- A
-
- AER – Annual Equivalent Rate
- This is a notional rate generally quoted on interest paid on savings and investments.
It demonstrates the interest return if the interest was compounded and
paid annually instead of, say, monthly.
- Allotment
- This is when a company makes an issue of shares and the shares will be allotted to
those people who apply for them on the terms outlined in the prospectus.
- AIM – Alternative Investment Market
- AIM is the London Stock Exchange's market for smaller companies
- Alternative Investments
- These are investments such as works of art, antiques, classic cars, stamps
& coins, vintage cognac and wines.
- AGM - General Meeting
- This is the mandatory shareholder meeting. All companies, except
the very smallest, are required by law to hold an AGM once a year.
- APR – Annual Percentage Rate
- The requirement to quote the APR was introduced as part of the Consumer
Credit Act of 1974.The APR figures (usually shown in brackets) highlights
the total amount of interest that will be paid over the whole term of the
loan.
- Annual Report
- By law this is the yearly statement which must be sent to the shareholders
of a company by its directors. It will include details of the company's activities
and financial position.
- Arbitrage
- Simply put it means the buying of something cheap in one place, to
make a profit selling it somewhere else, such as currency.
- B
-
- Bargain
- Any purchase or sale of securities between two members of the London Stock
Exchange is called a bargain. The term bargain is used interchangeably with
the term contract.
- Bank of England
- The UK’s central bank and responsible amongst other things in the management
of UK inflation
- Base Rate
- Sometimes referred to as the repo rate, the UK base rate is the minimum rate
at which banks are prepared to lend money. It is the benchmark for all interest
rates.
- Bearish – Bear Market
- A bearish investor expects prices to fall and the term bear market describes
a market in which sellers (the bears) predominate. A bear markets also means
prices are falling or are expected to fall enough for a clear down-trend to
be identifiable.
- Best Execution
- Equally known as "at best", this is the stock exchange rule which
puts an obligation on the dealer in the market to carry out a transaction
on behalf of his client at the best possible price available in the market
at the time of the deal.
- Bid
- The price that the market will buy shares.
- Bid/Offer Spread
- The difference between the bid price and the offer price. Market-makers quote
their prices to broker/dealers as a two-way prices, the lower of which is
known as the bid price (the price at which the holder can sell shares) and
the higher is the offer price (the price at which the holder can buy shares).
The bid/offer spread will be determined by a number of factors including the
underlying price of the equity, the sector, liquidity, volatility and takeovers.
- Blue Chip
- A share in a large, prestigious and perceived safe company, of the best among
city investments. A blue-chip company would ordinarily be well known, having
a large paid-up capital, a good track record of dividend payments and management.
- Bonds
- A bond is an agreement under which a sum is repaid to an investor after an
agreed period of time. They are generally issued by the UK government (gilt)
or public company.
Bonds normally repay a fixed rate of interest over a specified time and then
also repay the original sum in full at maturity.
- Bonus Issue
- Also described as a bonus issue, a free issue, a scrip issue, a capitalization
issue or a stock dividend. These are new shares issued by a company to its
existing shareholders, usually in a direct proportion to the number of shares
already held. These shares are issued free of charge as an accounting exercise
by the company.
- Broker-Dealer
- A trading firm which combines the functions of a broker as an agent for investors,
with that of a dealer, acting as a principal for its own account.
- Bucket Shop – AKA Boiler Room
- A bucket shop, also sometimes called a boiler room, is a broking scam run
to push worthless or even non-existent shares to the unsuspecting investor.
- Bullish – Bull Market
- A bull means anybody who considers share prices will rise and continue to
rise. A bull market is one in which share prices are generally rising.
- Bullion
- Gold and silver of a recognized quality in the form of bars rather than coins.
The bars are valued by weight as merchandise rather than by value as coinage.
- Bundesbank
- The German central bank (set up in 1957) with full independence to set interest
rates.
- Buyout
- In the City context - the purchase by the company itself of its own shares
held by the public, taking the company off the stockmarket and making it a
private limited company.
