Financial terms starting with “J”

4 terms · plain-language definitions for lifelong students and investors · Full glossary

J-Curve: The pattern where a currency devaluation initially worsens a country's trade balance before eventually improving it. Imports become more expensive immediately, raising the import bill; export volumes take time to respond as foreign buyers adjust their purchasing. The trajectory resembles the letter J.
Jensens Inequality: For a concave function f, the expected value of f(X) is less than or equal to f of the expected value of X. Applied to utility theory it means the expected utility of a random outcome is always lower than the utility of the expected outcome -- the gap is the cost of uncertainty. Jensen's inequality is the mathematical foundation of risk-averse decision-making: it explains why investors pay for insurance, accept lower returns for safety, and hold precautionary cash buffers against income variability.
JGTRRA 2003: The Jobs and Growth Tax Relief Reconciliation Act of 2003. Cut the US federal tax rate on QUALIFIED DIVIDENDS from ordinary-income rates (up to ~39.6%) down to the long-term-capital-gains rate (15% at the time, 15-20% today). The reform substantially narrowed the historical tax wedge against dividends, partly explaining the modest rise in dividend initiations 2003-2007 (Chetty + Saez 2005). Did NOT, however, slow the parallel rise in buybacks — by the late 2000s, buybacks exceeded dividends in aggregate S&P 500 payout.
Joel Greenblatts Two-Factor Screen: The quantitative value strategy of ranking the investable universe on return on invested capital and earnings yield independently, summing the two ranks, and buying a basket of the highest-combined-rank names. The strategy combines a quality factor with a price factor in the most parsimonious way possible and has a genuine long-run edge in the published literature. The structural reason few professional managers run it in pure form is the well-documented multi-year underperformance windows that exceed typical institutional evaluation horizons.

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