a manufacturer selling components to a wholesaler, or a wholesaler supplying a retailer. B2B covers goods, services, and digital offerings exchanged among businesses, and it is distinct from business-to-consumer (B2C) and business-to-government (B2G) transactions. Key…

Business risk Business risk is any factor that can reduce a company’s profits or threaten its ability to continue operating. Risks may come from outside the organization (changes in customer demand, economic shifts, regulations) or from inside (management decisions, operational failures). Understanding, measuring, and managing business risk helps firms protect value and improve resilience. Key…

Business Process Outsourcing (BPO) Key takeaways BPO is the practice of contracting specific business functions to specialized third-party providers to improve efficiency and focus on core activities. It covers back-office (finance, HR, IT) and front-office (customer service, sales, marketing) functions. BPO can be onshore, nearshore, or offshore—each offering trade-offs in cost, time zone alignment, and…

Comprehensive Guide to Crafting a Winning Business Plan What is a business plan? A business plan is a strategic roadmap that describes a company’s goals, the market opportunity, the approach to reach customers, and the financial path to profitability. For startups it’s a tool to attract investors and lenders; for established businesses it aligns teams…

Business Models A business model is a strategic plan that explains how a company creates, delivers, and captures value—how it will make money. It covers what the company sells, who the target customers are, the cost structure, and the ways revenue will be generated. Well-defined business models help attract investors, recruit talent, and guide management…

Business Intelligence (BI): Definition, Tools, Benefits, and Examples Business Intelligence (BI) is a technology-driven process that collects, integrates, analyzes, and presents business data to produce actionable insights. BI turns raw data into reports, dashboards, and visualizations that help managers and executives make better, faster decisions about operations, marketing, finance, and strategy. Key takeaways BI converts…

Business Insurance What it is Business (commercial) insurance protects companies from financial losses caused by unexpected events such as lawsuits, accidents, natural disasters, or business interruptions. Policies are tailored to the risks a company faces and can cover property damage, legal liability, employee-related claims, lost income, and more. Why it matters Having appropriate coverage helps…

Understanding Business Expenses and Which Are Tax Deductible Key Takeaways * Business expenses reduce taxable income when they are ordinary and necessary for the trade or business. * Expenses are recorded on the income statement and fall into categories such as cost of goods sold (COGS), operating (indirect) expenses, depreciation, and interest. * Some costs…

Business Exit Strategy What is a business exit strategy? A business exit strategy is a planned approach for an owner to reduce or sell their ownership stake in a company. It defines how and when owners convert equity into cash (or otherwise transfer control) while protecting value for owners, investors, employees, and other stakeholders. Key…

Business Ethics: Key Principles and Importance in Today’s Market What is business ethics? Business ethics are the moral principles that guide decisions and behavior in organizations. They extend beyond legal compliance to establish standards of trust, fairness, and responsibility between a company and its stakeholders—employees, customers, investors, suppliers, and the wider community. Key takeaways Business…

Business Ecosystems A business ecosystem is a dynamic network of organizations—suppliers, distributors, customers, regulators, competitors and complementary partners—that interact through cooperation and competition to create and deliver products or services. Like a biological ecosystem, its members co-evolve, adapt to external changes, and influence one another’s success. Key takeaways A business ecosystem is an interconnected community…

Business economics applies economic theory and quantitative methods to business decision-making. It examines how firms operate, compete, and respond to market and regulatory forces, helping managers, analysts, and policymakers make informed strategic choices. Key takeaways Business economics focuses on financial, organizational, market-related, and environmental issues affecting firms. Core concepts include supply and demand, scarcity, production…

Understanding Business Development Companies (BDCs) and Investment Tips Key takeaways Business Development Companies (BDCs) are regulated investment vehicles that fund small, mid-size, and financially distressed U.S. firms, often providing both capital and managerial assistance. To qualify as a BDC, a company must invest at least 70% of its assets in U.S. businesses with market values…

Business Cycle What is a business cycle? A business cycle (or economic cycle) is the recurring sequence of expansions and contractions in a nation’s aggregate economic activity. It reflects broad, economy-wide changes in output, employment, income, and sales. The sequence is recurrent but not strictly periodic. Four phases Expansion: Rising output, employment, incomes, and sales;…

Business Continuity Planning (BCP) What is a BCP? A Business Continuity Plan (BCP) is a strategic framework of procedures and safeguards that enables an organization to continue critical operations and recover quickly after a disruption. It protects personnel and assets, minimizes downtime, and helps the business resume normal activity with as little interruption as possible….

