Category: Financial Terms

Feasibility Study: Definition, Purpose, and How to Conduct One A feasibility study is a structured analysis that evaluates whether a proposed project, business, product, or investment is practical and likely to succeed. It measures costs, benefits, risks, required resources, and potential returns to support an informed go/no‑go decision. Why perform a feasibility study? Assess viability…

Key Takeaways * The Federal Unemployment Tax Act (FUTA) imposes a payroll tax on employers to fund federal unemployment programs and state unemployment administration. * FUTA applies only to employers (not deducted from employee pay). The statutory rate is 6% on the first $7,000 of wages paid to each employee per year. * Employers that…

Federal Trade Commission (FTC) Key takeaways The Federal Trade Commission (FTC) is an independent U.S. federal agency that enforces antitrust laws and protects consumers from deceptive or unfair business practices. Founded by the Federal Trade Commission Act of 1914, the FTC investigates fraud, reviews mergers, and enforces a wide range of consumer-protection statutes. The agency…

Federal Reserve System (FRS): Functions and History What is the Federal Reserve System? The Federal Reserve System (the Fed) is the central bank of the United States, established by the Federal Reserve Act in 1913. It comprises a central agency in Washington, D.C. (the Board of Governors) and 12 regional Federal Reserve Banks located across…

Federal Reserve Board (FRB): Role, Structure, and Duties Key takeaways * The Federal Reserve Board (Board of Governors) is the seven-member governing body of the Federal Reserve System, the U.S. central bank. * Its statutory mandate is to promote maximum sustainable employment, stable prices, and moderate long-term interest rates. * Members are presidential nominees confirmed…

Federal Reserve System The Federal Reserve System (the Fed) is the central bank of the United States. Created to provide a safe, flexible, and stable monetary and financial system, the Fed plays a central role in the U.S. economy through monetary policy, bank supervision, financial stability efforts, and the operation of key payment systems. Brief…

Federal Poverty Level (FPL) What the FPL is The Federal Poverty Level (FPL) is an annual income guideline published by the U.S. Department of Health and Human Services. It estimates the minimum income a household needs for basic necessities—food, housing, utilities, transportation, and clothing—and is used to determine eligibility for many federal and state assistance…

Federal Open Market Committee (FOMC) Meetings: What They Are and How They Work Key takeaways The FOMC is the Federal Reserve committee that directs open market operations to implement U.S. monetary policy. It has 12 voting members: the seven Board of Governors, the president of the Federal Reserve Bank of New York, and four rotating…

Federal Open Market Committee (FOMC) What the FOMC Is The Federal Open Market Committee (FOMC) is the Federal Reserve’s body that directs open market operations to implement U.S. monetary policy. Its actions influence short‑term interest rates, the money supply, and broader financial conditions to promote healthy economic growth. Composition 12 voting members: Seven members of…

Federal Insurance Contributions Act (FICA) Key points FICA is the federal payroll tax system that funds Social Security and Medicare. In 2024, Social Security tax is 6.2% for employees (6.2% employer), applied to wages up to $168,600. Medicare tax is 1.45% for employees (1.45% employer) on all wages, plus an additional 0.9% on wages above…

Federal Income Tax: What It Is and How It Works What is federal income tax? The U.S. federal income tax is levied by the Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other entities. For individuals it applies to wages, salaries, tips, investment income, certain retirement benefits, and other forms…

Federal Housing Administration (FHA) Loan: A Practical Guide What is an FHA loan? An FHA loan is a mortgage issued by FHA-approved lenders and insured by the Federal Housing Administration. Insurance from the FHA reduces lender risk, which makes mortgages more available to borrowers with lower credit scores or smaller down payments. FHA programs are…

Federal Housing Administration (FHA): Overview, History, and How FHA Loans Work Key takeaways The FHA is a U.S. government agency that insures mortgages made by FHA-approved lenders, expanding access to homeownership. FHA loans allow lower down payments (as little as 3.5%) and accept lower credit scores than many conventional loans. Borrowers with FHA loans must…

Federal Home Loan Bank System (FHLB) Overview The Federal Home Loan Bank (FHLB) System is a national network of 11 regional cooperative banks that provide liquidity and funding to banks, credit unions, insurance companies, thrifts, and certified community development financial institutions. Overseen by the Federal Housing Finance Agency (FHFA), the FHLBanks support housing finance, community…

Federal Funds Rate Key takeaways The federal funds rate is the interest rate at which depository institutions lend reserve balances to one another overnight on an uncollateralized basis. The Federal Open Market Committee (FOMC) sets a target range for that rate and meets regularly to adjust monetary policy. Changes in the fed funds rate influence…

Federal Funds: Definition and How Loans and Rates Work Federal funds (or fed funds) are excess reserves that commercial banks and other eligible financial institutions hold at regional Federal Reserve banks. Institutions with surplus reserves lend them overnight to institutions with shortfalls. These loans are unsecured and typically last one day; the interest charged is…

Federal Discount Rate Key points * The federal discount rate is the interest rate the Federal Reserve charges banks and other depository institutions for short-term loans from a Federal Reserve Bank’s discount window. * It is set by the Fed’s Board of Governors and used as a lender-of-last-resort tool to provide liquidity and support financial…

Federal Direct Loan Program What it is The Federal Direct Loan Program (William D. Ford Federal Direct Loan Program) is the U.S. Department of Education’s primary federal student loan program. It provides low-interest loans to eligible undergraduate, graduate/professional students and to parents of dependent undergraduates. Explore More Resources › Read more Government Exam Guru ›…

Federal Deposit Insurance Corporation (FDIC) The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures deposits in U.S. banks and savings associations to maintain public confidence and promote stability in the financial system. Created during the Great Depression, the FDIC prevents bank runs by guaranteeing depositor funds when an FDIC‑insured institution fails….

