Glossary of Terms

The information presented here is not intended as financial, investment, tax or legal advice and is provided for educational purposes only.
F
Term
Explanation
Fair Value
The amount that a willing buyer will pay a willing seller for a future income stream. Fair value is usually reported as market value.
Federal Agency Issue
Debt securities issued by agencies or corporations chartered by the federal government, such as the Tennessee Valley Authority. The issuers of such securities lack an explicit guarantee from the federal government, but because they have an implicit guarantee their debt is considered high quality.
Federal Deficit
The shortfall created when the federal government spends more in a fiscal year than it receives in revenues. To cover the shortfall, the government sells long- and short-term debt securities.
Federal Deposit Insurance Corporation, U.S. (FDIC)
An independent agency created by Congress in 1933 that maintains the stability and public confidence in the U.S. financial system by insuring deposits, examining and supervising financial institutions and managing receiverships. www.fdic.gov
Federal Funds Target Rate
The interest rate charged by banks with excess reserves at a Federal Reserve district bank to other banks who need overnight loans to meet reserve requirements. The Fed funds target rate is the most sensitive gauge as to the direction of interest rates, since it changes daily. federalreserve.gov
Federal Home Loan Mortgage Corporation (FHLMC)
A debt instrument in which interest and principal are paid from the mortgage payments on a pool of underlying real estate loans. Common agency issuers include GNMA, FNMA and FHLMC.
Federal National Mortgage Association (FNMA)
A debt instrument in which interest and principal are paid from the mortgage payments on a pool of underlying real estate loans. Common agency issuers include GNMA, FNMA and FHLMC.
Federal Reserve System
The central bank of the United States, which has regulated credit in the economy since its inception in 1913. Includes the Federal Reserve Bank, 14 district banks, and the member banks of the Federal Reserve.
Fiduciary
A person, company or association charged with investing assets for the benefit of another. Examples include a pension fund trustee or an executor of a will.
Fiduciary Account
An account administered by a bank, savings association, or trust company acting in a fiduciary capacity.
Fiduciary Capacity
The capacity or role of acting as a fiduciary. Examples of fiduciary capacity include a bank acting as a trustee of a trust or as an adviser to an investment management account. Under ERISA, a person acting in a fiduciary capacity must discharge all of its duties with respect to a retirement or employee benefit plan solely in the interest of the plan's participants and beneficiaries.
Financial Adviser
An investment professional who assists clients on financial issues such as retirement planning, investing and, if qualified to do so, insurance. Financial advisers may have varying levels or areas of expertise, but all are registered with - but not licensed or endorsed by - FINRA.
Financial Industry Regulatory Authority (FINRA)
The largest non-governmental regulator of securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. www.finra.org
Financial Status Indicator

The Financial Status Indicator or FSI is a data element that denotes when a NASDAQ-listed issuer had failed to submit its regulatory filings on a timely basis, failed to meet NASDAQ's continuing listing standards, and/or filed for bankruptcy. Possible values for the FSI are as follows:

