| A Shares |
Shares which are normally the same as ordinary shares but which do not carry the right to vote. |
| AAA |
The highest rating for corporate securities such as bonds, it reflects the unquestioned solidarity of the instrument. The rating is issued by Standard and Poors and Moody’s, two US credit rating agencies. |
| Abandoned Option |
Where an option is neither sold nor exercised but allowed to lapse at expiry. |
| Above/below the line |
Entries in the profit either before or after the tax charge. |
| Accrual Rate |
The rate at which money builds up in a scheme. |
| Accrued Interest |
The interest that a bond has earned since its most recent coupon was paid. The price for bonds ignores this element and quotes the price of bonds without accrued interest. However a buyer would have to pay for the interest that has accrued. |
| After Hours Trading |
Trading that takes place outside the normal hours of the Exchange and does not appear in the closing prices. It is reported to the Exchange Authorities the next day. |
| Alpha |
Alpha is an estimate of the return that can be expected from a share's fundamental characteristics, such as earnings growth. |
| Alternative Investments |
The term alternative investment is used to refer to investing money in something other than gilts or shares. Examples would be, putting money into stamps, antiques or art. |
| Annuity |
The income received either for a specific period or for life by the payment of an initial lump sum. Often used as a basis of a pension scheme. Income will depend on the prevailing interest rates and the expected life span of the recipient. |
| APR |
APR The Annual Percentage Rate of interest charged on loans etc. defined by the Consumer Credit Act. |
| Arbitrage
|
The concept of making a profit without risk and without any net outlay of capital. The arbitrageur will simultaneously buy and sell the same asset or two bundles of assets that amount to the same and profit from the difference in price. |
| Asset |
Within a portfolio shares, bonds and property are known as assets. Generally the term asset refers to something that has a realizable value or will generate net revenues greater than the cost of the item itself. Otherwise it is a liability. |
| At the Money |
A call option in which the exercise price is the same as the market price of the underlying security. |
| Authorised Share Capital |
The amount of shares that a company is allowed to issue. Specified in the memorandum of association and requires a shareholder meeting to change the amount. Not all of the authorised share capital has to be issued. |
| Averaging |
If the price of a share falls below the purchase price, an investor can buy more shares and therefore reduce the average cost per share. This is called pound cost averaging. |
| Avoidance |
The traditional meaning of avoidance by the tax authorities is the legal non payment of tax by making maximum use of provisions and loopholes in the legislation to reduce the amount of tax payable. |
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