| |
N |
| Nominal
Compounded Return |
|
The
compound return of an investment that ignores the effect of
inflation. |
| Nondiscrimination
Tests |
|
IRS
required tests that a 401(k) plan must run to show that the
plan does not favor highly paid employees at the expense of
lower paid employees. |
| |
|
|
O
- P |
| Passive
Equity Management |
|
An
investment strategy that invests in all or a statistical sample
of stocks representing an index. The portfolio manager makes
no attempt to pick stocks that might have higher returns than
the index. |
| Pension
and Welfare Benefits Administration |
|
Former
name of the Employee Benefits Security Administration. |
| Political
Risk |
|
The
chance that the actions of a government will affect the prices
of securities in that country's stock or bond market. |
| Portfolio
|
|
A
collection of securities that are purchased and sold based on
a stated set of objectives for risk and return. In 401(k) plans,
portfolios will hold stocks, bonds or a combination of stocks
and bonds. |
| Portfolio
Manager |
|
The
individual (or sometimes committee) responsible for buying and
selling securities in a portfolio or fund. |
| Portfolio
Rebalancing |
|
See
Rebalancing. |
| Prepayment
Risk |
|
The
chance that a mortgage holder or other debtor will pay off the
mortgage or loan before the maturity date. |
| Prime
Interest Rate |
|
Traditionally
considered the best interest rate offered by a bank to its best
customers. (However, it should be noted that the bank's best
customer usually get an interest rate lower than the Prime Interest
Rate.) |
| Promissory
Note |
|
A
contract between a lender and borrower that states the terms
of a loan (e.g., interest rate, payment dates, maturity date,
etc.) |
| Prospectus
|
|
A
legal document required by that U.S. Securities Act of 1933
that contains financial and other information related to a mutual
fund. |
| |
|
|
Q |
| Qualified
Domestic Relations Order (QDRO) |
|
A court order the instructs the 401(k) plan administrator
how to divide the assets between an employee and former spouse
in a divorce settlement. |
| Qualified
Retirement Plans |
|
IRS
approved plans that allow the company and participants to defer
income taxes. |
| |
|
|
R |
| Rallies
|
|
Rapid
upward movement in securities prices affecting an entire market.
|
| Real
Estate |
|
Ownership
interest in property—land and the buildings on it. |
| Rebalancing
|
|
Periodic
purchase or sales of securities or funds within a portfolio
to adjust for market movements, new investments or withdrawals.
Portfolios are usually adjusted to reflect a target asset allocation.
|
| Recession |
|
A
decline in the economy's growth rate for two quarters (six months)
or more. |
| Relative
Return |
|
The
return difference between one investment and another. Usually
the return of an investment is compared with an index or benchmark.
|
| Replacement
Ratio |
|
The
amount of income required in retirement to maintain the standard
of living achieved while employed. |
| Required
Minimum Distribution |
|
The
minimum amount that must be withdrawn each year from a 401(k)
plan or IRA after age 72½. |
| Risk
|
|
The
chance of an investment increasing or decreasing in value. The
standard deviation of an investment is the typical measure of
an investment's risk. |
| Roll
Over |
|
The
tax-free transfer of assets from a 401(k) plan to an IRA or
a new employer's 401(k) plan. |
