DEFINITION of 'Buck'

Buck is an informal reference to $1. In foreign exchange trader's slang, a buck is 1 million units of a dollar-base currency, most commonly the U.S. dollar. The term "buck" probably comes from the days when deerskins, or buckskins, were commonly traded. Fur trappers and farmers would trade "bucks" for goods.

BREAKING DOWN 'Buck'

The earliest written use of the word buck is from 1748. Conrad Weiser, a Pennsylvania Dutch pioneer who had frequent contact between colonists and Native Americans, wrote in his journal that someone was robbed of 300 bucks' worth of items. He further clarified that five bucks was worth a cask of whiskey at the time. By comparison, a cask of Jack Daniels whiskey was worth between $10,000 and $12,000 in 2015, which is a lot more than five bucks. Once American currency replaced animal skins as a way to pay for goods, the term "buck" remained as a slang term for $1.

Expressions Using Buck

Several idioms and expressions use the word "buck." When someone wants to "make a fast buck," it means a person wants to make money in a short amount of time with little effort. A "quick buck" talks about an easily earned profit. Making a fast buck or a quick buck may refer to scams or cheats. "Making an honest buck" refers to someone who makes money in an honest, legal way.

A person who gets "more bang for the buck" has a very favorable cost-to-benefit ratio or greater value for the money. As an example, a computer for $200 gets more bang for the buck compared to a similar computer for $300. Contrarily, a person who buys a 15-year-old vehicle may not get a lot of bang for the buck if the car breaks down shortly after buying it, and the repairs cost more than the purchase price.

Breaking the Buck

"Breaking the buck" refers to the net asset value (NAV) of money market funds that fall below $1. This occurs when the money market fund's investments fail to cover the operating expenses or any investment losses. Money market funds break the buck during times of low interest rates or high risk. The first time this occurred in the United States was in 1994 when investors liquidated the Community Bankers U.S. Government Money Market Fund at 94 cents due to large losses.

The NAV of money market funds usually stays constant at $1 because these funds do not produce capital gains or losses because of relatively safe investments. The principal figure, or $1, usually stays the same throughout the life of the fund.

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