Vocabulary

accident insurance - A policy which gives the named holder a sum of money if they suffer from certain injuries as a result of an accident.

accountant - A person holding a qualification from a recognised professional body, such as the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Management Accountants, or the Chartered Institute of Public Finance and Accountancy. Accountants work in partnership, in business and in the public sector and are responsible for ensuring the financial probity of the organisations in which they work. Strict regulations exist to regulate the work of accountants. Many accountancy firms also offer tax and management consultancy advice but have attracted controversy in recent months because of concerns about the impartiality of advice given to audit clients.

accounts - Accounts are the financial records of a company's trading. All British-registered companies are required to file accounts once a year. Failure to file can incur fines from Companies House. Quoted companies are obliged to have their accounts verified or audited by a recognised firm of accountants

active management - Describes the investment strategy pursued by a pension fund. Actively managed funds have a fund manager to decide on the investment strategy the fund will pursue and aims to outperform a particular market index.

actuary - Actuaries use highly complex mathematical models to assess risk and work out potential levels of return for policies such as insurance and pensions. Accountants like to joke that actuaries are people who found accountancy too exciting.

additional voluntary contributions (AVC) - This a way of making additional contributions to your company pension policy. Their final value depends on the performance of the funds invested in.

affinity card - A credit card that benefits a third-party organisation such as a sports club, charity or trade union. The organisation concerned receives a small fee every time the card is used.

aggregation - Increasingly this word is being used in the internet arena to refer to the combining of different online financial accounts for activities such as banking, sharedealing and bill payment. Although account aggregation has been common in the US for several years, it has been held up in the UK by concern that such a service would be easy for hackers to infiltrate

alternative investment market (AIM) - This market is a subsidiary of the FTSE all-share index and was created to help smaller companies float on the stock market. The admission rules are generally less stringent than for a main market listing, but despite a slow start AIM has become a successful market.

American depository receipt - These are US dollar denominated shares in non-US companies. Many quoted UK companies issue ADRs, as it is a way of broadening the shareholder base to include US institutional investors who might not otherwise trade shares in overseas companies.

amortisation - The process by which expenditure is written off in a company's accounts over a given period of time. Usually it allows a company to account for the depreciation over the lifetime of a particular asset.

analyst - A person who researches the stock market to determine the likely performance of a particular company, industry sector or country. Controversy has surrounded the work of some investment bank analysts, amid claims that some will never recommend that investors sell shares in a company that happens to be a corporate finance client of the bank.

annual report - The yearly publication that details the performance of the business. Companies are obliged to issue results but the annual report itself is often a glossy publication that serves more of a public-relations function than any investor-information role.

annual percentage rate (APR) - This figure reveals exactly how much a borrower will pay in interest to a lender during a year.

annuity - Pensioners are obliged to spend their pension fund on this financial services product, which will then pay out an income until the pensioner dies. There is much controversy over the performance of annuities and claims that pensioners could do better with an alternative sort of product. Some pensioners' groups are campaigning for annuities to be replaced.

audit - This is the process of verifying a company's accounts and is normally carried out by a recognised firm of accountants. The accountants (auditors) must certify that the accounts represent a true and fair picture of the company's financial situation.

balance sheet - Part of a company's accounts, the balance sheet is concerned with the assets and liabilities of the business. Assets are what the company owns and liabilities are its debts or responsibilities to others.

bankruptcy - People become bankrupt if they have insufficient money to pay off their debts and cannot satisfy creditors' demands for repayment. Although bankruptcy means people can come to an arrangement with their creditors and can thus make a fresh start, it does not put people back to where they where before they ran up large debts. Although people can be discharged as a bankrupt once debts are paid or after an agreed period of time, they may have to disclose their bankruptcy in the future if they ever try to open a bank account, take out a loan or other mortgage. Discharged bankrupts may find lenders unwilling to deal with them.

base rate - This is the basic level against which banks calculate interest rates.

basic rate tax - This is the standard rate of tax which people pay. The rate is currently 22% and covers all income earned from Ј1880 to Ј29400. Anyone who earns more than the upper limit will have to pay a higher rate on income above that limit.

bear market - If traders think that the stock market is vulnerable and prices will fall, it is known as a BEAR market. Bears tend to be pessimistic about the prospects for share prices, unlike bulls that are naturally more upbeat.

