Base rate

What's the base rate?

The "base rate" typically refers to the interest rate that a central bank, like the Bank of England or the Federal Reserve in the United States, sets and uses as the primary tool for controlling monetary policy. This rate is crucial because it influences the cost of borrowing money throughout the economy. 

The rate set by a central bank can influence the cost of borrowing for others in an economy. This has the knock-on effect of either encouraging or slowing economic activity. 

Central banks use the base rate to try to control factors like inflation. Changes in the base rate can also influence the valuation of a country’s currency in relation to other currencies. 

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Unicorn

A startup valued at over £1 billion. They are rare, hence the name.
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Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.
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Net asset value

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

The rules a company follows when preparing financial statements.
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Arithmetic Mean

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

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

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Clean price

The quoted price of a gilt, which excludes accrued interest
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Geometric Mean Return

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