- C
-
- CAC 40 Index
- The CAC 40 index is the leading real-time indicator for the French stockmarket.
- Chartist – Charting
- Someone who uses a visual method of analysing or trading the markets using
price information to form a picture of previous price movements. Invariably
institutional investors use a mix of charts and "fundamental" analysis
such as the state of the economy, demand for a company's goods, etc.
- Chinese Wall
- These are the supposed communications barriers between members or departments
of the same financial institution created to ensure that price sensitive information
is not leaked.
- Claw Back
- This describes how a company makes a share issue where the existing shareholders
have the right to buy back a proportion of the new shares already placed with
subscribing investors and is commonly used by companies wishing to attract
new investors while preserving some of the rights of their existing shareholders.
- Closed Position
- A long or short position that has been liquidated.
- Commission
- The charges levied by the broker for buying/selling a financial product such
as a CFD.
- Corporate Bonds
- This is an IOU issued by a public company, such as ICI or Marks & Spencer.
An investment in a corporate bond is a loan to the company. In return you
will receive interest at a fixed rate and the "promise" that your
capital will be repaid at maturity.
- Correction
- A correction is a term used to describe a sharp downward movement in share
prices.
- Coupon
- The term is often used interchangeably for interest.
- Cover
- To sell a long position or buy back a short position.
- CREST
- Crest is the computerised system for 'settling' purchases and sales of shares.
- CUM
- From the Latin word meaning "with" it describes any rights or privileges
attached to owning a security, one the most common phrases you may see is
cum dividend.
- Cumulative Preference Shares
- These are not Ordinary shares but another form of borrowing from the issuing
company.
These confer a preferential right to receive a fixed dividend ahead of the
dividend rights of any ordinary shareholder but also have the rights to any
arrears of preference dividends.
- D
-
- Dawn Raid
- This is the term to describe the situation in which one company or stockbroker
launches a sudden surprise buying campaign in the stockmarket or a target
company.
- DAX 30
- The main German stockmarket index.
- Day Trading
- This is the buying and selling of stocks during the trading day by individuals
known as 'day traders' on their own account. The objective is to make a profit
on the day and have no open positions at the close of the trading session.
- Debenture
- This is a loan raised by a company, paying a fixed rate of interest and secured
on the assets of the company.
- Deferred Shares
- As part of the ordinary capital of a company, these shares enjoy the same
rights as ordinary shares with the exception that they do not get a dividend
until certain conditions are met.
- Derivatives
- A derivative is an entity that derives its value from something else. The
price of a Barclays Bank call option is derived from the price of Barclays
shares in the general market.
- Discount
- A share price of a company is said to be at a discount if it is trading below
that at which the shares were issued. In some cases, it may mean that the
share is trading below its nominal value.
- Dividend
- Dividend is the income you receive as a shareholder from a company.
- Dow Jones Industrial Average
- The index has 30 constituents chosen by Dow Jones and the Wall Street Journal
to represent a balanced selection of blue-chips. In recent years, the constituents
have been gradually altered, to reflect the shift in the US economy away from
traditional manufacturing towards computers and service industries.
- Dual Listing
- A dual listing signifies the listing of a company's shares on two separate
stock exchanges.
- E
-
- EPS - Earnings Per Share
- This indicator expresses how much the company is earning for every share held.
The calculation is based on 'pre-tax profit divided by the number of shares
in issue'. The EPS provides a clear and unadulterated measure of profitability.
- EMU
- EMU stands for European Monetary Union. From January 1, 1999, the European
Central Bank took over monetary policy. All stocks and government debt in
countries participating in EMU became denominated in Euro. The Euro as a form
of currency came into being.
- ETFs – Exchange Traded Funds
- ETFs are shares on different sectors within the stockmarket and are easily
traded within CFDs. Currently very liquid in the US. ETFs have yet to take
off in the UK.
- Euro Sterling Bonds
- Euro Sterling bonds are corporate bonds issued by UK companies in the international
markets rather than in the London market.
