Financial Glossary for Tech Professionals

💡 Example:

Startup's 409A values shares at $15. All stock options must be granted at or above $15 strike price.

💡 Example:

With a 1-year cliff on 1,000 RSUs, you receive 250 shares after 12 months. If you leave at 11 months, you get zero.

💡 Example:

After 2 years, company grants 500 additional RSUs to retain you. These vest over another 4 years.

💡 Example:

RSUs vest when FMV is $150/share. That's the value used to calculate your taxable income.

💡 Example:

Exercise ISOs at $10/share when FMV is $50/share. If you hold for qualifying period, you only pay long-term capital gains on the $40 spread.

💡 Example:

Exercise NSOs at $10/share when FMV is $50/share. You owe ordinary income tax on $40/share immediately.

💡 Example:

If you receive 1,000 RSUs worth $100/share at vesting, you'll owe taxes on $100,000 of ordinary income.

💡 Example:

Strike price $20, FMV $80. Spread is $60/share, which is taxed as ordinary income for NSOs.

💡 Example:

Options granted with $25 strike price. Current FMV is $100. You can buy shares for $25 each, a $75 discount.

💡 Example:

4-year vest with 1-year cliff: 25% vests after year 1, then 6.25% every 3 months (or 2.08% monthly).

💡 Example:

Receive 10K shares worth $0.10 at grant. File 83(b) and pay tax on $1,000. If value grows to $100/share, no additional tax at vesting.

💡 Example:

Exercise ISOs with $500K spread. May trigger AMT requiring you to pay ~28% on the spread, even without selling.

💡 Example:

RSUs vest at $100/share (your basis). Sell at $150 after 2 years. Pay long-term capital gains on $50/share profit.

💡 Example:

RSUs vest at $80/share (cost basis). Sell at $120. Capital gain is $40/share.

💡 Example:

RSUs worth $50K vest Q2. Employer withholds $11K but you owe $20K. Must pay $9K via estimated tax by June 15.

💡 Example:

RSU income of $100K triggers $1,450 Medicare + $6,200 Social Security (if under wage base) = $7,650 FICA.

💡 Example:

MAGI of $300K with $50K capital gains. Pay 3.8% NIIT on $50K = $1,900.

💡 Example:

RSUs vest worth $100K. Employer withholds 22% federal + 10.23% CA = 32.23%. Your actual rate may be 50%, creating a $18K shortfall.

💡 Example:

Sell company stock at $10K loss. Buy same stock 20 days later. Loss is disallowed for tax purposes.

💡 Example:

$75K relocation + $50K sign-on with 18-month clawback. Leave after 1 year: owe $62,500 (50% prorated).

💡 Example:

Senior Software Engineer = L5 at Google, E5 at Meta, L6 at Amazon. Each level has defined compensation bands.

💡 Example:

Base $150K + 20% target bonus = $180K OTE. Actual bonus may be 0-40% depending on performance.

💡 Example:

Year 3: Initial grant mostly vested. Company gives 200 RSUs refreshing over 4 years to maintain equity value.

💡 Example:

$50K sign-on bonus paid in first paycheck. Must repay if you leave within 1 year (12-month clawback).

💡 Example:

Base $180K + Bonus $30K + RSUs $100K/year + Benefits $15K = $325K total comp.

💡 Example:

4% APR compounded daily = 4.08% APY. APY accounts for compounding frequency.

💡 Example:

Lend USDC on Aave at 5% APY. No bank involved—smart contracts handle everything automatically.

💡 Example:

Swap on Uniswap (Ethereum mainnet): $50 gas fee. Same swap on Arbitrum: $0.50 gas fee.

💡 Example:

Deposit 1 ETH + $2,000 USDC ($2K per ETH). ETH doubles to $4K. IL means you'd have been better off holding.

💡 Example:

Optimism and Arbitrum are L2s. Same security as Ethereum but 10-100x cheaper transactions.

💡 Example:

Deposit $10K USDC + $10K ETH into Uniswap pool. Earn 0.3% of all USDC/ETH trades proportional to your share.

💡 Example:

Deposit ETH in smart contract. Contract automatically pays you 4% interest and lets you withdraw anytime.

💡 Example:

Stake 32 ETH to run validator node. Earn ~4-5% APY in ETH rewards for validating transactions.

💡 Example:

Aave has $5B TVL. This means users have deposited $5B worth of crypto for lending/borrowing.

💡 Example:

Provide liquidity on Curve (earn CRV), stake LP tokens on Convex (earn CVX), stake CVX (earn more yield).