blue chip - Shares in blue chip companies are shares in the biggest companies in the land. They are said to be safer as the company has a track record and has grown to a considerable size. These are considered the least risky shares to buy. So a blue chip company is an established, large company. Examples include Barclays Bank, Vodafone, British Telecom.

bottom feeding - Refers to the buying of shares after the price is thought to be at or near its lowest possible value. People who buy at this level are hoping that the share will soon start to rise.

bounced cheque - Banks can refuse to honour cheques, usually because there are insufficient funds in the account on which the cheque is drawn. Banks will normally make a charge for dishonouring a cheque and the business to which the cheque is made out could refuse to deal with the person who wrote the cheque in future.

bricks and clicks - A dot.com expression which refers to traditional businesses that have gone onto the internet in the search for new markets and customers. See also clicks and mortar.

bubble - A rapid increase in share prices caused by investors continuing to buy shares in the market. The investors are driven by the belief that if they don't buy now, they will be missing out on substantial growth opportunity. The fevered nature of buying means that eventually the market will run out of steam. When it does, the market will either tail off or the bubble will burst, potentially leaving investors nursing large losses.

building society - A mutual organisation that is owned by its customers. Many building societies have converted to banks over the past few years as members sold their ownership to the stock market in return for windfall payouts.

Building Societies' Ombudsman - An independent office that listens to complaints against building societies.

bull market - If traders think that the stock market is healthy and shares are going to go up, it is known as a bull market. Bulls are upbeat and optimistic, whereas bears are deemed to be pessimistic and have a more negative outlook.

capital gains tax (CGT) - If someone makes a gain on the sale of an asset, such as a business, the government will levy a hefty tax on that windfall. Some assets, including your main home, are exempt from CGT. The threshold for untaxed gains is currently Ј7, 500, so any benefit above that level incurs CGT.

capital growth - The rate at which the money you invest grows in value.

capital versus income - You can make money on the stock exchange in one of two ways. Firstly, the share price goes up and, secondly, you get income. The first is a capital gain while the second is a gain from income in the form of a dividend. Both are taxed in different ways.

capped rate mortgage - Mortgages with a fixed maximum interest rate, designed to protect home owners from unexpectedly large upward movements in rates. Although the rate can fall below the cap, it cannot move above it.

cash flow - The flow of cash around a company is referred to as its cash flow. Because cash is needed on a day-to-day basis to meet a company's obligations, it needs a constant flow of money to service debts and other commitments. If cash flow is inadequate, a company can be said to suffer from cash flow difficulties. In extreme circumstances, this can cause a business to fail.

CAT mark - This is a government mark of approval for financial services products. It assesses a product against Cost, Access and Terms. The CAT mark signifies that the particular product meets a range of criteria designed to ensure customer satisfaction.

certificates / CREST - When you buy shares you have to have proof that you have bought them and therefore are a part owner in a company. The traditional way to do this was for a company to issue a share certificate to you. This is done by the Crest system. Crest is the name for the new electronic share register. Instead of paper, your shares are registered electronically. When you sell, or buy more, the transfer goes on electronically too.

City (The) - Also called The Square Mile, the City is a general term used to describe the London Stock Exchange and major financial institutions and investors. When newspapers describe the City as responding badly to a company's financial announcement, it generally means that large institutional investors took the news badly and that some/many sold the shares, thereby causing the price to fall.

clicks and mortar - A dot.com expression that refers to internet companies which have broadened their activities to non-internet activities. These could include more traditional forms of business such as opening shops, running warehousing and distribution.

commission - The payment that financial services providers pay salespeople such as Independent Financial Advisers or accountants for selling a particular product to a consumer. IFAs survive on commission payments though some financial services giants employ salesforces on a salaried basis only. By law IFAs must tell consumers, if asked, how much commission they make from the sale of a particular product.

commodities - These are physical assets such as gold, silver, copper, wheat and cattle. You can trade in cattle in exactly the same way as in shares, and you can buy and sell copper in the same way too. There are special markets for commodities.

