Debt Free Article

Debt Terms Glossary

Letters E-F

Earnings per share

This is a company’s profits after taxes, bond interest, and preferred stock payments have been subtracted, divided by the number of shares of common stock outstanding.

Employee stock ownership plan (ESOP)

ESOPs are plans where employees purchase stock in the company that they work for through payroll deduction or some other way. Sometimes, the company contributes shares of its stock to funds that allocate the shares to the workers based on their annual pay rate.

Exchange traded funds (ETFs)

These funds own a fixed portfolio of securities and can be purchased or even sold at any time the stock market is in operation. Similar to an index fund, these funds’ portfolios represent a part of the market – an index, a sub-sector of an index, or even a certain industry. You can buy and sell them through a broker, you can even sell them short or but them on margin – as you would an ordinary stock.

Ex-dividend

This is the period between the declaration of a dividend by a company or a mutual fund and the actual payment of the dividend. On the ex-dividend date, the price of the stock or fund will fall by the amount of the dividend, so new investors do not get the benefit of it. Many of our debt free customers reading this may already know that companies and funds that have obtained this status are marked by an X in the newspaper listings.

Fannie Mae

This is the name under which the Federal national Mortgage Association conducts business, buying mortgages on the secondary market, repackaging them, and selling off pieces to investors. The effect is to infuse the mortgage markets with additional funds.

Federal Deposit Insurance Corporation (FDIC)

This is the government agency that many of our debt free customers notice at their banks on the insurance documents. The FDIC provides up to $100,000 in insurance coverage per depositor’s account. Most banks, savings and loans, and mutual savings banks are members of the FDIC – but not credit unions, they have another agency.

Fixed income investment

This type of  investment plan is a catchall for all investments in bonds, CDs, and other similar instruments that pay a fixed amount of interest.

Flexible Spending Account (FSA)

This is a fringe benefit that permits a worker to divert a certain amount of their income to a special account used to reimburse the cost of medical treatments. Funds funneled through the account are exempt from federal income taxes and Social Security taxes. Also, in most cases, state income taxes as well.

401 (k) plan

An employer sponsored retirement plan that allows workers to divert a certain amount of their earnings into the account tax fee until it is withdrawn. Many employers match up to a certain amount of an employee’s contribution. The 401 (k) gets it interesting name from the section of the federal tax code that allows it. Many of our debt free readers have this type of retirement account.

403 (b) plan

Like the 401 (k), this plan is set up for public employees and employees of not for profit companies. Many of our debt free readers have this type of retirement account.

Freddie Mac

This is the name under which the Federal Home Loan Mortgage Corporation operates. This is similar to Fannie Mae.

Full service broker

This is a brokerage firm that maintains a research department and other services designed to supply its individual and institutional customers with advice on investments. Commission rates are higher than those of discount brokers.

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