Thursday, 30th March 2017

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Stock Market Glossary

Stock market terminology can be quite confusing so we have compiled this list of the main terms used in the UK financial industry as a reference guide. We will be expanding this section in the near future. You can also play a game of hangman with these terms

Click on the starting letter of term you wish to lookup:

A

Accrual
The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (interest arbitrage) deals over the period of each deal.
Accumulation/Distribution
A mathematical indicator of momentum that attempts to gauge the supply and demand of a stock or currency - whether investors are generally "accumulating" (buying) or "distributing" (selling) a certain a security.
Advance / Decline Ratio
The ratio of the number of stocks increasing in price to the number of stocks decreasing in price. Also called the "breadth of the market."
Agent
One who acts for another. When a firm acts as agent, it is acting as a broker, bringing together a buyer and a seller. As agent it does not buy or sell for its own account.
AIM
The Alternative Investment Market, which is the secondary market run by the London Stock Exchange for smaller companies, with cheaper listing costs and a lighter regulatory environment.
Alpha
A statistical measurement of risk versus performance used to determine the percentage of the change in a stock's price due to factors internal to the company rather than to the stock market's fluctuations. See also Beta.
Amortization
(i) A reduction in a debt or fund by periodic payments covering interest and part of the principal. (ii) Writing off an intangible asset investment over the projected life of the assets.
Analyst
A person with expertise in evaluating financial investments; he or she performs investment research and makes recommendations to institutional and retail investors to buy, sell, or hold.
Annual Report
A booklet sent by companies to shareholders once a year depicting the company operations and describes earnings, balance sheets, profits, sales and other important facts about the company.
Arbitrage
Taking advantage of minor differences or aberrations in the market to try to profit as the market evens itself out or returns to normal. This is done by traders who purchase or sell an instrument and simultaneously take an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.
Arbitration
A method of settling disputes. The parties present their arguments to a panel of one or more arbitrators who will render a decision. There are no appeals from arbitration.
Ask Price
Lowest price at which a dealer is willing to sell a security, commodity or currency (alternative term to Offer).
Asset Allocation
Balancing risk and reward by dividing or allocating your investment assets over a number of different types of investment, be they stocks, mutual funds, bonds, money market account, etc.
Assets
Any possessions that has value in an exchange.
At Best
An instruction given to a dealer to buy or sell at the best rate that can be obtained.
Average Maturity
The average time to maturity of securities held by a mutual fund. Changes in interest rates have greater impact on funds with longer average life.

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