Companies House - The part of the Department of Trade and Industry that is responsible for maintaining records of British-registered companies. These records can be seen by the general public. Companies House is responsible for ensuring that companies file accounts and other relevant corporate information. It has the power to dissolve companies that do not file information as requested.

completion - The stage in the property transaction at which title passes from the seller to the buyer.

consolidation - The process by which a company reduces the number of shares in circulation. This is often done for housekeeping reasons and has no effect on the value of an investor's total holding. A company could offer investors one new share for every 20 held, so if they have 20,000 shares worth Ј1 each, they could have 1,000 shares worth Ј20 each.

conveyancing - The process of transferring the ownership of property, usually - though not always - carried out by a solicitor.

County Court Judgement - Often referred to by its acronym of CCJ, this is a County Court ruling that obliges a company or individual to settle a debt. An individual with a CCJ against them may find it difficult to obtain a mortgage or other form of credit. A company with a history of CCJs may find other businesses insist on it paying cash up front in any transaction.

creditor - A person or business to which a company may owe money. When businesses go bust, some creditors - usually the taxman - take preference over others such as commercial suppliers

credit reference agency - Many companies collect information on people's credit history, so that lenders and banks can assess the likely risk of them defaulting on a loan or mortgage.

critical illness cover - An insurance policy designed to cover the beneficiary in the event of a serious illness or other health crisis.

dead cat bounce - Share prices that plummet after a company releases really bad news do occasionally appear to pick up or recover on the way down. This is sometimes referred to as a dead cat bounce since it is usually a short-term phenomenon caused by bargain hunters moving in (and then out again) to take advantage of this temporary movement.

debtor - A person or business who owes a company money.

debentures - These are not shares, but simply loans to a company, which then returns the money with interest. They are very similar to bonds

derivatives - High risk securities whose value varies according to the value of an underlying investment, such as shares, currencies, futures or options.

director - People who manage the company. Company law says that every company must have at least one director. They are responsible for ensuring the business is run in accordance with the law and they can be held personally liable for breaches of the law.

discount mortgage - A mortgage offered at an interest rate that is below the standard rate offered by major lenders. Usually the discount is available for a short term only, with a penalty for early repayment or remortgage.

dividend - A dividend is simply a payout to shareholders of a percentage of the company's profits. Paid either once, but usually twice a year, it will be more the better the company is doing. Companies can, at their discretion, make special dividend payouts if the business has had a good year or as part of a winding up arrangement.

dividend cover - This is the total amount of dividend paid to shareholders divided into the total after-tax profits. So if profits after tax are Ј1, 000,000 and Ј100, 000 is handed out to shareholders in total, the dividend cover would be 10.

dividend yield - Expressed as a percentage, this represents the benefit that shareholders receive from investing in a certain share.

dormant - A company can be deemed to be dormant if it carries out no significant business during an accounting period. A dormant company has to file accounts with Companies House but they are in a greatly simplified format.

due diligence - The process of studying a prospective acquisition target for any potential financial or other liabilities. Any public company acquiring another business must carry out due diligence, though this is often performed by its auditors. Auditors can be held liable for damages caused by their failure to turn up hidden liabilities or other problems during the due diligence process.

EASDAQ - This is a European stock exchange that deals with US dollar denominated shares.

endowment - A savings product designed to pay out a lump sum at a certain date. These policies are commonly used to pay off an interest-only mortgage. The money paid out by the mortgage is invested in the stock market and in the past usually produced a healthy surplus over and above the size of the mortgage. In recent years, however, poor stock-market performance means that many endowments have not performed as well as envisaged, leaving mortgage holders with a shortfall.

equities - Another word for shares that investors can buy in a quoted company.

ethical investment - Money invested in companies that are said to be ethically responsible, usually a reflection of how they treat employees, the markets in which they operate, and their environment. It also reflects the business in which they operate, so companies that pollute the atmosphere or those involved in arms, munitions or tobacco would also not count as ethically responsible.

