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Investment strategy

Emerging markets

An emerging market is an economy that is becoming wealthier and more advanced, but is not yet classed as "developed".
24 Jan 2020
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Funds

Tracker fund

Tracker funds (also known as index funds or passive funds) aim to track the performance of a particular index, such as the FTSE 100 or S&P 500.
17 Jan 2019
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Glossary

ADR

ADRs (American Depositary Receipts) allow US investors to get exposure to shares in foreign companies without the hassle of owning shares denominated …
30 May 2018
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Glossary

AIM

The Alternative Investment Market (Aim) was first established in 1995 by the London Stock Exchange as a way for newer firms to gain access to public f…
30 May 2018
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Glossary

Alpha

Alpha (which is also known as the alpha coefficient) is a way of analysing the value that an active fund manager...
30 May 2018
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Glossary

Altman Z Score

Devised in the 1960s by Edward Altman, a Z score indicates the probability of a company entering bankruptcy within the next two years...
30 May 2018
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Glossary

Amortisation

Amortisation has two slightly different meanings, depending on whether you’re in America or Britain...
30 May 2018
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Glossary

Annuity

An annuity is a product that can provide you with a lifetime income, typically on retirement...
30 May 2018

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Glossary

Arbitrage

Arbitrage is a technique used to take advantage of differences in price in substantially identical assets across different markets...
30 May 2018
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Glossary

Auditor

The law requires an independent person to sign off that a firm's financial statements are "true and fair" and have been prepared using the relevant le…
30 May 2018
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Glossary

Backwardation

If the current cash price for an asset slips above the price for forward delivery, that's known as 'backwardation'.
29 May 2018
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Glossary

Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.
29 May 2018
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Glossary

Baltic Dry Index

The Baltic Dry Index is a key barometer of global freight activity – measuring the cost of ferrying raw materials around the planet.
29 May 2018
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Glossary

Bank of England

The Bank of England is the UK's central bank. It started life in 1694 as a private bank set up by London merchants as a vehicle to lend money to the g…
29 May 2018
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Glossary

B/C share scheme

Companies occasionally hand cash back to shareholders by issuing new types of shares, typically called B shares and C shares
29 May 2018
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Glossary

Bernanke put

There is a widespread belief that the US central bank can always rescue the economy by decreasing interest rates. Since the current chairman is Ben Be…
29 May 2018
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Glossary

Beta

Beta (or the 'beta coefficient') is a way to measure the relative riskiness of a share.
29 May 2018
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Glossary

Bid-offer spread

The bid-offer spread is simply the difference between the price at which you can buy a share and the price at which you can sell it.
29 May 2018
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Glossary

Big Bang

The 'Big Bang' refers to the deregulation of the London Stock Exchange, which took place on 27 October 1986.
29 May 2018
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Glossary

Bond auction

When governments want to raise money, they do so by issuing bills (typically short-term) and bonds (longer term – maturities can reach 30 years or mor…
29 May 2018
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Glossary

Bond duration

Duration is a measure of how long it will take to reach a bond's mid point in cash-flow terms.
29 May 2018
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Glossary

Bond rating

The risk of default on bonds varies from issuer to issuer. Credit-rating agencies grade bonds to help you gauge their risks.
29 May 2018
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Glossary

Bond vigilantes

"If the fiscal and monetary authorities won't regulate the economy, the bond vigilantes will," says economist Ed Yardeni on Bloomberg...
29 May 2018
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Glossary

Bond yields

An investor buying a bond needs to know what return to expect.
29 May 2018
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Glossary

Bonds

A bond is a type of IOU issued by a government, local authority or company to raise money.
29 May 2018
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Glossary

Bonus issue

A bonus issue is common among British companies. In America the nearest equivalent is a stock split.
29 May 2018
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Glossary

Book value

Book value is the total value of the net assets of a company attributable to - or owned by - shareholders.
29 May 2018
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Glossary

Bottom-up investing

Bottom-up investing is a strategy that overlooks the significance of industry or economic factors and instead focuses on the analyses of individual st…
29 May 2018
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Glossary

Bovespa

The Bovespa is the Brazilian stock market's benchmark index.
29 May 2018
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Glossary

Break even

The break-even point on an option is the price that the underlying asset has to hit in order to enable the option buyer (holder) to recover their prem…
29 May 2018
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Glossary

Bullet repayment loan

A 'bullet repayment loan' is one where the borrower repays the capital in one chunk at the end of the term of the loan.
29 May 2018
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Glossary

Buyouts and buyins

A management buyout (MBO) occurs when the management of a company buys up a controlling interest (often by buying all outstanding shares).
29 May 2018
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Glossary

CAC-40

The CAC-40 is France’s benchmark stockmarket index.
28 May 2018
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Glossary

Capital adequacy

Central banks impose capital adequacy ratios (also known as solvency ratios) that set the amount of its own money a bank needs to have relative to its…
28 May 2018
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Glossary

Capital asset pricing model (CAPM)

The capital asset pricing model has been widely used for many years by the global financial services industry to try and predict the returns you shoul…
28 May 2018
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Glossary

Capital expenditure (Capex)

Capex is short for capital expenditure. This is simply the purchase of fixed assets such as land, buildings and equipment for a business and it is oft…
28 May 2018
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Glossary

Capital ratio

In an attempt to prevent organisations such as banks from going bust too easily, regulators impose minimum capital requirements on them...
28 May 2018
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Glossary

Carry trade

Carry trades seek to make money from the fact that the interest rates set by central banks around the world vary considerably.
28 May 2018
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Glossary

Cash conversion

Making profits is one thing – but you want to know how well a company converts these profits into cash.
28 May 2018
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Glossary

Cash flow

As well as publishing yearly profit and loss accounts, companies also have to produce a cash-flow statement...
28 May 2018
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Glossary

Chapter 11

Chapter 11 of the American bankruptcy protection laws effectively puts a protective ring around a company, winning it time to renegotiate its debts an…
28 May 2018
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Glossary

Clearing house

A typical contract between two financial-market participants involves one agreeing to sell and later deliver a product (say, shares) and another agree…
28 May 2018
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Glossary

Closet tracker funds

An active fund with a portfolio of stocks that is little different from the overall market is called a "closet tracker".
28 May 2018
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Glossary

Coco bonds

Could contingent convertible bonds, or Cocos, stop a bank failing? Some regulators believe so...
28 May 2018
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Glossary

Cognitive bias

We use mental shortcuts (heuristics) to make decisions rapidly. These work in many circumstances, but when it comes to investing, they can be a major …
28 May 2018
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Glossary

Commodity forwards

A 'forward' is a contract agreed between two parties whereby one agrees to deliver a specific quantity of an asset – say one ton of aluminium – on an …
28 May 2018
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Glossary

Compound interest

When you invest money, you earn interest on your capital. The next year, you earn interest on both your original investment plus the interest from the…
28 May 2018
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Glossary

Contagion

When used in financial markets, contagion is a term associated with the kind of market turmoil seen in 2007 as well as previous crises such as those o…
28 May 2018
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Glossary

Contango

The price of an asset for forward delivery is usually above the price you would pay today...
28 May 2018