Category: Financial Terms

Bull Spread What is a bull spread? A bull spread is an options strategy designed to profit from a moderate rise in the price of an underlying asset while limiting downside risk. It is a vertical spread: you buy one option and sell another option of the same type (both calls or both puts), with…

Bull Put Spread A bull put spread is an options strategy that generates income with limited risk. It involves selling a put option at a higher strike price and buying another put at a lower strike price, both sharing the same expiration. The trader receives a net credit up front and profits if the underlying…

Bull Market Key takeaways A bull market is a sustained period of rising prices and investor optimism across a financial market. The commonly used threshold for a bull market is a 20% rise from recent lows. Bull markets often accompany economic expansion—rising GDP, falling unemployment, and growing corporate profits. Common strategies to benefit from bull…

Bull Call Spread What it is A bull call spread (also called a debit call spread) is a moderately bullish options strategy that uses two call options on the same underlying asset with the same expiration date: * Buy a call at a lower strike (long call). * Sell a call at a higher strike…

Bull (in investing) What is a bull? A bull is an investor who expects the market, a sector, or a specific security to rise and takes long positions to profit from that increase. More broadly, a “bull market” describes a sustained period of rising prices and optimism among investors. Key takeaways A bull believes prices…

Build-Operate-Transfer (BOT) Contract A build-operate-transfer (BOT) contract is a form of public-private collaboration in which a private firm finances, designs, builds, and operates an infrastructure project for a fixed concession period and then transfers ownership to the public authority. BOTs are commonly used for large greenfield projects—such as highways, power plants, and transit systems—where governments…

Build America Bonds (BABs) Build America Bonds (BABs) were taxable municipal bonds created under the American Recovery and Reinvestment Act of 2009 to help state and local governments raise capital for capital expenditures during the recession. The program provided federal subsidies that lowered the effective borrowing cost for issuers and made municipals more attractive to…

Budget Variance: Definition, Causes, and Types A budget variance measures the difference between budgeted (planned) and actual figures for revenue, expenses, or other accounting categories. Variances help organizations and individuals assess performance, diagnose problems, and refine future budgets. Key takeaways Variance = Actual − Budgeted. Interpretation depends on the line item (revenue vs. expense). A…

Budget Surplus What is a budget surplus? A budget surplus occurs when an entity—such as an individual, business, state, or national government—receives more revenue than it spends during a given period. For governments, revenue typically comes from taxes and fees; for businesses, from sales and other income. The opposite of a surplus is a budget…

Budget Deficit What is a budget deficit? A budget deficit occurs when a government’s spending exceeds its revenues (taxes, fees, and investment income) during a given period. Repeated deficits add to the national (or federal) debt—the cumulative amount the government owes to creditors. Why it matters Budget deficits influence a country’s fiscal flexibility and economic…

What Is a Budget? A budget is a financial plan that estimates revenue, expenses, and changes in finances over a defined future period. Budgets help governments, businesses, and individuals allocate resources, set goals, measure outcomes, and plan contingencies. Depending on expectations, a budget can be a surplus (profits expected), balanced (revenues equal expenses), or deficit…

Economic Bubbles: How They Form and Burst Key takeaways * An economic bubble occurs when asset prices rise far above intrinsic value, followed by a rapid contraction or crash. * Bubbles are driven by shifts in investor behavior—often optimism and speculation—though exact triggers are debated. * Hyman Minsky’s five-stage framework (displacement, boom, euphoria, profit-taking, panic)…

Brownfield Investment What is a brownfield investment? A brownfield investment is when a company or government purchases or leases existing production facilities or industrial sites to start or expand production activity. It contrasts with a greenfield investment, where new facilities are built on previously undeveloped land. Key characteristics: * Involves existing structures and infrastructure (buildings,…

Brown Bag Meeting A brown bag meeting is an informal workplace gathering—often held around lunchtime—where participants bring their own lunches and take part in a short presentation, discussion, or training. These sessions are typically held in conference rooms (or virtually) and are designed to be low-cost, easy-to-organize opportunities for learning, collaboration, and team building. Key…

Brokerage Fee: What It Is, How It Works, and How to Reduce It Key takeaways * A brokerage fee is a charge a broker or agent imposes to execute transactions or provide specialized services. * Fees can be a percentage of assets or transaction value, a flat fee, or a combination. * Fee levels vary…

Brokerage Firms: What They Are and How They Work Key takeaways A brokerage firm is an intermediary that matches buyers and sellers of financial assets and earns revenue through commissions, fees, or asset-based charges. Full-service brokerages offer advice and a wide range of services for higher fees (often a percentage of assets under management). Discount…

Brokerage Account: Definition, Types, and How to Choose A brokerage account is an investment account held at a licensed brokerage firm that lets you buy, hold, and sell securities — for example, stocks, bonds, mutual funds, and ETFs. Money and securities in the account belong to the investor, and any gains or losses are reported…

Broker-Dealer: Roles, Types, and How They Work What is a broker-dealer? A broker-dealer (B-D) is a firm that buys and sells securities either on behalf of clients (as a broker) or for its own account (as a dealer). Broker-dealers provide market access, execute trades, offer investment advice and research, distribute securities, and support capital-raising activities….