Business Banking: Definition, Key Services, and How It Works Key takeaways Business banking provides financial products and services tailored to companies, including deposit accounts, lending, cash management, payroll, and fraud protection. Banks support growth through term loans, lines of credit, equipment financing, and industry-specific lending. Treasury or cash-management tools (ACH, payment processing, sweep accounts, online…

Business Asset: Overview and Valuation Methods Key takeaways A business asset is any resource owned by a company that provides present or future economic benefit—tangible (equipment, real estate) or intangible (patents, trademarks). Assets are recorded on the balance sheet at historical cost and listed by liquidity. Assets are classified as current (convertible to cash within…

Business Activities: Definition and Overview Business activities are the economic actions a company undertakes to generate profit and create shareholder value. These activities are summarized in the statement of cash flows and fall into three primary categories: operating, investing, and financing. Understanding each type clarifies how a company earns, spends, and raises cash. Key Takeaways…

What Is a Business? Understanding Types, Structures, and Sizes A business is an organization or enterprising entity that produces or sells goods and/or services in exchange for payment. Businesses can operate for profit or as nonprofits that pursue social, cultural, or charitable missions. They range from single-owner ventures to multinational corporations and may operate in…

Burn Rate Burn rate measures how quickly a company uses its cash reserves before reaching positive cash flow. It’s a critical metric for startups and pre-profit companies, helping founders and investors understand how long a business can operate without new funding. Key takeaways Burn rate shows how fast cash is being depleted and determines financial…

Bureaucracy Key takeaways A bureaucracy is an organizational system that enforces rules and procedures through hierarchy and specialization. It exists to translate decisions and policies into routine, repeatable processes. While bureaucracies can bring order and fairness, they can also become rigid, slow, and resistant to innovation. What is bureaucracy? A bureaucracy is a structured system…

Bureau of Labor Statistics (BLS): What It Is and How It Works Key takeaways * The BLS is the principal U.S. federal agency for labor-related statistics, producing widely used indicators on employment, wages, prices, productivity, and workplace trends. * Its headline inflation measures are the Consumer Price Index (CPI) and the Producer Price Index (PPI)….

What Defines a Bungalow? Characteristics and History Explained A bungalow is typically a single-story, compact house known for its simple, efficient layout and distinctive architectural features. Originally developed as affordable, practical housing, bungalows remain popular for their accessibility, low maintenance, and adaptable design. Key characteristics Single level (often one to one-and-a-half stories; some have a…

Bundle of Rights in Real Estate A “bundle of rights” describes the set of legal privileges that accompanies ownership of real property. When title transfers to a buyer, the owner typically receives a package of rights that determine how the property can be used, who can access it, and how it can be transferred. These…

Bullish Harami Overview A bullish harami is a two-candle candlestick pattern that can signal a potential reversal from a downtrend to an uptrend. It appears when a relatively small candlestick (often a small-bodied or doji candle) is completely contained within the body of the prior, larger bearish candle. Traders view it as an early sign…

Bullish Engulfing Pattern: Definition and Overview A bullish engulfing pattern is a two-candle candlestick reversal signal that appears at the end of a downtrend. It consists of a smaller bearish candle (Day 1) followed by a larger bullish candle (Day 2) whose real body completely engulfs the real body of Day 1. The pattern signals…

Bullish Abandoned Baby The bullish abandoned baby is a rare three-candle candlestick reversal pattern that signals a potential end to a downtrend and the start of an upward move. It highlights a sharp sell-off, a moment of indecision, and then a strong bullish response. Key takeaways Appears after a downtrend and consists of three bars:…

Bullet Repayment: Definition and Overview A bullet repayment is a single, large lump-sum payment that repays the entire outstanding principal of a loan at maturity. Loans structured this way—also called balloon loans—often require only interest payments (or small principal payments) during the loan term, with the remaining principal due in one final payment. Bullet repayments…

Bullet Bond A bullet bond is a debt security that repays the entire principal in a single lump sum at maturity rather than through periodic principal repayments. Bullet bonds are typically non-callable, meaning the issuer cannot redeem them early. How bullet bonds work Issuers (governments or corporations) pay interest over the bond’s life, and return…

What is a Bull Trap? A bull trap is a false breakout in a downtrending stock or index that briefly appears to signal the resumption of an uptrend but quickly reverses and moves lower. Traders who buy the initial rally become “trapped” when the price falls back below the breakout level. The opposite scenario—when sellers…