For example, you can set aside money to pay for medical expenses that aren't covered by insurance, for child care, or for additional life insurance coverage. As you incur these kinds of expenses, you are reimbursed from the amount you have put into the plan.

Since you owe no income tax on the money you contribute, you actually have more cash available for these expenses than if you were spending after-tax dollars. However, you must estimate the amount you're going to contribute before the tax year begins, and you forfeit any money you've set aside but don't spend. For example, if you've set aside $1,500 for medical expenses but spend only $1,400, you lose the $100.

In contrast, you can sell a call option, which is known as writing a call. That gives the buyer the right to buy the underlying investment from you at the strike price before the option expires. If you write a call, you are obliged to sell if the option is exercised.

Long-term capital gains are taxed at a lower rate than your other income while short-term gains are taxed at your regular rate. The long-term capital tax rates are 20% for anyone whose marginal federal tax rate is 27% or higher, and 10% for anyone whose marginal rate is 15%. Even lower rates apply to gains on assets purchased in 2001 or later and held at least five years for taxpayers in the 27% bracket or higher and to any assets held at least five years for taxpayers in the 15% bracket.

You are exempt from paying capital gains tax on profits of up to $250,000 on the sale of your primary home if you're single and up to $500,000 if you're married and file a joint return, provided you meet the requirements for this exemption.

Although nobody wants to lose money on an investment, there is a silver lining: You can use capital losses to offset capital gains in computing your income tax. And if you have a net capital loss in any year — that is, your losses are greater than your gains — you can usually deduct up to $3,000 of this amount from regular income on your tax return. You may also be able to deduct net capital losses above $3,000 on future tax returns.

	What you paid
	What you sold for
=	Capital loss
	$3,000 (Purchase price)
	2,000 (Selling price)
=	$1,000 (Capital loss)

Like 401(k)s, the plan is portable, which means any employee who leaves the company can move the assets that have accumulated into a rollover IRA or into a new employer's plan, if the new employer's plan allows transfers. The employee also has the option of leaving the assets in the old employer's plan, where they will continue to earn interest.

Cash balance plans have advantages for younger employees since a percentage of their earnings is added to the plan each year and can compound over time. The plans also benefit employees who change jobs during their careers.

On the other hand, employees who have stayed at the same job for many years and whose employer switches from a traditional defined benefit plan to a cash balance plan are likely to receive substantially less pension income from a cash balance plan than from a traditional plan. That's because traditional plans typically figure pension income based on the worker's salary in the final three to five years before retirement, when salaries tend to be highest.

These plans are portable, which means you can roll them over from one employer to another when you change jobs. That makes them popular with younger and mobile workers. But they are often unpopular with older workers whose employers switch from a defined benefit to cash balance plan because their pensions may be less than with traditional defined benefit plans.

For example, if a car dealership sells $100,000 worth of cars in a month and spends $35,000 on expenses, it has a positive cash flow of $65,000. But if it takes in only $35,000 and has $100,000 in expenses, it has a negative cash flow of $65,000. Investors often consider cash flow when they evaluate a company since without adequate money to pay its bills, it will have a hard time staying in business.

You can calculate whether your cash flow is positive or negative the same way you would a company's: Subtract the money you receive (from wages, tips, investments and other income) from the money you spend on expenses (such as housing, utilities, transportation, and other costs). If there's money left over, your cash flow is positive. If you spend more than you have coming in, its negative.

The cash value of an insurance policy is the amount the insurer will pay you, based on your policy's cash reserve, if you cancel your policy. The cash value is the difference between the amount you paid in premiums and the actual cost of insurance plus other expenses.

However, according to the terms of some loans, lenders can add interest charges comparable to what a jump in rates would have yielded to the total amount you owe. This is known as negative amortization. That means, despite a ceiling, you don't escape the consequences of rising rates, though repayment is postponed, often until the end of the loan's original term.

Ceiling can also refer to a cap on the amount of interest a bond issuer is willing to pay to float a bond, and to the highest price a futures contract can reach on any single trading day before the market locks up, or stops trading, that contract.

As with other zeros, CATS prices can be volatile, so you risk losing some of your principal if you sell before maturity. And like other federal government issues, the interest is free of state and local income tax but subject to federal income tax.

However, rates can vary significantly from bank to bank, and some banks also offer or offer adjustable rate CDs or hybrid CDs whose earnings are tied to a stock index such as the Standard & Poor's 500-stock Index (S&P 500). You usually have to pay a penalty if you withdraw funds before your CD matures, often equal to the interest that has accrued up to the time you make the withdrawal.

Currently, trading is halted when the market, measured by the Dow Jones Industrial Average (DJIA), drops 10%. But trading could resume, depending on the time of day the drop occurs. If the DJIA drops 20%, trading ends for the day. The actual number of points the DJIA would need to drop is set twice a year (in January and June) based on the average value of the DJIA in the previous month.

The only time the circuit breakers have been triggered was on October 27, 1997, when the DJIA fell 554 points, or 7.2%, and the trigger levels were lower. In fact, the DJIA has dropped as much as 10% in a single day only three times in its history.

