Face value
The value a bond has printed on its face, usually $1,000. It represents the amount of principal owed at maturity. The bond's actual market value may be higher or lower. Furthermore, if a bond's market price fluctuates, it has an impact on its yield. If the price drops below the bond's face value, its yield increases. If the price rises above face value, the yield decreases.
Federal Budget deficit
The amount of money the federal government owes because it has spent more than it has received in revenue for the past year. To compensate for this, the government usually borrows from the public by floating long- and short-term bonds.
The aggregate unpaid debt is known as the Federal Debt, or the National Debt.
Federal Funds
Funds that are deposited by commercial banks at Federal Reserve Banks including excess bank reserve requirements. These commercial banks can lend Federal funds to each other overnight at the Federal Funds Rate. Banks can also lend Federal funds to customers as well through debiting and crediting transactions during the day.
Federal Funds Rate
The interest rate at which one member commercial bank charges for loans made out to another commercial bank through a Federal Reserve Bank, in order for the recipient bank to meet their legal reserve requirements. The weighted average of these interest rates comprises the Federal Funds Effective Rate. In contrast, the Nominal Rate is a predetermined target rate set by the Federal Reserve itself, the rate is increased, decreased, or left alone depending on economic conditions. The Federal Funds Rate, is both useful as a way for the government to control money supply, and as an indicator of the direction of interest rates and the economy.
Federal Reserve (Fed)
The central bank of the U.S. that sets monetary policy and oversees money supply, interest rates and credit with the goal of keeping the U.S. economy and currency stable. It is governed by a seven-member board and the system includes 12 regional Federal Reserve Banks, 25 branches and all national and state banks that are part of the system.
Firm
A business usually a corporation, partnership, or proprietorship that is legally not considered a corporation because it cannot be incorporated and because the firm’s principals are not recognized as a distinct and separate identity from the firm itself. Ex: Law Firm, Accounting Firm
Fiscal Policy
One way that the government tries to manage the welfare of the nation’s economy by adjusting tax rates and general spending policies. Ultimately, Fiscal Policy is designed to keep unemployment down and the business cycle healthy. It works on the principle of the laws of supply and demand, and thus tries to increase the demand by encouraging spending by cutting taxes and increasing government purchases. Fiscal Policy is one way the Federal government tries to keep the economy healthy the other is Monetary Policy which controls the money supply.
Fixed assets
Tangible property used to operate a business but not expected to be consumed or converted into cash. These include plant machinery and equipment, and furniture.
Fixed-income security
A security that pays a fixed rate of return. This usually includes government, corporate or municipal bonds that pay a fixed rate of interest until they mature. Because fixed-income investments guarantee an annual payout, they are less risky than stocks.
Fixed-Rate Mortgage
A type of mortgage in which the interest rate does not fluctuate with general market conditions. These types of mortgages charge higher original interest rates than adjustable-rate mortgages, because there is no protection against fluctuating market conditions for the lender.
Floater
An insurance policy that covers specific items of personal property.
Ex: jewelry
Forfeiture
The loss of rights and assets because of a failure to meet legal obligations or compensation for damages.
Fortune 500
A listing of the top 500 corporations in the United States that is compiled by Fortune magazine. The companies are ranked according criterion such as revenue, assets, profits, growth, and total return to investors, and overall performance.
Franchise
The right and or license granted by a company to an individual or group allowing it to market its products or services in a specific territory.
Futures
An agreement to buy or sell a set amount of a certain commodity or security on a future month at a price that is agreed upon today by the buyer and seller.