- Eurobond
- Eurobonds are a medium or long-term interest-bearing bonds created in the
international capital markets and are denominated in a currency other than
that of the country of its origin. This means, among other things, that interest
on such bonds is usually paid without tax being deducted.
- ECB - European Central Bank
- The European Central Bank (ECB), based in Frankfurt in Germany, has responsibility
for the conduct of monetary policy in the Eurozone The ECB sets interest rate
s for the countries that have signed up for the single currency, the Euro.
It is also the sole issuer of Europe's currency, the Euro.
- EX
- A Latin term which literally means "from" or "out of".
It is the opposite of cum and is used to show that a share is being traded
without a specified benefit, e.g. a dividend which usually will accrue to
the previous holder.
- Ex Coupon
- A stock or bond that's sold without the right of receipt of the next due interest
payment.
- Ex Dividend
- Ex dividend (ex div), is a share sold without the right to receive the declared
dividend payment, which is marked as due to those shareholders who are on
the share register at a pre-announced date.
- EGM Extraordinary General Meeting
- An Extraordinary General Meeting - EGM - is a meeting called to discuss special
business. This may involve voting on a proposed takeover or merger, a break
up of the business or other major event.
- F
-
- Face Value
- Face value describes the value of a bond in terms of what the company which
issued the bond will actually repay when the loan matures. It's sometimes
described as nominal or par value.
It is also the term being used to describe shares where the stockmarket price
of shares is significantly different than their face value.
- Fair Value
- Fair value is the term describing is the relationship between the futures
contract on a market index and the actual value of the index. So when futures
are above fair value, traders are betting the market index will go higher.
If futures are below fair value then self evidently the reverse holds true.
- False Break
- A false break is a move to new highs or lows that may indicate that a trend
has emerged. But if it later proves to have been deceptive and the market
moves back into its range, excellent trading chance exists.
- Fast Market
- This is a specific term used by the London Stock Exchange to describe a situation
in which share prices are changing more rapidly than the prices actually quoted
on the SEAQ service by the market-makers. This means that a market-maker's
price may well be out of date when you try to deal on it.
When the Exchange announces a fast market, the market-makers are no longer
obliged to deal at their quoted price but may vary from it. That is to say,
the price on the screen becomes indicative, not a firm price.
- FED - Federal
- The FED (Federal Reserve Board) is the U.S. central bank - the equivalent
of the UK Bank of England.
- Final Dividend
- This dividend is paid by a company to its shareholders out of profits at the
financial year end.
- Fill or Filled
- Describes a completed order as in a CFD trader stating “that order has
been filled”.
- Firm Price
- The firm price is the price quoted by a market-maker at which he is committed
to deal with a broker or other market-maker. A market-maker may vary from
promoting a firm price is when the London Stock Exchange has declared a fast
market.
- First Closing Date
- The first closing date is when one company launches a takeover bid for another.
- Fixed Interest
- Fixed Interest usually refers to bonds on which the holder receives a pre-determined
and unchanging rate of interest.
- Flat
- Having no position either way (neither long or short).
- Flotation
- This refers to the launch on the stockmarket for a public company. Flotations
are sometimes referred to as new issues although it is possible for companies
already in the stockmarket to issue new shares.
- Founders Shares
- Shares subscribed to by the original owners of a company which has since come
to the stockmarket are known as Founders Shares.
These shares sometimes have special voting rights which allow them to exercise
control over certain issues relating to the company's future.
- FTSE 100
- The FTSE 100 Index is the 'popular' index for tracking the London Stock Exchange.
The index contains the shares of the top 100 U.K. companies ranked by market
capitalisation. It's jointly sponsored by the Financial Times, the London
Stock Exchange, and the Institute and Faculty of Actuaries.
- FTSE All-Share Index
- The FTSE All-Share is the most comprehensive U.K. stockmarket index. Calculated
daily it is referred to in the market as 'the All-Share'. The index is made
up of companies accounting for more than 90 per cent of the market capitalisation
of all listed companies on the London Stock Exchange.