Code Description

  • D Deficient: Issuer failed to meet NASDAQ continued Listing Requirements
  • E Delinquent: Issuer missed regulatory filing deadline
  • Q Bankrupt: Issuer has filed for bankruptcy
  • N Normal (Default): Issue is not currently deficient, delinquent, or bankrupt
  • G Deficient and bankrupt
  • H Deficient and delinquent
  • J Delinquent and bankrupt
  • k Deficient, delinquent and bankrupt
Fiscal Policy
Tax and spending policies implemented by Congress intended to achieve full employment, price stability and sustained economic growth. In times of economic distress, government spending may be increased and/or taxes may be decreased to stimulate demand and promote full employment. The cash for clunkers program in 2009 — in which the government provided financial incentives to spur new-car sales — is an example of fiscal policy. See Monetary Policy. See Monetary Policy.
Fiscal Stimulus
An increase in public spending or a reduction in the level of taxation that might be performed by a government in order to encourage and support economic growth. Most government bailout packages offered to various business types can be considered a form of fiscal stimulus. See Fiscal Policy.
Fiscal Year-End
The time when a corporation closes its books and determines its profit or loss. It may or may not coincide with the calendar year-end.
Fixed-Income Security
A security that pays a fixed rate of return, such as a bond or note.
Float
In equity markets, the number of shares of a corporation that are available for trading by the public. Float estimates usually exclude large insider positions and corporate control or strategic holdings.
Floater
A debt security with a variable interest rate tied to another interest rate — similar to an adjustable rate mortgage. Interest rates on floaters rise if the related interest rate increases, but fall if the related interest rate declines. Floaters can be particularly attractive when interest rates appear likely to rise.
Folio
A collection of stocks that may reflect some degree of standardization against a benchmark but which is assembled primarily to provide its holder with a degree of diversification or exposure to an investment theme.
Foreign Account Tax Compliance Act (FATCA)
Refers to US tax legislation provisions that became law in March 2010 and is intended to target tax non-compliance by US taxpayers with foreign accounts.
Foreign Tax Credit
Many funds invest in securities of foreign companies and pay taxes in those countries. If a fund has more than 50% of its assets invested in foreign securities at fiscal year-end, it may pass a foreign tax credit through to shareholders. This credit may be used to offset the amount of tax due on a shareholder’s federal income tax return. Shareholders have the option of taking the foreign tax credit or deduction. Holding-period rules may apply. If you have questions about claiming a foreign tax credit or deduction, consult a tax advisor or see IRS Form 1040 for instructions.
Forward Commitment
A purchase or sale of a security at a specified price with a delivery and cash settlement at a specified future date.
Free Cash Flow
Cash not required for operations or for reinvestment. Free cash flow is calculated by subtracting capital expenditures from cash flow. Capital expenditures include the purchase of new plant, property and equipment. Free cash flow can be used to pay dividends, buy back stock or pay off debt. The more the better.
Free Cash Flow
Cash not required for operations or for reinvestment. Free cash flow is calculated by subtracting capital expenditures from cash flow. Capital expenditures include the purchase of new plant, property and equipment. Free cash flow can be used to pay dividends, buy back stock or pay off debt. The more the better.
Front-End Load
A sales charge on certain fund shares levied at the time of purchase. A mutual fund's prospectus includes complete information about applicable front-end sales charges.
Full Faith and Credit
An unconditional commitment to pay interest and principal on debt securities, usually securities issued or guaranteed by the U.S. Treasury and tax-exempt general obligation bonds.
Fund Abbreviation
An abbreviation of a fund's name, commonly used in newspaper listings.

 

Fund Family
An issuer that sponsors multiple mutual funds, each with its own investment objective. Often, investors may move assets from one fund to another within the same fund family without charge. See Exchange Privilege.
Fund Net Assets
The total value of a fund's securities, cash, and other holdings, minus any outstanding debts.
Fund of Funds
A financial intermediary organized as a corporation, business trust, or partnership that accepts equity investments and buys shares of other funds that, in turn, hold securities or commodities.
Fundamental Analysis
The study of a company's business and financial condition to help forecast future movements in its stock price. Analysts consider the company's past record of earnings and sales as well as company assets, management, and markets to predict trends that could affect a company's stock.
Funding Agreement
Illiquid insurance contracts, often held by mutual fund companies, that provide guaranteed payment of principal and interest for a specified period of time.
Futures
Agreements to buy or sell specific amounts of financial instruments or physical commodities for an agreed upon price at a certain time in the future.
Futures Contract
An agreement obligating a seller to sell, and a buyer to buy, an asset (such as a commodity or financial instrument) at a predetermined date and price. Futures contracts are used for speculation, hedging and arbitrage, and may be traded themselves before the predetermined date. Futures contracts differ from options, which give a buyer the right — but not the obligation — to purchase an asset.