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Wayne Adult Community Center

From the Febuary, 2002 Cyberspace News

Tax Time is Creeping Up

Tick-tick-tick. With every passing second, tax time is coming closer and closer. For those of us who do not speak the language of finances (and who may be completely befuddled by it), below are explanations of just a few terms:

$ Taxable equivalent yield- The return from a higherpaying but taxable investment that would be equivalent to the return from a tax-free investment. To determine this, you need to know the tax bracket of the individual paying the taxes on the income.

$ Short-term capital gain - A profit on the sale of a security that has been held for one year or less. Short-term capital gains are taxed as ordinary income.

$ Securities- A fancy name for shares of stock, bonds, or any kind of financial asset that can be traded.

$ High-yield bonds- Bonds that are rated as below investment grade. The issuers of these bonds - which are judged to be at a higher risk of default - have to pay an attractive dividend to compensate investors for the additional risk.

$ High-yield fund- A mutual fund that invests in bonds with low credit ratings. Because of the risky nature of high-yield bonds, high-yield funds have greater volatility than the average bond fund.

$ Earnings per share (EPS) - A company's earnings, also known as net income or net profit, divided by the number of shares outstanding.

$ Dividend-A share of a company's earnings paid to each stockholder.


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