Federal Communications Commission (FCC) Key takeaways * The FCC is an independent U.S. government agency that regulates interstate and international communications. * Its authority covers radio, television, satellite, telephone, wireless, and broadband communications across all U.S. states and territories. * The commission sets technical and content standards, oversees competition and mergers in the communications sector,…

What Is a Federal Agency? Definition, Purposes, and Bond Issues Federal agencies are government organizations created to carry out specific functions that require specialized expertise or close oversight. They are typically established by Congress but can also be created or reorganized by presidential action. Agency heads are often appointed by the president and confirmed by…

Fed Balance Sheet: What It Is and Why It Matters What the Fed balance sheet is The Federal Reserve’s balance sheet is a consolidated financial statement that lists the central bank’s assets and liabilities. The Fed discloses these details weekly in a report titled “Factors Affecting Reserve Balances.” The report provides a snapshot of the…

Fear and Greed Index The Fear & Greed Index quantifies investor sentiment on a 0–100 scale, where 0 indicates extreme fear and 100 indicates extreme greed. Developed to capture the emotional drivers behind market moves, the index helps investors gauge whether stocks may be under- or overvalued and serves as a sentiment barometer—not a standalone…

FDIC-Insured Account An FDIC-insured account is a deposit account at a bank or thrift that is protected by the Federal Deposit Insurance Corporation (FDIC). If an FDIC-member institution fails, the FDIC reimburses depositors up to the insurance limits, providing protection against bank failures. Key takeaways FDIC insurance protects deposits up to $250,000 per depositor, per…

Fast-Moving Consumer Goods (FMCG) Fast-moving consumer goods (FMCGs) are low-cost, high-turnover products that consumers buy frequently and consume quickly. They are typically nondurable—perishable or rapidly used—and sold in large volumes through supermarkets, convenience stores, and online retailers. Key takeaways FMCGs are nondurable consumer products with short shelf lives and high sales velocity. Common examples include…

Fast Fashion Fast fashion describes low-cost, trend-driven clothing that moves rapidly from design to retail, allowing consumers to buy the latest styles at affordable prices. Fueled by efficient supply chains, frequent new releases, and strong consumer demand, the model has reshaped the apparel industry — increasing accessibility and retailer profits while raising serious environmental and…

Farmers Home Administration (FmHA): Meaning, History, and Legacy The Farmers Home Administration (FmHA) was a U.S. Department of Agriculture agency established to provide credit and technical assistance to rural families and farmers. Its programs financed housing, utilities, business ventures, and community development in rural areas, using direct loans, loan guarantees, and grants. Key takeaways *…

FANG Stocks: Definition, Companies, Performance, and How to Invest What are FANG stocks? FANG is an acronym for four high-profile U.S. technology companies: Facebook (now Meta), Amazon, Netflix, and Google (Alphabet). The term was coined in financial media and popularized by commentators. In 2017 some analysts began including Apple, creating the variant FAANG. Explore More…

Family Offices: What They Are, How They Work, and Types What is a family office? A family office is a private, full-service wealth management organization created to serve ultra-high-net-worth individuals (UHNWIs) and their families. It provides a centralized team that handles financial, legal, tax, estate, and lifestyle needs tailored to the family’s goals and values….

Family Limited Partnership (FLP) Key takeaways An FLP is a limited partnership owned by two or more family members used to operate or hold a family business or assets. There are two partner types: general partners (manage the business; unlimited liability) and limited partners (no management role; limited liability). FLPs are commonly used to consolidate…

Family and Medical Leave Act (FMLA): What You Need to Know Overview The Family and Medical Leave Act (FMLA) is a federal law that requires certain employers to provide eligible employees with up to 12 weeks of unpaid, job‑protected leave for specified family and medical reasons. It also protects continuation of group health insurance while…

Fama–French Three-Factor Model The Fama–French Three-Factor Model extends the Capital Asset Pricing Model (CAPM) by adding two systematic risk factors—size and value—alongside market risk. It was developed to better explain cross‑sectional differences in stock and portfolio returns that CAPM could not account for. Key takeaways * Improves on CAPM by including size (small vs. big)…

Understanding Falling Knives: Risks and Trading Strategies What is a falling knife? A “falling knife” refers to a rapid, sharp decline in a security’s price. The phrase warns against trying to buy during strong downward momentum without confirmation, because the price can continue falling before it stabilizes or reverses. Explore More Resources › Read more…

Fallen Angel: Definition and Overview A fallen angel is a bond that was originally rated investment grade but has been downgraded to junk (non‑investment grade) after a deterioration in the issuer’s creditworthiness. Downgrades can affect corporate, municipal, or sovereign debt. The term is also sometimes used more loosely to describe stocks that have fallen sharply…

Fair Value Fair value is an estimate of an asset’s current worth—the price at which a willing buyer and a willing seller would transact in an orderly market. It reflects what an asset is reasonably worth today, taking into account comparable transactions, expected earnings, replacement cost, and other relevant factors. Key takeaways Fair value represents…