Because the US income tax system is progressive, your tax rate rises as your taxable income rises. Your marginal tax rate is the rate you pay on the taxable income that falls into the highest bracket you reach.

For instance, if you have a taxable income that falls into three brackets, you would pay at the 10% rate on the first portion, the 15% rate on the next portion, and the 22% federal tax on only the third portion. Your marginal rate would be 22%.

However, your marginal tax rate is higher than your effective tax rate, which is the average rate you pay on your combined taxable income. That’s because you’re only paying tax at your marginal, or maximum, rate on the top portion of your income.

Keep in mind that your marginal tax rate only applies to tax on ordinary income, and does not take into account other tax liabilities — such as realized long-term capital gains which are taxed at your long capital gains rate — or tax credits for which you may be eligible, which may reduce the actual tax you pay.

Market capitalization is a measure of the value of a company, calculated by multiplying the number of either the outstanding shares or the floating shares by the current price per share. For example, a company with 100 million shares of floating stock that has a current market value of $25 a share would have a market capitalization of $2.5 billion.

Outstanding shares include all the stock held by shareholders, while floating shares are those outstanding shares that actually are available to trade.

Market capitalization, or cap, is one of the criteria investors use to choose a varied portfolio of stocks, which are often categorized as small-, mid-, and large-cap. Generally, large-cap stocks are considered the least volatile, and small caps the most volatile.

The term market capitalization is sometimes used interchangeably with market value, in explaining, for example, how a particular index is weighted or where a company stands in relation to other companies.

Market cycles are the recurrent patterns of expansion and contraction that characterize the securities and real estate markets. While the pace of these recurrent cycles of gain and loss isn’t predictable, certain economic conditions affect the markets in fairly reliable ways.

For instance, stocks and real estate usually gain value when the economy is healthy and growing, whereas bonds often do well during periods of rising interest rates. And during times of economic uncertainty, investors often prefer to put their money into short-term cash equivalent investments, such as US Treasury bills.

The cyclical pattern in one type of asset sometimes works in opposition to what’s occurring at the same time in another asset class or subclass. For example, when the stock market is gaining value, the bond market may be flat or falling, or vice versa. Similarly, sometimes large-company stocks increase in value faster than small caps, but sometimes the opposite is true.

A mid-cap stock is one issued by a corporation whose market capitalization falls in a range between $3 billion and $15 billion, making it larger than a small-cap stock but smaller than a large-cap stock. Market capitalization is figured by multiplying the number of either the outstanding or the floating shares by the current share price.

Investors tend to buy mid-cap stocks for their growth potential. Their prices are typically lower than those of large-caps. At the same time, these companies tend to be less volatile than small-caps, in part because they have more resources with which to weather an economic downturn

Moody's is a financial services company best known for rating investments. Moody's rates bonds, common stocks, commercial paper, municipal short-term bonds, preferred stocks, and annuity contracts. Its bond rating system, which assigns a grade from Aaa through C3 based on the financial condition of the issuer, has become a world standard.

Morningstar, Inc., offers a broad range of investment information, research, and analysis online, in software products, and in print. For example, the company rates open- and closed-end mutual funds and variable annuities, as well as other investment products, using a system of one to five stars, with five being the highest rating.

The Morningstar system is a risk-adjusted rating that brings performance, or return, and risk together into one evaluation. In addition, Morningstar produces analytical reports on the funds and variable annuities it rates, as well as on stocks sold in US and international markets.

A mortgage, or more precisely a mortgage loan, is a long-term loan used to finance the purchase of real estate. As the borrower, or mortgager, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property. The interest may be calculated at either a fixed or variable rate, and the term of the loan is typically between 10 and 30 years.

Municipal bonds are debt securities issued by state or local governments or their agencies to finance general governmental activities or special projects. For example, a state may float a bond to fund the construction of highways or college dormitories.

The interest a muni pays is usually exempt from federal income taxes, and is also exempt from state and local income taxes if you live in the state where it was issued. However, any capital gains you realize from selling a muni are taxable, and some muni interest may be vulnerable to the alternative minimum tax (AMT).

Munis generally pay interest at a lower rate than similarly rated corporate bonds of the same term. However, they appeal to investors in the highest tax brackets, who may benefit most from the tax-exempt income.

A mutual fund is a professionally managed investment product that sells shares to investors and pools the capital it raises to purchase investments. A fund typically buys a diversified portfolio of stock, bonds, money market securities, or a combination of stock and bonds, depending on the investment objectives of the fund. Mutual funds may also hold other investments, such as derivatives.

A fund that makes a continuous offering of its shares to the public and will buy any shares an investor wishes to redeem, or sell back, is known as an open-end fund. An open-end fund trades at net asset value (NAV). The NAV is the value of the fund’s portfolio plus money waiting to be invested, minus operating expenses, divided by the number of outstanding shares.

Load funds — those that charge upfront or back-end sales fees — are sold through brokers or financial advisers. No-load funds are sold directly to investors by the investment company offering the fund. These funds, which don't charge sales fees, may use 12b-1 fees to pass on the cost of providing shareholder services.

All mutual funds charge management fees, though at different rates, and they may also levy other fees and charges, which are reported as the fund’s expense ratio. These costs plus the trading costs, which aren’t included in the expense ratio, reduce the return you realize from investing in the fund.

A fund that sells its shares to the public only until sales reach a predetermined level is known a closed-end fund. The shares of a closed end fund trade in the market place the way common stock does.