- FTSE Eurotrack 200 Index
- The FTSE Eurotrack 200 Index is a composite of both the shares of 100 companies
from Continental Europe, selected from among those quoted on the SEAQ International
system operated by the London Stock Exchange the constituents of the FTSE
100 index of leading UK companies.
Stocks from each country reflect that country's proportionate share of total
European stock market capitalisation. Therefore the weighting of the 100 shares
from the UK are adjusted so as not to take up a disproportionate amount of
the index.
The FTSE Eurotrack 200 is calculated every minute using live prices. The FTSE
Eurotrack 100 has the same constituents as the FTSE 200 Eurotrack but excludes
U.K. shares.
- Fully Paid Shares
- Shares at which the full face or nominal value has been paid. When a company
has issued partly-paid shares in a rights issue, the stock market will quote
two prices, one for the partly-paid shares and one for the fully-paid shares.
- Fund Manager
- Fund manages are professional investors who uses their judgment to invest
other people's money with the aim of increasing its value usually for a performance
related fee – usually a percentage of the overall fund.
- Futures
- A futures contract is the sale or purchase of a financial instrument, commodity
or index at a fixed price on a fixed date in the future.
- G
-
- Gap
- This is the term that describes when the market opens below or above the previous
day's close. The gap may then be closed when the market trades at prices between
the opening level and the previous day's close.
- Gearing
- Gearing is the percentage of borrowing relative to assets. In financial markets
it is mostly used when describing CFDs where for an example a trader can buy
a CFD where he places only a 10% deposit against the value of the CFD of £1000.
If the stock moves 10% higher his profit on the capital invested will be £100
or 100%. This demonstrates the effect of gearing. See Leverage.
- Gilt Edged Market Maker
- A market maker authorised by the Bank of England to make a market in government
stocks (gilts).
- Glamour Stock
- This is a stock which is fashionable either because the share itself or because
it is in a sector of the stockmarket which is currently fashionable.
- GDR - Global Depository Receipt
- Global Depositary Receipts are negotiable certificates which confirm ownership
of a company's shares and are mainly marketed to financial institutions.
- Golden Share
- A golden Share is a share which enjoys voting rights capable of exercising
a veto over specified or significant changes to the constitution or articles
of association of a company.
- Gross
- This describes the payment of a dividend or some other income without the
deduction of tax. Investors therefore take responsibility for paying any tax
due to the Inland Revenue.
- Gross Redemption Yield
- This is the total yield on an investment, including both the expected income
and the capital growth up to the date of maturity and eventual repayment.
Gross redemption yield is calculated without accounting for any allowance
for tax liability.
- Guaranteed Stock
- This is a bond where the issuing company or a public body gives the investor
an undertaking that a third party is guaranteeing the issue.
- H
-
- Head & Shoulders
- This is a term used in technical analysis by chartists to describe a particular
pattern of price movement.
The formation is said to resemble a person's head and shoulders - a level
period followed by a sharp rise, maintained briefly, before falling back to
another plateau.
Some chartists consider that a head and shoulders formation suggest a significant
fall in the price of a security is imminent.
- Hedge Fund
- A hedge fund is a fund which specifically uses options and futures contracts
to make money in either a bull or bear market without ever actually investing
in an underlying share or index.
- Hedging
- This is the technique of minimsing risk by simultaneously being short and
long. An example would be where someone is long £100,000 of stock in
the cash market and protects his investment from a potential downside by going
short by selling £100,000 futures or CFDs. Consequently if the market
did go down any loss on the stock position would be offset by the profits
on the short position.
- Holding Company
- A holding company is a company which holds other companies in the group. It'
is a company which has been formed with the sole aim of owning the whole,
or a substantial part, of the share capital of one or more other companies
or group of companies.
- Horizontal Integration
- Horizontal integration is the term used when two or more companies in the
same line of business merge.
- I
-
- Illiquid
- An illiquid share or market is one that doesn’t have much volume and
is usually characterised with wide bid/offer spread and are consequently expensive
to trade.
- Initial Margin
- This is the initial amount of cash deposited for a CFD position. Usually 20%
of the nominal value of the position so on a bargain size of £20,000
an initial margin will be £4,000.