Euro-zone - This group comprises countries that have decided to convert their currencies to the Euro (the single currency). The UK has not yet taken a decision to join the Euro-zone, though the Labour Government says it will do so when the time is right. The Conservative Party is opposed to membership of the single currency.

ex-dividend - An ex-dividend share price indicates that the most recent dividend has been paid out so anyone buying the share will not receive this benefit. Ex-dividend share prices will normally reflect this by falling in price after the payout has been made to shareholders.

execution only - Describes the type of service offered by a stockbroker, in this case it is sharedealing without any accompanying advice.

flotation - This simply means that a company offers shares in itself for the first time. It may be a privately owned firm that wants to raise capital by getting investors to buy its new shares, or a building society converting into a public company as a bank. Of course once a company floats it is owned by its shareholders. In the US a flotation is often referred to as an initial public offering or IPO.

Forex - Foreign exchange, dealing in foreign currencies.

FTSE 100 - The top one hundred companies on the main market of the London Stock Exchange as ranked by market value. Changes to the FTSE 100 are made every quarter. The FTSE 100 index was created in 1984 with a base of 1,000.

FSA - The Financial Services Authority is the body that is responsible for the supervision of investment advisers in the UK. Based in Canary Wharf, London.

Gazumping - The process by which a buyer out-bids another prospective buyer by offering more money for a property. Gazumping is more often seen in a sharply rising market than in a depressed market where buyers can be thin on the ground. Scotland, unlike England and Wales, has a different housebuying system which depends on sealed bids and therefore does not suffer from gazumping, though prices paid tend to be higher than they might be through an open bidding situation.

gearing - Financial journalists often refer to gearing as it is a means of gauging the extent to which a company has borrowed to carry on in business. Gearing is the ratio of borrowings to shareholder funds. The higher gearing is, the more exposed a company becomes to movements in interest rates.

gilt-edged - This is another word for Treasury stock. It is the way the government borrows money from individuals and institutions. Each gilt-edged stock pays a set rate of interest over a fixed period of time. There are many different forms of gilt-edged stock, all varying in both the rate and the period of time the stock runs for.

gross domestic product - The value of a country's total output, this figure is closely examined by economists and analysts for evidence as to how well a country's economy is performing.

gross national product - GNP includes not just GDP but also the value of financial transactions between individuals and companies in different countries.

Hang Seng Index - Hong Kong's stock market, consisting of the largest 33 companies in the province.

hedging - An insurance policy designed to protect individuals or companies from major market movements. Hedging involves buying two investments that will move in opposite ways as markets move, leaving investors unaffected by major movements. Companies typically hedge against exchange rate movements.

higher rate income tax - Once people earn over Ј29,400, they become liable to income tax at a higher rate. This is currently 40%.

independent financial advisor (IFA) - A registered financial advisor who is supposed to act for his or her client rather than the financial services company whose product is being recommended.

index-linked - This is a term that means linked to inflation. If you have an income that is index linked it simply means that the income will go up each year in line with the prevailing rate of inflation. Many civil servants enjoy index-linked pensions, which means their retirement income rises in line with inflation.

intangible assets - These are assets that do not physically exist, such as goodwill. Huge controversy surrounds the accounting treatment of these assets, with many in the accounting profession claiming that the way companies deal with goodwill can materially disguise the true financial state of the business.

interest rate - The price paid for borrowing money, expressed as a percentage rate over a period of time (usually one year). The Bank of England sets an interest rate for its own dealings with the market, which in turn affects the rates set by commercial banks for savers and borrowers. Interest rates affect spending and output in the economy, and eventually costs and prices. Broadly speaking, interest rates are set at a level to ensure demand in the economy is in line with the productive capacity of the economy.

investment trust/s - A quoted company that acts as an investment vehicle, putting its shareholders' money into the shares of other quoted companies. These trusts invest in other companies, but you buy shares in the investment trust. So it is just like any other PLC. It is just that instead of making widgets, a trust's "product" is other companies' shares. There are lots of investment trusts, all specialising in different areas. It is a good way of getting into shares as your money, lumped together with other investors, gives you the buying power of the big boys without having to have millions to spend.

IPO - An Initial Public Offering is the process by which a company first floats on the stock market. This is an American term that is creeping into common parlance in the UK.

joint account - Any account owned by two or more people - the same as in joint mortgage or joint will.

junk bond - A high-risk bond with a low credit rating. Investing a junk bond involves greater than usual risk and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history.

kickback - An illegal, secret payment made in return for a referral which resulted in a transaction or contract leveraged buyout The takeover of a company or controlling interest in a company, using a significant amount of borrowed money (usually 70% or more of the total purchase price).

life annuity - An annuity which continues to pay out as long as the beneficiary is alive.

liability - A financial obligation, debt, claim, or potential loss.

