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GLOSSARY
Defined-benefit plan
A defined-benefit plan is a type of retirement or pension arrangement. Under a defined-benefit plan, retirement payouts are calculated based on a specific formula; common factors include the employee's length of employment, and salary history. The employer manages the funding portfolio and is responsible for keeping it adequately capitalized to support future benefit obligations.
Defined-contribution plan
Defined-contribution plan is a retirement savings vehicle, where an employee voluntarily deposits a portion of her salary into the account, and is responsible for managing the investment portfolio. These include 401(k) and 403(b) plans.
Deflation
Deflation is an economic condition where prices drop throughout a region or economy. Deflation, which is the opposite of inflation, can result from a tightening of the money supply.
Delinquency
This is the failure to pay monthly motgage on due dates. Even if late fees are not charged, the late payment is called loan deliquent and beyond the stipulated 30 days, lenders have the right to report the late payment to credit bureaus.
Delinquent mortgage
When a borrower fails to make their mortgage payments on time according to the terms of the loan.
Demand deposit
A deposit that can be withdrawn at any time without advance notice. A checking account is a demand deposit account.
Demand draft
A demand draft is an order that a bank transfer money from one account to another. Demand drafts, which are used in lieu of paper checks, are created by the recipient of the money using the customer's account number and bank routing number.
Demand loan
A demand loan is a debt that's repaid at the lender's request, rather than on a stated maturity date.
Dependency ratio
Dependency ratio is the percentage of a population that's below age 15, or above age 64. These age groups are considered dependents because they're either too old or too young to maintain regular employment. A high dependency ratio presents greater risk to an economy, because the burden of supporting the population is spread out over a relatively smaller number of people.
Dependent
A dependent is one who relies on another person for financial support. Qualified dependents (usually children) are often claimed on the tax returns of the supporting party in exchange for a reduction in tax liability.
Dependent care credit
Dependent care credit is a tax reduction available to those who incur expenses associated with the care of a child, parent, or disabled spouse.
Deposit
A certain amount of money paid in advance in anticipation and assurance of receipt of a larger sum in the future. It is also termed 'earnest money deposit' in real estate terminology.
Depreciation
A decrease in the value of property or assets. It is used in accounting to show an expense to reduce taxable income. Since it is not an actual expense, only a representation of the decreasing montary value of a asset in use, lender will add back the depreciation expense for self employed borrowers and take it as income.
Derivative
A conditional instrument used by market participants which derives its value from an underlying security or notional amount. There are two types of derivatives: options/futures and swaps. The main use of derivatives is either to remove risk or task risk on depending if one were a hedger or a speculator.
Designated agency
A designated agency is an arrangement where a buyer and seller in a transaction are both represented by agents within the same brokerage. Under designated agency, each agent separately represents only the interest of his client.