- Insider
- An insider is someone who trades a security with knowledge not available to
the market at large and who thereby makes a profit.
- Institutional Investor
- An institutional investor manages money on behalf of private investors who
entrust them with money via their pension and life insurance funds, unit trusts,
ISAs or other collective investment.
- Interim Certificate
- An interim certificate is the temporary document of ownership of shares and
is normally issued when shares are trading in a part-paid form.
- Interim dividend
- An interim dividend is a dividend payment during the financial year. Often
paid following a half year profit (or loss) announcement UK companies normally
pay only one interim dividend.
- Issued Share Capital
- Issued Share Capital is the total number of shares a company has made publicly
available multiplied by the total nominal value of the shares.
- K
-
- Kerb Market
- Kerb market is the term for an unofficial trading of securities outside a
recognised stock exchange. The term originates from the old practice of dealers
continuing to trade on the pavement after the exchange's hours of business.
- L
-
- Leverage
- Leverage is the percentage of borrowing relative to assets. In financial markets
it is mostly used when describing CFDs where, for example, a trader can buy
a CFD where he places only a 10% deposit against the value of the CFD of £1000.
If the stock moves 10% higher his profit on the capital invested will be £100
or 100%. This demonstrates the effect of leverage. See Gearing.
- LIBOR
- LIBOR stands for London Inter Bank Offered Rate. It's the rate of interest
at which banks offer to lend money to one another in the money markets in
the City of London.
- LIFFE
- The London International Financial Futures and Options Exchange (LIFFE) was
established in September 1982 to trade in financial futures. Ten years later
it took over the London Traded Options Market. LIFFE is the world's largest
financial futures market outside of Chicago.
LIFFE trades futures contracts in several government bonds, FTSE indices and
currency futures.
- Liquidity
- Liquidity describes the ease with which stockmarket investments may be converted
into cash quickly.
Shares in the FTSE 100 are said to be highly liquid, meaning there's a lot
of activity in them. Heavily traded shares make 'liquid' markets. This almost
certainly means there'll be competition among market makers when it comes
to trading these shares. Such competition will tend to narrow the margins
of the market makers thereby offering the investor a keener deal. See Illiquid
Markets.
- Listed
- A company is listed when it’s shares have been accepted by the Quotations
Committee of the Stock Exchange and, after examination of the company's financial
situation, has been included in the Official List of Securities dealt in by
member's of the Stock Exchange. Listed or quoted shares contrast with unquoted
shares.
- Lloyds of London
- Lloyds is the London insurance market and insures a wide range of global insurance
risks. Best known for aviation and marine cover within the market there are
syndicates within the market that cover home contents and motor insurance.
- LIBID London Inter Bank Rate
- This is the rate at which banks in the City of London lend and borrow money
from each other in the wholesale money markets. The rate at which a bank is
willing to borrow money is called the London Inter Bank Bid Rate (LIBID).
The rate at which a bank is willing to lend money is called the London Inter
Bank Offer Rate (LIBOR).
- Limit Order
- This is an order to a broker to buy or sell at a specific price.
- Long Position
- Having bought but not yet sold with the aim of profiting from an increase
in price. See Short Position.
- Long Trade
- A position that will make money in a rising market. Buying £10,000 of
Vodafone is an example of a long trade.
- M
-
- Maintenance margin
- CFDs are margined products and consequently all bargains are credited/debited
a profit or loss at the close of the business day. Maintenance margin can
therefore be positive of negative and contract with the cash stockmarket where
the profit or loss is only realised when the share is sold.
- Margin
- This is the amount of money deposited with a CFD broker in order to fund a
position.
- Margin Call
- This is usually a telephone call from your CFD broker asking for further funds
to be deposited as a result of an adverse price movement.
- Market Make
- Market makers in the stockmarket trade as principals and actively courage/discourage
trading by changing the prices they quote to entice buyers and sellers into
the market.
- Market Order
- This is an order to buy or sell at the current bid or offer price.