LIFFE - The London International Financial Futures and Options Exchange where people trade financial risk. Those who don't want to take on financial risks transfer them to people who have the appetite for them and the ability to control them.

limited company - A business structure which limits shareholder responsibility for company debt to the amount he/she has invested in the company. Limited companies are legal entities in their own right and a minimum of two directors is required to form one. Abbreviated to Ltd.

liquidate - To sell all of a company's assets, pay outstanding debts, distribute the remainder to shareholders and then go out of business.

listing - This simply describes the acceptance of a company to trade on a registered exchange. See also flotation.

lump sum - A single payment for the total amount due, as opposed to a series of payments over time.

majority shareholder - Someone who holds the majority of a company's shares, effectively giving them control of the business.

MBO - A Management Buyout is where the company's existing management team takes over ownership of a company they already run. The usual form of an MBO is where a publicly quoted company is taken private by its management team. This differs from a Management Buyin (MBI) where a small group of directors is brought in to a business, often by a new investor such as a venture-capital firm, with the aim of improving its prospects.

mid-price - As with a foreign currency, a share has a buy value and a sell value. The buy value is always more than the sell value, and the mid-price is the value between the two. It is this figure that is quoted in most newspapers

mortgage - A charge made against an asset. Homeowners' mortgages will be secured against the property they have borrowed to buy. Likewise, lenders will often insist that any lending to a company director is secured against his or her property.

MIG - mortgage interest guarantee - this is an insurance premium paid for by a borrower designed to protect the lender in the event that they can't keep up with repayments on the property they are borrowing against. The policies are disliked by practically everybody who's ever bought a property and had to pay it. The policy does not pay out to the borrower at all in the event of default but is just to protect the lender's interest.

Money Box - Money Box is Radio 4's flagship personal finance programme, helping you get a better deal for your money. The programme is presented by Paul Lewis with a live phone-in programme, Money Box Live, by Vincent Duggleby.

Nasdaq - The National Association of Securities Dealers Automated Quotation system was the world's first computer-run stock exchange, specialising mainly in technology company shares.

negative equity - Home owners whose property is worth less than the sum for which it is mortgaged experience negative equity. If they want to sell their property, they will have to make up the difference between the sale price and the size of the mortgage.

net asset value - This is a figure that is derived by dividing a company's total net assets (assets minus liabilities) by the number of shares in issue. Assets minus liabilities mean all your assets minus loans, outstanding bills, etc. So if a company's net assets are Ј1, 000,000 and there are 1 million shares in issue, then the NAV is obviously 1.

Nikkei - The Nikkei index features the 225 leading stocks traded on the Tokyo Stock Exchange.

Ofex - Set up in the same year as the Alternative Investment Market, Ofex deals in unlisted and unquoted securities. Regulation in this market is generally less stringent than on AIM or the main market of the London stock exchange, so risks for investors are therefore higher.

offshore company - A company incorporated in a country where there is little government control and/or low tax rates.

online trading - The increasingly popular activity of buying and selling securities over the internet, or to a lesser extent, through a broker's proprietary software.

operating costs - The day-to-day expenses incurred in running a business, such as sales and administration, as opposed to production (also called operating expenses).

overdraft - The amount by which withdrawals exceed deposits - or the extension of credit by a bank or building society to allow for such a situation.

oversubscribed - Term used to describe a new stock issue in which the buyers want more shares than are available.

partnership - This is an agreement between two or more people to take responsibility for running a business. They share both the profits and the risks. Most accountancy firms operate as partnerships but many are now changing their structure as they believe that the risks they face outweigh the potential benefits. In the US accountancy firms have been able to form limited liability partnerships for many years

passive management - The opposite of active fund management, this investment strategy is based on the development of a portfolio of investments that reflects a particular stock market or stock exchange index and is not chopped and changed on the say-so of a fund manager.

personal allowance - This refers to the total amount of money that someone can earn before they have to start paying tax. Currently the personal allowance is Ј4, 385. The Chancellor often changes personal allowance limits in the Budget, usually allowing for increases in the retail prices index.

portfolio - A collection of different investments or shares in different companies.