For example, if you borrow money to buy a car, the car is the collateral. If you default, the lender can repossess the car and sell it to recover the amount you borrowed. Loans guaranteed by collateral are also known as secured loans.

As is the case with all mortgage-back securities, a drop in interest rates may mean that mortgages are paid off more rapidly than expected as homeowners refinance. But with a CMO, all early repayments of principal go to owners of the first tranche until it is repaid, then to the owners of the second tranche, and so forth. That provides a longer income period for investors holding the tranches with later maturities.

CMOs usually involve high-quality mortgages, or those guaranteed by the government. Their yield may be lower than those of other mortgage-backed investments, but the way in which they are repaid makes them especially attractive to institutional investors including insurance companies and pension funds.

Online brokerage firms, on the other hand, usually charge a flat fee for each transaction, regardless of the value of the trade. The flat fee may have certain limits, however, such as the number of shares being traded at one time.

The commissions on some transactions, such as stock trades, are reported on your confirmation slip. But commissions on other transactions are not reported separately. In the case of cash value life insurance, for example, the commission may be as larage as a year's premium.

Commodities are bought and sold on the cash market, and they are traded on the futures exchanges in the form of futures contracts. Commodity prices are driven by supply and demand: When a commodity is plentiful tomatoes in August, for example prices are comparatively low. When a commodity is scarce because of a bad crop or because it is out of season, the price will generally be higher.

Commodity exchanges also regulate themselves, but any new rules they want to introduce, or any changes they want to make to existing rules, must be approved by the CFTC before they go into effect.

In a divorce, the value of the community property is divided equally. However, property you owned before you married or that you received as a gift is generally not considered community property. (The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.)

In addition, the NYSE total also includes transactions on regional exchanges such as those in Boston, Chicago, and the Pacific Exchange in California. Since trading continues on some of those exchanges after the close of business in New York, the composite figures give a comprehensive picture of the day's activities.

For example, if you earn 10% compounded interest on $100 every year for five years, you'll have $110 after one year, $121 after two years, $133.10 after three years, and $161.05 after five years for total growth of 61.1% on your investment. With simple interest, you would have earned $10 a year for five years, for $150, or 50% growth. The $11.05 difference is the effect of compounding. Compound interest earnings are reported as annual percentage yield (APY), though the compounding can be figured annually, monthly, or daily.

Compound interest vs. Simple interest

	Compound	Simple
Start	$100.00	$100.00
After 1 year	$110.00	$110.00
After 2 years	121.00	120.00
After 3 years	133.10	130.00
After 5 years	161.05	150.00
Growth rate	61.1%	50%

For example, you can choose funds that put money into companies that have exceptional environmental or social records, or those that refuse to invest in the tobacco or weapons industries.

Each fund explains principles it follows in its prospectus and describes the screens, or criteria, it uses to identify its investments.

Economic observers and policymakers follow the index because when consumer attitudes are positive because they think the economy is growing and they have a sense of job security they are more likely to spend money, which contributes to the very economic growth they anticipate. But if consumers are worried about their jobs, they may spend less, contributing to an economic slowdown.

Compiled monthly by the US Bureau of Labor Statistics, the CPI often incorrectly referred to as the cost-of-living index is used as a benchmark for making adjustments in Social Security payments, wages, pensions, and tax brackets to keep them in tune with the buying power of the dollar.

If the opposite is true, and the price of a longer-term contract is lower than the price of one with a closer expiration date, the relationship is described as backwardation.

The charge is a percentage of the amount of the investment you're liquidating and may be the same say 1% during the entire period it applies, or it might begin at a higher percentage and decline each year until it disappears entirely, typically over five to seven years. Information about the charge and how long it's levied is provided in the fund's prospectus.

In addition, the contrarian believes that if other investors are fully committed to a certain type of investment, they're not likely to have cash available if a better one comes along. But the contrarian would. Contrarian mutual funds use this approach as their investment strategy, concentrating on building a portfolio of out-of-favor (and therefore often undervalued) investments.

These bonds have a double appeal for investors concerned about volatility and high stock prices: Their prices go up if stock prices go up but usually drop less than the underlying stock price if that price should fall. And while convertible bonds typically provide lower yields than regular bonds, they provide higher yields than the underlying stock. You can buy convertibles through a broker or choose a mutual fund that invests in them.

Different kinds of transactions are governed by different cooling-off rules. For example, one federal rule allows you to cancel home improvement loans and second mortgages within three days of signing. Another gives you three days to return purchases you make at places other than a merchants usual place of business, such as at a trade show. The law governing your rights is included in the fine print on any agreement you sign.

If you have a managed-care health insurance plan, your copayment is the fixed amount you pay often $10 to $20 for each office visit or medical treatment.

You may be able to buy corporate bonds at issue through brokers, usually at a par value of $1,000 per bond, though you may have to buy more than one. You can buy bonds on the secondary market at their current market price, which may be higher or lower than par. You may also invest in a mutual fund that specializes in corporate bonds.

When a market correction is greater than 10% and the prices do not begin to recover promptly, some analysts point to the correction as the beginning of a bear market.