- Market to Market
- This adjusts the value of an asset or liability to reflect the current market
price. For example if your buy 1,000 BT shares at £1.00 on the opening
and at close the price is £1.05 then £50 in profits will be deposited
in your account in so-called positive maintenance margin. The opposite applies
for market to market losses.
- Mid Price
- The 'mid price' is the price quoted for a share in the newspapers. It's effectively
the average between the buying and selling price in the market.
- MOC Order – Market On Close
- This is an order to cover a trade on close. If a trader were long on 1,000
BT shares using a CFD then a closing MOC order would sell 1,000 shares of
BT at the close (4.30pm). The opposite would apply for a short position.
- Monetary Policy Committee
- The Monetary Policy Committee of the Bank of England consists of nine members,
including among others, the Bank of England Governor, the Deputy Governor
and four external experts. The committee meets monthly and votes on whether
to raise interest rates.
- Mutual Fund
- Mutual Funds are collective investments such as unit trusts.
- N
-
- NASDAQ – AMEX
- The National Association of Securities Dealers Automated Quotations (NASDAQ)
was set up in 1971 as an international screen-based trading system without
a central dealing floor. NASDAQ-AMEX now lists thousands of US and foreign
companies.
- NASDAQ – Europe
- NASDAQ purchased EASDAQ in March to create NASDAQ Europe. This Brussels-based
Pan-European stockmarket was set up in November 1996 along similar lines to
NASDAQ in the US.
- NAV – Net Asset Value
- The Net Asset Value of an investment is the total value of all its assets
less its liabilities. This can alternatively be expressed in pence by dividing
the above figure by the number of shares in issue. 'NAV' is a measure of Investment
Trusts.
- New Issue
- This describes where a company is making its debut on the stockmarket or issuing
further shares.
- Nikkei 225 Index
- The Nikkei 225 is the leading index for the Tokyo stockmarket. It was formerly
known as the Nikkei-Dow index.
- Nil Paid
- These are shares on which no payment has been made but which are being dealt
in on a stockmarket. These shares generally arise from a new issue or a rights
issue.
Because the price at which a rights issue is made is at a discount to the
market price of the existing shares, the rights issue shares have a value
in their own right.
- Noise
- This is the term for normal market activity where the market movement has
been up and adown without actually going anyway.
- Nominee Accounts
- Nominee accounts are accounts set up by stockbrokers for the purpose of administering
assets held on behalf of clients.
- NYSE - New York Stock Exchange
- NYSE stands for the New York Stock Exchange on Wall Street – need we
say anything else?
- O
-
- OFEX
- OFEX is an unregulated trading facility established by the stockbroking firm
JP Jenkins in which shares of smaller companies may be bought and sold.
- Open-Ended Funds
- These are investments such as unit trusts where the number of units in issue
varies from day to day.
Other open ended funds include: US mutual funds, European UCITS and SICAVs
and most offshore funds.
An 'open-ended' fund varies from an investment trust which are closed-end
funds, and have a fixed number of shares in issue.
- Open Position
- This is a long or short position which has not been closed out.
- Opening Range
- Busy markets very rarely open at one price and so they are given a range (normally
within the first 2 minutes) where opening orders are filled.
- Options
- An option is a contract giving the right to sell or buy a commodity, financial
instrument or index, at a specified price for a certain period.
- Over Bought
- This is a term to describe a market or a stock which has appreciated so quickly
that an imminent fall in value is expected. The opposite of Over Sold.
- Over Sold
- This is a term to describe a market or a stock which has fallen so rapidly
that a rally soon is expected. The opposite of Over Bought.
- Oversubscribed
- Oversubscribed refers to when investors collectively bid for more shares in
a share offer than the company making the offer has for sale.
When an offer is oversubscribed, the applications for shares are scaled back
to enable all (or most) shareholders to receive some shares. This means that
most investors will get a proportion of the shares they bid for but not all
of them.
- P
-
- Par
- This is the nominal value of a security. This 'par value' will bear no relation
to the current market value of the security which will rise and fall in relation
with supply and demand in the market.
