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Glossary of Accounting, Financial & Investing Information - B

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Back-end load fund

This type of mutual fund charges a redemption fee when the shares in the fund are eventually sold by the investor.  This fee is also often called a deferred sales charge (DSC).  It may be calculated based on the original investment cost, or on the market value of the investment at the time of redemption.  The percentage amount of this fee is usually reduced each year that the fund is held, and can be zero if the fund is held long enough.  Many back-end load funds will allow a portion of the investment to be redeemed each year without charge.  Also, as with all mutual funds, trailer fees are paid annually by the fund to the advisor, broker or dealer where you hold your funds.  See also front-end load fund, and no-load fund.

Balance sheet

A balance sheet is part of the financial statements.  The balance sheet reports the amounts of assets, liabilities, and owners' equity at a specific date.  The total of all assets is always equal to the total of liabilities plus owners' equity.  This is a function of the double-entry accounting system.

Bankers' acceptance

A bankers' acceptance is a short term debt instrument guaranteed by a bank, and sold through a brokerage company to investors.

Basis of assets

Basis includes the original purchase price, and all costs related to the purchase of an asset.  Events during your ownership of the asset could result in an adjusted basis.  For instance, your basis would be increased by the cost of improvements, or decreased by allowable depreciation.  See the Internal Revenue Service (IRS) Topic 703 - Basis of Assets.

The basis of an investment in securities would include the purchase price, as well as any commissions or fees paid.  The basis of an interest-paying investment such as a bond would include any amount paid for interest accrued since the last interest payment date.  When the accrued interest is paid to you, it is used to reduce the basis of your bond.  See the IRS Publication 550, Investment Income and Expenses.

The basis of assets such as machinery or equipment would include installation costs, customs brokerage and legal fees, and any other costs expended to get the asset into operation.  The basis of your asset is used to calculate deprecation, amortization, and any gain or loss on the disposal of the property.

The adjusted basis of a rental property would include any improvements that cannot be expensed for tax purposes.  Improvements increase the value or the life of the property.  Examples of improvements would be a new roof, new appliances, etc.  See the IRS Publication 527, Residential Rental Property.

There may be costs related to any asset (for instance, major repairs that extend the life of the asset) that must be added to the adjusted basis instead of being expensed.

Basis point

A basis point is 1/100th of 1%, or .01% (.0001), and is used to refer to changes in interest rates, such as the Federal Reserve Board discount rate, or the yield rate on bonds.

Bear market

A bear market is a declining market (prices are falling).  A person who expects that the market will decline is called a bear.

Bearer security

A financial instrument, such as a bond, stock or other security that is not registered in any name.  This means it is cashable by the person physically holding it.

See also street name.


The bid price on a security is the price that a prospective buyer is willing to pay, and the ask price is the price that a prospective seller is willing to accept.

Blue chip

A blue chip stock is a stock which has a long record of being high quality, in terms of stability, dividends, earnings, etc.

Board lot

A board lot is usually 100 shares.  Trades on stock markets are usually made in multiples of a board lot.  See also odd lot.


A bond is interest-bearing debt issued by corporations, governments and institutions, with the principal (face value) to be repaid at a specified date (or dates) in the future.  Interest is to be paid on the principal at a specified rate per period.  Bonds may be secured (backed by a claim on specific assets) or unsecured (backed by the issuer but not by any specific collateral).  Bonds may be sold for more (at a premium) or less (at a discount) than their face value.  See also bond discount, bond premium, and strip bond.

Bond discount

When a bond sells for less than its face value, it is sold at a discount.  The discount is the difference between the face value and the purchase price.  Bonds sell at a discount when their coupon rate (rate of interest paid based on the face value of the bond) is less than the current market rate for that type of bond.  When long term interest rates rise, bond prices generally decrease.

Bond premium

When a bond sells for more than its face value, it is sold at a premium.  The premium is the difference between the purchase price and the face value.  Bonds sell at a premium when their coupon rate (rate of interest paid based on the face value of the bond) is greater than the current market rate for that type of bond.  When long term interest rates drop, bond prices generally increase.

Book value (of an asset)

The book value of depreciable assets such as buildings, machinery and equipment is original cost less accumulated depreciation.

Book value per share

This is the total shareholders' equity (as stated on the balance sheet), divided by the total number of common shares outstanding

Bull market

A bull market is a rising market (prices rising).  A person who expects that the market will rise is called a bull.

Revised: October 12, 2021


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