Glossary definitions provided in part by the Jump$tart Coalition for Personal Financial Literacy.

Annual Percentage Rate (APR): The percentage cost of credit on an annual basis, which must be disclosed by law. Example 1: A $100 loan repaid in its entirety after one year with a $10 finance charge ($9 interest plus a $1 service fee) has an APR of 10%. Example 2: A $100 one-year loan with a $10 finance charge repaid in twelve equal installments (meaning the borrower has the use of less and less of the loan principal each month) has an APR of 18%.

Annual Percentage Yield (APY): The annual rate of return on an investment, which must be disclosed by law and which varies by the frequency of compounding. Example 1: A $1,000 investment that earns 6% per year pays $60 at year-end and has an APY of 6%. Example 2: A $1,000 investment that earns 0.5% per month (6%/12) pays $61.68 in one year and has an APY of 6.17%. Example 3: A $1,000 investment that earns 0.0164% per day (6%/365) pays $61.83 in one year and has an APY of 6.18%.

Appraised: A professional opinion, usually written, of the market value of a property, such as a home, business, or other asset whose market price is not easily determined.

Asset : An item with economic value that an individual or organization owns, such as stocks, real estate, personal property, and business equipment.

Asset Class: Most assets fall into these two types of asset classes: income-producing (defensive) or high risk (growth). An asset class that produces income is best for the short-term investor as well as for those who favor a secure investment with regular returns on their investment. A more risky asset class would consist of higher returns on your investment. These are best for the long-term investor who is willing to ride out any dips in growth.

Auto-debit: An agreement, usually made with a financial institution (such as a lender or loan servicer) to deduct monthly loan payments directly from an individuals bank account. Lenders and other service providers may offer a slight interest rate reduction or other benefit for this type of payment.

Automated Teller Machine (ATM): A computer terminal used to conduct business with a financial institution or purchase items such as postage stamps or transportation tickets; also known as a cash machine.

Average Annual Return : The rate of return on investments averaged over a specific period of time (e.g., the last 20 years). It is determined by adding together the rates of return for each year and dividing by the number of years in the calculation.

Award Letter: After your EFC (Expected Family contribution) is determined and your SAR (Student Aid Report) is sent to your colleges, they will assess your need and generate an award letter that will explain the financial aid package that they are able to offer you. Most award notifications are electronic. The school will publish instructions on how to access the award notification.

Bank: A state or federally chartered for-profit financial institution that offers numerous financial services for commercial and consumer use, such as checking and savings accounts, loans, and safe deposit boxes.

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