- Pairs Trade
- This is another name for a spread trade but done with 2 stocks usually from
the same sector. An example would be buying a CFD for HSBC whilst short selling
NatWest. The bargain will make money if HSBC outperforms NatWest either up
or down.
- Perk
- This is something enjoyed by an employee which is in addition to the basic
salary or wage for the job they do.
These extras form part of the employee’s remuneration package. The taxman
and accountants call perks 'benefits in kind'.
- PIBS - Permanent Interest Bearing Shares
- These are issued by major building societies, and they offer investors a set
income, paid twice a year. Traded on the London Stock Exchange, their capital
value moves in response to interest rates, similar to gilts. But PIBs are
not redeemable, so in order to offload, it’s often best to find a buyer
through a stockbroker.
- Placing
- Placing is a way of issuing shares in a private company, which is seeking
a stock exchange listing.
Rather than seeking applications from the public for shares, the broker or
issuing house looks for clients, such as wealthy individuals and financial
institutions, who are willing to buy large numbers of the new shares at a
fixed price.
- Portfolio
- Portfolio is an overall name for all investments belonging to an investor
or financial organisation.
- POTAM - Panel on Take-Overs and Mergers
- Originally proposed in response to increasing concern over unfair practices
to shareholders which had featured in a number of controversial takeovers,
POTAM was established in 1968. It now regulates the code of company takeovers
in the UK.
- Preference Shares
- Preference shares aren’t considered to be as risky than ordinary shares
for a number of reasons. Among them is the fact that they pay a fixed dividend
and are often paid out to preference shareholders before ordinary shareholders.
Also you can invest in preference shares via an ISA.
- Premium/discount
- The theoretical relationship between the FTSE 100 cash and FTSE 100 futures
is governed by the dividend flow out of the 100 companies which make up the
index, and the current rate of interest.
When the futures price trades at a level above/below this theoretical level,
the futures market is described as being at a premium/discount to fair value.
- Price Sensitive Information
- This is information about a company's affairs which would, if made public,
have an effect on its share price.
Price/Earnings Ratio
Price/Earnings Ratio is a measure of a share’s value. It’s worked
out by dividing the company's market value by its earnings.
- Primary Market
- The London stockmarket is often described as a primary market.
- Principal
- The principal is another term for capital.
- Private Company
- This is a company whose shares are privately held, and are not listed on the
stock exchange.
- Prospectus
- To satisfy the law, this must be issued by any company that wants to issue
shares to the public.
- Proxy
- This is a person who has the power to vote on behalf of a shareholder at company
meetings.
- PLC - Public Limited Company
- Limited by shares or by guarantee, the memorandum of a PLC states that it’s
a public company and which has registered as such.
- Put Option
- The right to sell stock at an agreed price at or before a stated future time.
- Q
-
- Quote Vendors
- Quote vendors are commercial organisations, usually offering screen-based
computer systems, which take price quotes provided by market makers and then
immediately sell it on in value-added form.
- R
-
- RIE - Recognised Investment Exchange
- This is a securities market which, recognised as meeting the requirements
of the Financial Services Authority.
- Registrar
- It’s an organisation appointed by a company to maintain its share register
and to communicate with shareholders.
- Returns on Gilts
- Gilts are Government bonds issued by the UK Government, and they pay a fixed
rate of interest. So that means, when you buy the investment, you will know
with certainty what return you’ll get.
- Rights Issue
- These don’t happen very often, but sometimes a company will create new
shares, the proceeds of which will go directly into its bank account, instead
of giving a profit (or a loss) to an existing shareholder.
- Roll Up Funds
- Often located in Dublin and the Channel Islands, these are off shore funds
which offer investors flexibility over when they take the income from their
investments.
- Rolling Settlement
- This is the system used to buy, sell and pay for shares.
- S
-
- SAEF
- The SEAQ Automated Execution Facility (SAEF) allows small trades in UK shares
to be carried out at a computer instead of over the phone.
- SEAQ
- SEAQ is the screen-based Stock Exchange Automated Quotations system.