PLC - This stands for Public Limited Company; all companies that have ordinary shareholders, with shares issued on the stock exchange, are PLCs. A PLC has to have its accounts audited and presented in a special way. It has to comply with a range of tough Companies House regulations and its directors also have to meet certain Department of Trade and Industry criteria. Financially, a plc must have a total share capital of more than Ј50, 000, a quarter of which should be paid up in cash.

pre-tax profit - The surplus after all costs have been taken away from a company's turnover. If the surplus is a negative, it is a pre-tax loss.

price/earnings ratio - This term is often used by stock tippers to indicate whether or not they think a share is a good prospect. P/E ratios are calculated by dividing the share price by net earnings per share. The higher the number, the better the company is deemed to be doing. During the dot.com boom it was not unusual to find technology companies with p/e ratios of several hundred while, conversely, some manufacturing businesses had single-figure p/e ratios.

profit & loss - This is the part of a company's accounts that looks at transactions and the cost of those transactions over a fixed period of time. It is often referred to as the P&L .

profit margin - This is the gap between the cost of producing and selling goods and the income received from selling them. Companies in different industry sectors survive on different levels of profit margin. In a commodity business, making screws for the building industry, companies may survive on low single-figure margins, but in a high-value operation the margins could be well into double figures.

quarterly report - Is a report on financial performance that all publicly listed companies are required to publish every three months. The report should contain details of profits, losses and any significant company changes.

receiver - This is a person, often appointed by a court, to manage the winding up of a business that has run into financial difficulties.

receivership - Refers to the state of a company that is being managed by a receiver.

recession - An economy is said to be in recession if GDP declines for two successive quarters, though this is sometimes referred to as a technical recession. When recessions last any longer, economies run the risk of entering a slump or depression where demand for goods and services continues to fall and unemployment rises as a result.

redemption penalty - The interest penalty charged by mortgage lenders on some mortgages if they are paid back early. Penalties are most common on discounted mortgages because lenders rely on borrowers staying with them once the discounted period has ended to make some money on the product.

repayment mortgage - This is designed to fully repay the mortgage and the end of the loan term. Each monthly repayment consists of a repayment of interest plus some of the money borrowed at the outset.

rights issue - A means by which quoted companies issue more shares to raise money for the business. It's called a rights issue because existing shareholders have a right to buy the new shares. If they are not interested, they can sell the rights.

real estate - Another term for describing property, whether it is commercial or residential.

scrip dividend - This is where you take your dividend in the form of more shares, instead of cash. It is still taxable, though.

self-assessment - The government's personal tax regime transfers the responsibility for tax affairs onto the shoulders of taxpayers themselves. Forms must be returned, along with any tax payment, by the end of January. The Inland Revenue has signalled that it will introduce swingeing fines for taxpayers who file their returns late, in addition to the automatic Ј100 late payment penalty. Self-assessment has been the norm in a number of other countries, such as the US and Australia, for some years.

serps - If you are employed, part of your National Insurance contributions goes toward your State Earnings Related Pension Scheme (SERPs), which is paid out on top of your basic state pension when you retire. Many people choose to 'opt out' and have this money paid into a personal pension instead.

share - A "share" in the ownership of a company. When you buy a share you buy a bit of the company. As part owner you have the right to vote at annual general meetings (AGMs) and appoint the board of directors.

spread - This is the difference between the buy and the sell value.

stamp duty - The tax that is incurred on the transfer of assets, such as shares, companies and property. All share sales incur a stamp duty of 0.5% of the value of the total transaction. Houses valued at more than Ј60,000 incur stamp duty of 1%, while those sold for between Ј250,000-500,000 incur a rate of 3%.

tax year - The tax year runs from 5 April to 4 April every year.

