Alternative Investment Market (AIM)

A Market for trading smaller company shares with less onerous reporting requirements than required by a full listing.

Bear Market

A market that is falling

Bid / Offer

The OFFER price is the higher price which the investor buys at and the BID price is the lower price which the investor sells at. The difference between the two is called the Bid Offer Spread and is usually 5% but can be more or less depending on the type of investment.

Bond

Fixed Interest security issued by governments and companies

Bull Market

A market that is rising

Capital gains tax

This is applied to an individual’s gains arising on the disposal of chargeable assets

Capitalisation

The total value of a company’s issued securities

Chinese Wall

Rules designed to prevent price sensitive information seeping between dealing/fund management/corporate finance operations in an investment house

Compliance

Self-policing by firms to make sure rules and regulations are being obeyed.  Compliance officers within firms act as 'internal deputies' to the outside regulations authorities

Convertibles

Bonds which have the option of converting into shares of the company at a predetermined price and time

CREST

Computerised share dealing system making shareholdings non-certificated

Dividend yield

The annual return on an investment, based upon the price of the security, and the amount paid as dividends

Equities

The ordinary share capital of a company, as distinct from its preference or loan capital.  Some times a synonym for ordinary shares

FTSE 100 Index

Index of the 100 top UK shares

Gilts

Stock issued by the Government in which one or both of  the capital and interest are guaranteed at maturity.  'Long gilts' are those without a redemption date within 15 years.  'Medium gilts' are those with redemption between 5 and 15 years.  'Short gilts' have a redemption date within 5 years. Irredeemable Gilts have no fixed redemption rate so there is often no fixed or guaranteed price with them.

Guaranteed Investment Products

Guaranteed performance bonds/trusts or equity protected investment guarantee investment performance over a set time span via coupling investing part of each deposit in fixed rate bonds giving a defined return. A small further deposit in an options contract to provide linkage to a stock market index and offer some upside potential

Index Tracker

A fund that tries to replicate the performance of a particular index by mirroring its constituent parts

Indexation Relief

Indexation relief,which started in 1982,ceased in respect of acquisitions after 5th. April 1998.  The disposal of assets held on 5th. April 1998 will be computed with indexation applying to 5th. April 1998 only. Tapering relief applies from 6th. April 1998

Investment Trust

A limited company whose sole business is investing in securities. The value of its shares reflect the value of its investments.

Loan Stock

Convertible loan stock is a form of corporate bond issued by a company, which at a future date is redeemed for an issue of ordinary or preference shares.

NASDAQ

National Association of Securities Dealers Automated Quotation System

Net Asset Value

Net Assets divided by issued ordinary shares

Nominee Name

Name in which a security is registered which does not indicated the beneficial owner

OEIC

Open Ended Investment Company.  A hybrid Unit Trust which is single priced with a better geographical remit.

Preference Shares

Shares that pay a fixed rate of dividend and are paid in priority to dividends on ordinary shares.  They can carry restricted rights to dividend but are normally repaid in preference to other shareholders in liquidation.  They normally have no voting rights and may have the right to convert to ordinary shares at certain times.

Price/Earnings Ratio

The share price divided by the earnings per share also known as the ‘P/E ratio’

Redemption Date

Date on which a redeemable bond or preference share will be paid

Rights issue

A rights issue is a means whereby a company can raise extra finance offered to existing shareholders

Risk warning

A warning on the risks associated with product types.

Securities

The general name given to stocks and shares

Unit Trust

An open ended trust, which invests in a portfolio of shares and investments managed by a professional investment manager.  Units of investment are made available on demand

Venture Capital Trusts (VCTs)

A quoted company that invests at least 70% in qualifying unquoted companies.  Subscribers for VCT shares receive generous tax reliefs.

Yield

The annual return on investment. Based upon the price of the security and the amount paid as dividends.

Zero Coupon Bonds

Also known as deep discount bonds, they pay little or no interest.  Issued well below par and the return is the guaranteed uplift to the nominal value at the maturity date.