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Financial Glossary

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Balloon mortgage

A type of mortgage where a large payment is made at the end of the loan period in addition to the regular periodic payments. The regular payments alone are not enough to pay off the principal and interest owed. The final payment is called the balloon payment.

Basis

The actual cost of an investment, including commissions and other expenses. Basis is used to determine capital gains and losses for income tax purposes.

Bond

A piece of debt issued to an investor by a corporation, government, government agency or municipality. The issuer agrees to make regular, fixed payments of interest (called coupon payments) and repay the principal (the face value of the bond) on a specified date.