Brokers: Roles, Types, Regulation, and Examples A broker is an intermediary who connects buyers and sellers in a marketplace. Brokers can be individuals or firms that execute transactions, advise clients, and provide access to markets that require licensed intermediaries. Common areas with brokers include securities (stocks, bonds, options) and real estate. Key takeaways Brokers execute…

Broad Money What is broad money? Broad money is the most inclusive measure of a country’s money supply. It includes highly liquid forms of money (cash and checkable deposits) plus other assets that can be readily converted into cash to buy goods and services—such as savings accounts, time deposits, money market funds, short-term marketable securities…

Bridge Loans: What They Are and How They Work Key takeaways * Bridge loans are short-term, interim financing used until permanent financing is secured or an existing obligation is settled. * They carry higher interest rates and fees, generally require collateral (commonly real estate), and are approved faster than traditional loans. * Homeowners use bridge…

Bridge Financing Bridge financing is short-term funding used to cover immediate cash needs until a company secures longer-term financing or generates expected revenue. It can take the form of debt (a bridge loan), equity (selling ownership stakes), or specialized arrangements tied to an upcoming IPO. Key takeaways Provides temporary capital to cover short-term working capital…

Brick-and-Mortar Key takeaways “Brick-and-mortar” describes businesses with a physical storefront or office where customers interact and make purchases in person. Physical stores offer immediacy, hands-on product inspection, and face-to-face service—advantages that are hard to replicate online. High overhead (rent, staff, utilities) and competition from e-commerce are ongoing challenges; many retailers combine physical and online channels…

Brexit: What Happened, Why It Mattered, and What Changed What is Brexit? Brexit—short for “British exit”—refers to the United Kingdom’s decision to leave the European Union (EU) after a nationwide referendum. Voters chose to leave on June 23, 2016; the U.K. formally left the EU on January 31, 2020. A transition period ran through December…

Bretton Woods Agreement and System Definition The Bretton Woods Agreement (July 1944) established an international monetary system in which the U.S. dollar was pegged to gold and other currencies were pegged to the dollar. It created fixed exchange-rate rules and founded two lasting institutions: the International Monetary Fund (IMF) and the World Bank. Historical background…

Breakout: Definition, Meaning, Example, and What It Tells You What is a breakout? A breakout occurs when an asset’s price moves above a defined resistance level or below a defined support level. It signals that price may begin to trend in the breakout direction. Breakouts accompanied by higher-than-usual trading volume carry more conviction and are…

Breakeven Point: Definition, Examples, and How to Calculate Definition The breakeven point is the sales level at which total revenue equals total costs, so a business neither makes a profit nor incurs a loss. It marks the transition from operating at a loss to generating profit and is a key tool for pricing, planning, and…

Break-Even Analysis: What It Is, How It Works, and the Formula Definition A break-even analysis determines the sales volume required to cover both fixed and variable costs. The break-even point (BEP) is where a business’s net profit equals zero—sales exactly cover total costs. Key components Fixed costs: Costs that do not vary with production or…

Break-Even Price Key takeaways * The break-even price is the sale price at which total receipts equal total costs—no profit, no loss. * In business, it reflects the unit price that covers fixed and variable costs; in options, it’s the underlying price that offsets the option premium. * Firms sometimes price at break-even to gain…

Breadth Indicator: Overview, Uses, and Limitations Breadth indicators measure how many stocks in a market or index are advancing versus declining (and often the volume behind those moves). They show participation in an index’s price movement and help assess trend strength and market sentiment. Breadth indicators rarely provide standalone trade signals but are useful for…

BRICS: Brazil, Russia, India, China, South Africa—and Beyond Key takeaways * BRICS began as the “BRIC” economic thesis (Brazil, Russia, India, China) and became a formal diplomatic grouping in 2009; South Africa joined in 2010. * The bloc seeks deeper economic cooperation, alternatives to Western-led financial institutions, and greater geopolitical influence. * BRICS expanded in…

What is BRICS? BRICS is an informal international bloc originally formed by Brazil, Russia, India, and China (BRIC). South Africa joined in 2010, turning BRIC into BRICS. The grouping promotes economic cooperation among major emerging economies and seeks greater influence in global economic governance, offering an alternative voice to Western-led institutions. Key takeaways Originated as…

Brand Recognition What is brand recognition and why it matters Brand recognition is the ability of consumers to identify a company or product using visual or auditory cues—logos, colors, packaging, slogans, or jingles—without seeing or hearing the brand name. Strong brand recognition helps a company stand out in a crowded market, encouraging repeat purchases, premium…

Brand Personality Brand personality is the set of human traits and emotional associations people attach to a brand. It supplements a product’s functional benefits with qualitative value that helps consumers relate to and form lasting relationships with a brand. Key takeaways Brand personality consists of human-like characteristics assigned to a brand to shape how consumers…

Brand Management Brand management is the strategic process of shaping and maintaining how the public perceives a product, service, or company over time. Its aim is to build brand equity, recognition, and loyalty so customers trust the brand, choose it repeatedly, and allow the company to capture greater value. Key takeaways Brand management uses marketing…