For example, if you buy a stock at $20 a share and sell it for $50 a share, your cost basis is $20. If you sell, you owe capital gains tax on the $30-a-share profit. However, if someone left you stock that was bought at $20 a share but was valued at $50 a share when that person died, your cost basis would be $50 a share, and you would owe no tax if you sold it at that price.

COST BASIS
+	Original purchase price Commission
=	Cost basis
	$2,000
+	60
	$2,060

The Council consists of a chairman and two staff members, appointed by the president and confirmed by the Senate, plus a staff of about 10 economists and 10 younger scholars. The Council's chairman frequently speaks on behalf of the administration on economic issues and policies.

Experts suggest including some countercycylical stocks in your equity portfolio to balance the potential volatility of cyclical investments, which tend to gain value as the economy expands, and to provide regular income, if not growth potential, in economic downturns.

Although most new bonds are electronically registered rather than issued in certificate form, the term coupon has stuck as a synonym for interest in phrases like the coupon rate. When interest accumulates rather than being paid during the bond's term, the bond is known as a zero coupon.

The term is derived from the practice, now discontinued, of issuing bonds with detachable coupons. To collect a scheduled interest payment, you presented a coupon to the issuer or the issuer's agent. Today, coupon bonds are no longer issued. Most bonds are registered, and interest is paid by check or, increasingly, by electronic transfer.

One appeal of selling a covered option is that you collect the premium and don't risk unexpected losses caused by having to buy the stock at market price in order to meet your obligation to sell. Selling options is also a technique for receiving income from stocks that pay few or no dividends.

The two great US crashes of the 20th century, in 1929 and 1987, had very different consequences. The first was followed by a period of economic stagnation and severe depression. The second had a much briefer impact. While some investors suffered huge losses in 1987, recovery was well underway within three months.

In the aftermath of each of these crashes, the federal government instituted a number of changes designed to reduce the impact of future crashes.

Credit is also used to mean positive cash entries in an account. For example, your bank account may be credited with interest. In this sense, credit is the opposite of debit, which means money is taken from your account.

If you always pay your bills on time, you are more likely to have good credit and therefore may receive favorable terms on a loan or credit card, such as relatively low interest rates. If your credit rating is poor because you have paid bills late or have defaulted on a loan, you are likely to get less favorable terms or may be denied credit altogether.

A corporation's credit rating is an assessment of whether it will be able to meet its obligations to bond holders and other investors. Credit rating systems for corporations generally range from AAA or Aaa at the high end to D (for default) at the low end.

You have a right to see your credit history if you have been turned down for a loan. You may also question any information the credit reporting agency has about you and ask that errors be corrected. If the information isn't changed following your request, you have the right to attach a comment or explanation, which must be sent out with future reports.

Because they are not-for-profit, credit unions tend to charge lower fees and lower interest rates on loans than commercial banks while paying higher interest rates on savings and investment accounts. The services offered at large credit unions can be as comprehensive as those at large banks. At smaller credit unions, however, services and hours may be more limited, and at a few deposits may not be insured. Credit unions enjoy a reputation for superior customer service, which may be part of the reason why more than 76,000,000 people across the nation are members.

Although it is illegal for market makers to cross a market deliberately, the situation may occur when individual investors place after-hours market orders over the Internet for execution at opening, or when investors participate directly in the market through an electronic communications network (ECN). The National Association of Securities Dealers (NASD) has introduced a set of pre-opening procedures for market makers on the Nasdaq Stock Market to help prevent the confusion, and potential inequalities in pricing, that a crossed market can produce.

Cumulative voting is designed to give individual stockholders greater influence in shaping the board than they would ordinarily have if their votes had to be spread among all the candidates, as is the case with statutory voting.

While some currencies fluctuate freely against each other, such as the Japanese yen and the US dollar, others are pegged, or linked, to the value of another currency, such as the US dollar or the euro, or to a basket, or weighted average of currencies.

For example, if you paid $800 for a bond with a coupon rate of 10%, the current yield is 12.5%. If you paid $1,200, the current yield would be 8.33%. And if you paid par, or $1,000, the current yield would be 10%, the same as the coupon rate. If you own a stock, the current yield is the annual dividend divided by its market price.

CURRENT YIELD: BONDS
Coupon rate		= Bond Current Yield
	x 1,000
Purchase price
For example
.10
	x 1,000 = .125 = 12.5%
800
CURRENT YIELD: STOCKS
Annual dividend	= Stock Current Yield
Market price
For example
$2.28
	= .0829	= 8.29%
$27.50

There may be some tax advantages in transferring assets to a minor. If the child is under 14, up to $650 in earnings in the account are free of federal income tax, and earnings between $650 and $1,300 are taxed at the child's income tax rate (typically the lowest rate). Any earnings above $1,300 are taxed at the parents' top marginal tax rate. But if the child is 14 or older, earnings are taxed at the child's rate-again, typically the lowest rate.

In contrast, stocks in industries that provide necessities such as food, electricity, gas, and health care products, or those that provide services that reduce the expenses of other companies, tend to be more price-stable. Those stocks are sometimes called countercyclicals.