Techmark 100 - This is the specialist technology market of the FTSE. It spans a wide range of sectors within the technology arena, including software developers, telecoms service providers, online innovators and computer hardware companies.

tracker funds - Also known as 'Index funds', Trackers reflect the performance of a given share index (e.g. FTSE 100)

takeover - The process of gaining control of a business, either by consent (an agreed takeover) or without the agreement of the company's management (hostile takeover).

tax evasion - The illegal non-payment of tax. The Inland Revenue has signalled a get-tough approach to tax evaders. This is not the same as tax avoidance, which is the legitimate use of tax law to minimise one's tax exposure.

tax avoidance - The completely legal practice of minimising one's tax liability by taking advantage of measures in tax law to reduce your total tax bill. Successive Budgets have been used to clamp down on avoidance by closing loopholes in the law.

take a bath - To sustain a substantial loss on an investment.

turnover - The total income recorded by a business. This figure will include sales and other forms of income such as licence fees and royalties.

tender offer - A takeover bid which takes the form of an invitation to shareholders to accept the terms of the acquiring person of company.

tax-deductible - Items that can be offset against an individual's or company's tax bill.

troubleshooter - A term often used to describe a management consultant or other adviser whose role is to fix problems. Arguably one of the UK's best-known troubleshooters is Sir John Harvey-Jones, former head of ICI and star of the BBC Troubleshooter series.

trustee - A person or organisation who manages assets on behalf of another. Trustees manage pension funds, for instance, and are legally responsible for ensuring that the assets under management are looked after in the best interests of the investors and in accordance with UK pensions law.

UK GAAP - UK General Accepted Accounting Practices are the guidelines set down for financial reporting in the UK.

underwriter - An intermediary who sits between the issuer of a share and the investing public (usually an investment bank). An underwriter can also be the issuer of insurance policies.

unlimited risk - An investment where the loss is potentially unlimited. Examples include short selling and futures trading.

unit trusts - Instead of issuing shares, Unit Trusts issue units. They are only bought and sold from the trust, not on an exchange, and you don't own the trust, nor can you vote. There is no limit to the number of units issued, and so it is called "open ended". Again, a good way into the stock market, as Unit Trusts buy shares in other companies just like Investment Trusts.

variable - Subject to change - as in variable rate mortgage, where the level of interest can both rise and fall.

VAT - Value added tax is a sales tax that is levied at 17.5% of the value of the good or service supplied within the UK. Companies that are VAT registered, that is normally turning over in excess of Ј35, 000 a year, can reclaim VAT on purchases that they make.

venture capital - Funds made available for start-up firms and small businesses with potential for future growth. Venture capital firms also often offer managerial and technical expertise to start-up companies to help ensure their investment grows successfully.

volatility - The relative rate at which the price of a share moves up and down - found by calculating the average deviation of daily change in price over the year.

voluntary liquidation - Voluntary liquidation is the sale of a company's assets to pay outstanding debts with the support of the company's shareholders because they believe it is in the best interests of the business. As opposed to an involuntary liquidation forced on a company by bankruptcy.

Wall Street - Name for the financial district in lower Manhattan, New York, and the street where the New York Stock exchange is located. Sometimes also used to refer to the investment community in general.

whistle blower - An employee who publicly reports illegal activities going on inside his/her company. Recently made famous by the staff at Enron who shed light on the company's financial irregularities.

white knight - A potential friendly acquirer sought out by a company to protect it from a hostile takeover.

WAP banking - WAP banking, using a mobile telephone that relies on Wireless Application Protocol to conduct one's financial affairs, was supposed to become the next big thing in financial services. To date, however, the technology has failed to develop in line with its backers' expectations.

with profits - With-profits bonds are investment bonds where a sum is invested in a specific with-profits fund of a life assurance company. The idea is that bonuses are paid every year in a bid to iron out the volatility of investment returns.

Watchdog - The BBC's leading consumer affairs show, takes a stand on behalf of consumers, tackles problems live on air and exposes scandals.

Working Lunch - BBC2's lunchtime personal and consumer finance show with something for everyone from novice to expert alike.

XD - Meaning ex-dividend, this symbol often appears in the share pages of newspapers and indicates that a dividend has recently been announced for holders of that share. If you buy a share at an ex-dividend price, you will not receive the dividend as you were not the holder at the time the dividend was announced.

year-on-year - Compared to the same time period in the previous year

year-end bonus - Payment sometimes given to employees at the end of a year in which the employee and/or the company performed very well

yield - The yield is the dividend per share as a percentage of the value of that share. This is very simple. If each share is worth Ј1 and you get an annual dividend of 10 pence, the yield is 100p/10p = 10%.