Glossary Of Investment Terms

The second largest floor-based securities exchange in the US, specialising in equity derivative products, particularly options. Known as the (New York) Curb Exchange until 1953 - its roots go back to 1849 - the Amex merged with the Nasdaq Stock Market in 1998 to form the Nasdaq-Amex Market Group.

A gradual paying off of a debt by periodic installments

The true rate of paying interest on a loan.

The provision of a guaranteed income for life in return for a lump sum payment. Often bought with a pension fund on retirement. Annuity rates are linked to yields on gilt-edge securities.

Taking advantage of small price differences (of securities or goods) in different markets to make a profit. It involves buying something to sell in another market or at another time

Fixed assets are land, machines and buildings; current assets consist of cash, money owed, stock, investments and work in progress; intangible assets are goodwill, trade marks, patents, etc; liquid assets are funds kept in cash or in a form that can be quickly and easily turned into cash.

Buying a business and then realising a profit by selling off the assets separately.

A balance sheet is a summary of an organisation's financial position. It lists the values, in the books of account on a particular date, of all the organisation's assets and liabilities. The assets and liabilities are grouped in categories, to paint a picture of the organisation's strengths and weaknesses.

These are traditional names given to certain investors in the market. A Bear is someone who believes that the price of a share or other commodity will go down. When he takes this view he is 'bearish'. A Bull believes that the price of a share or other commodity will go up and when he takes this view, he is 'bullish'. A Stag is an investor who buys a share at the time of its issue at the issue price in anticipation that the share will’ have an opening market price at a higher level so that he can make a short-term profit. A Bull who buys shares and is left holding them when the price, contrary to his expectation, goes down is called a stale Bull.

Originally an American expression to denote the shares of companies which are well established, usually large and highly regarded. A leading share in a large company.

A bond is a written promise to repay a debt at an agreed time and to pay an agreed rate of interest on that debt

This is the value of a fixed asset, such as a building or machine, as recorded in an organisation's books. It is usually the amount paid for the asset less an amount for depreciation.

Arrangement by the owner of a building to acquire the remaining lease term of a tenant in a different building. This frees the tenant from the old lease obligations and permits him to negotiate a lease in the new building.

The capital return is the return obtained by an investor through the movement of share, property or bond prices, without taking any accounting of dividends, rent or interest received.

These are short-term assets that are constantly changing in value, such as stocks, debtors and bank balances.

These are short-term liabilities which are due to be paid in less than one year, such as bank overdrafts, money owed to suppliers and employees' PAYE.

The distribution to shareholders out of company profits.

Traditionally, the word ‘dividend’ has been used for the payments made to shareholders in securities which, as in the case of most ordinary shares, own the company; so the dividend is variable, upwards or downwards, according to the success of the company. 'Interest', on the other hand, is a term normally used for the payments made on cash deposits or bonds. The interest on a bond is sometimes called the 'coupon', a name which results from the fact that, for some securities, the interest is claimed from the company by sending in a coupon detached from the share certificate.

A loss in the purchasing power of money; an increase in the general price level. Generally measured by the consumer price index

An agreement between two or more parties who invest in a single business or property

The ratio of the price of a share to the earnings per share is termed the price/earnings ratio. This is the most important measure of how expensive a share is. The price/earnings ratio (for example 7, or 15) gives the ratio between the price which investors are prepared to pay in the market and the earnings produced by the company in question and due to that particular share. So the higher the ratio, the more investors are prepared to pay for participation in the company's earnings.

A real estate investment trust, or REIT, is a company that owns, and in most cases, operates income-producing real estate and enjoys special tax benefits. It sells shares of ownership and must invest in real estate or mortgages.

A simultaneous sale of real estate and lease of the same property to the seller

Share capital is the money invested directly in a company by its members (shareholders).

This document certifies who owns shares in a company. It gives the type and number of shares owned by the shareholder and lists the serial numbers of the shares.

Transfer Stamp Duty, imposed by the Government, is payable by the buyer only. It is an ad valorem (ie based on value) duty. It is not levied on gilt¬-edged stocks, company debentures and loan stocks, and certain other securities. Higher rates are payable on some property transactions.

A body set up, under the law governing trusts, to look after the property or investment of other persons. This does not necessarily entail the management of the assets but responsibility for such management.

A unit trust is a legal vehicle used for investment purposes, in which the money subscribed by unit holders is invested for some common investment aim, usually in ordinary shares. Investors may subscribe to units, which can be created if necessary, at some subsequent date the investor may sell the units back to the managers, In which case they are cancelled or sold on to another investor. The fund is therefore 'open ended' and the amount of money under management can vary according to the confidence which investors have in that particular unit trust's future.