Investment dictionary | Learn & invest

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52-week high/low

The highest, or lowest, price a share has traded at in a passing year.

A - B

Account balance

The amount of money a user has stored in a financial repository.

Accounting standards

The rules a company follows when preparing financial statements.

Accrued interest

The interest earned on a gilt since the last dividend date. When buying a gilt, the buyer pays the accrued interest at the time of a transaction to the seller in addition to the clean price of the gilt

After-hours trading

Trading outside of a stock exchange's opening hours.

Alpha

The percentage by which an investor outperforms a relevant benchmark.

American Depository Receipt (ADRs)

Tradeable assets that let Americans invest in overseas stocks using US laws and dollars.

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

Balance sheet

A summary of a company's finances, including its assets, liabilities and shareholder equity.

Base rate

What's the base rate?

Bed & ISA

Understand what Bed and ISA is and how it works

Beta

Learn what Beta stands for in finance.

Bond

Learn what a bond is

Bull market

We explain what a 'bull market' means

C - D

Capital

Learn what financial capital means

Clean price

The quoted price of a gilt, which excludes accrued interest

Collective investment scheme

Learn what's a collective investment scheme

Compound interest

Understand what compound interest means and how it's calculated

Conventional gilts

Gilts where the dividends and principal repayments are fixed in nominal terms. This is as opposed to an index-linked gilt where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI).

Costs and Charges

The money you pay when investing.

Coupon

Also called a dividend, this is the fixed annual interest paid to gilt holders. It’s usually paid in two equal, semi-annual instalments and expressed as a percentage of the nominal value of the gilt.

Custodian bank

Learn what a custodian bank is.

Depository

We look at what is a depository and what role they play in keeping markets work.

Dirty price

The total price payable on the purchase of a gilt. It’s calculated as the clean price plus accrued interest.

Diversification

An investment strategy in which money is put into a variety assets.

Dividends

Find out what dividends are and how they can contribute to the growth of your investment portfolio.

DMO

The United Kingdom Debt Management Office. It’s an executive agency responsible for managing the government’s debt and cash needs, primarily through issuing gilts and Treasury bills.

E - F

Earnings per share

We look at what earnings per share mean and how to calculate it

Equity

The amount of money a company would be left with by subtracting its liabilities from the value of its assets.

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

ESG investing

ESG is a hot topic right now for investors. Understand what ESG investing is all about and how you can use it to diversify your portfolio.

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Fixed Income

An investment that provides a fixed rate of return, often over a specific set of time.

Free Trade

The other free trade. International trade in which countries allow goods to flow across their borders without imposing import or export taxes.

Fundamentals

The data or information that is likely to impact a company's stock price.

G - H

Geometric Mean Return

A way of calculating compound returns on an investment or savings over a set period of time.

Gilt

What is a gilt?

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

Gross Margin

The difference between a company's revenue and the cost to produce its goods/services, divided by revenue.

Growth stocks

These are stocks in companies that are considered to be “growing”. These companies may be delivering new products and services, or entering new markets.

Hedge Fund

Investment funds that are often associated with riskier and shorter-term trading strategies.

Holding Period Return

The amount of money generated by an asset during the time that it was held by an investor..

Hypothesis Testing

A mathematical test used to determine whether a claim is true or false.

I - J

Income statement

A summary of a company's income and expenses over a set period of time.

index-linked gilts

Gilts where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI). This is as opposed to a conventional gilt, where the dividends and principal repayments are fixed in nominal terms.

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.

Interest Rate

The amount a lender charges for lending your money, or a borrower pays you for borrowing your money.

Internal Rate of Return (IRR)

A means of calculating the potential future return on an investment.

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

Investment Trust

A company that pools money together from multiple investors and then invests it.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

K - L

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

Know Your Customer (KYC)

A legal requirement for financial firms to understand exactly who their customers are. Used to prevent money laundering and terrorist financing.

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

Limit order

Learn what a limit order is and how to use it to make the most of your portfolio.

LSE

London Stock Exchange, which was founded in 1571 and now has a market cap of almost $5 trillion.

M - N

Forward pricing

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.

Margin call

Learn what a margin call stands for in financial terms.

Maturity value

What's the maturity value of a bond?

Money laundering

A method of moving money obtained illicitly through the financial system so it can be used legally.

Money weighted rate of return

Learn what Money Weighted Rate of Return or MWRR stands for in finance.

NASDAQ

A US stock exchange specialising in the shares of technology companies.

Net asset value

Mutual funds and investment trusts are priced on their net asset value (NAV).

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.

Net Income (NI)

The money a firm is left with from sales after subtracting taxes and different business costs.

Nominal amount

The face value of a gilt. It represents the amount that will be repaid to the holder at maturity and is also used to calculate the dividend or coupon payment.

NYSE

The world's largest stock exchange. Wall St HQ.

O - P

OEIC

Unique to the UK, these funds pool together money to invest from multiple investors.

Oligopoly

A situation in which a market or industry is controlled by a small group of companies.

Over-The-Counter (OTC)

A security that is sold outside of an exchange.

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.

Ponzi Scheme

A form of fraud designed to lure new investors, and pays the earlier backers by using the new investors' money.

Professional Client

An investor that is able to meet several regulatory criteria.

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

Q - R

Quantitative easing

Find out what quantitative easing is and how central banks use this monetary measure to encourage economic growth.

Quick ratio

Learn what quick ratio stands for in financial terms and how to calculate it.

Rate of Return

Profit on an investment, expressed as a percentage of the investment.

Real Estate Investment Trust (REIT)

An investment trust specialised in investing in commercial property such as parking garages or GP offices.

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

S - T

Securities

Bonds and stocks.

S&P 500

Find out what is the definition of the S&P 500 index.

SPAC

Find our what a SPAc or special purpose acquisition company is.

Spot Rate

The currency exchange rate a bank quotes, valid with immediate effect.

Stock Exchange

A physical/digital place where stockbrokers and traders can buy and sell securities.

Stock Market

A place where shares of publicly listed companies are traded.

Synthetic ETFs

An ETF that that reproduces the return of an index through the use of swaps.

Technical Analysis

Examining price movements of shares and other assets, and trying to predict how they will move in the future.

Time Value of Money

The concept that money you have now is more valuable than the same sum in the future.

Time-Weighted Rate of Return (TWRR)

A return calculated over the time period invested, that excludes extraneous elements, such as deposits to and withdrawals from the investment accounted.