- SEATS PLUS
- The Stock Exchange Automated Trading Service is known as SEATS PLUS. It's
a way for shares which aren’t dealt very often and in small quantities,
to still be traded under the support and protection of the exchange.
- Securities
- This is the generic term for any financial instrument traded on the Stock
Exchange.
- SIPPS – Self Invested Personal Pensions
- These are the most flexible of personal pension plans in which investors saving
for retirement has the flexibility to invest in wide ranging opportunities
including property, CFDs and traditional collective funds.
- SEPON
- SEPON stands for the Stock Exchange Pool Nominee, which is the account into
which all stock sold is transferred and from which all buying orders are placed
during the settlement process.
- SETS
- The Stock Exchange Electronic Trading Service (SETS) which is the electronic
trading order book.
- Settlement
- Settlement is the payment of cash for securities bought and the delivery of
securities against payment - the process of concluding a securities transaction.
- Settlement Day
- The settlement day is the one on which purchased securities are due for delivery
to the buyer and the cash consideration to the seller.
- Share Certificate
- A Share Certificate is a legal document which is proof of ownership of a shareholding
although holding certificates is becoming less popular as investors prefer
to hold their shares in a broker’s nominee service.
- Shareholder
- A shareholder is the legal owner of a security.
- SSAS – Small Self Administered Pension Scheme
- This is a pension fund which is normally set up for small companies. It enjoys
wide investment options and will usually be managed by professional trustees
on behalf of its members.
- Spike
- A spike is a temporary but extreme high or low of in a day's share price or
index.
- Spread Betting
- Spread betting is akin to gambling. In a spread bet you have a choice of betting
low or down (also known as a Sell) at the first named price or betting high
or up (also known as a Buy) at the second price and in effect merely betting
on which way you believe a price or index will move.
- Stag
- A stag is an investor applying for a new issue of shares which he intends
to sell immediately for profit once trading starts on the stockmarket.
- Stamp Duty
- Stamp duty is the government tax of 0.5% on all share purchases paid by the
purchaser. CFDs do not attract stamp duty.
- Stop Loss
- This is a predetermined price or level at which a position will be closed
to protect against further loss.
- Support
- The level at a price or index is expected to attract buying. For an example,
if the FTSE 100 was trading in a downward trend and currently at 5,970, brokers
might expect support “to come in at 5,950”.
- T
-
- Takeover
- In the stockmarket a takeover occurs when one company approaches another company,
making an offer to the latter’s shareholders, seeking to acquire their
shares in sufficient quantities to take control. Strict rules and regulations
exist to protect the interests of shareholders within the London Stock Exchange
during any takeover activity.
- Talisman
- Standing for 'Transfer Accounting, Lodgement for Investors, Stock Management
for Jobbers', Talisman was formerly the London Stock Exchange's centralised
computer settlement system for equities. It has subsequently been superseded
by CREST.
- Target
- A company which is the subject of a takeover bid.
- TechMARK
- The FTSE TechMARK Index is made up of all listed technology businesses including
companies from FTSE 100 to smaller companies on the stockmarket.
- Technical Analysis
- A form of very sophisticated charting using complex computer programs.
- Tracker Funds
- Tracker funds, or 'index funds' replicate or “track” the performance
of a given share index.
- Traded Options
- A Traded option is a contract which gives the owner a right to buy or sell
a financial instrument or commodity at a specified price within a specified
time.
- Tradepoint
- Tradepoint is London's second stock exchange.
- U
-
- UCITS
- UCITS stands for Undertakings for Collective Investment in Transferable Securities
– and is the term given by the European Union (EU) for pan-European
investment funds.
- Unit Trusts
- Unit Trusts are professionally managed collective investments.
- Unquoted Shares
- Shares in some companies, often smaller ones, are not traded on any stock
exchange and are called unquoted or listed.
- Upside/Downside Rotation
- At its essence the market’s purpose is to maximise business. It does
this by 'probing' in all directions over all time frames. Many investors will
not move until certain levels or predetermined limits are triggered. The action
of probing out business is called rotation.
