Appendix A. Glossary

The financial pages are a minefield of jargon: you need to have a working knowledge of the lingo to get you through to the other side unscathed. This glossary gives you explanations for over 100 terms you'll come across along the way.

AIM:

The Alternative Investment Market, a more lightly-regulated division with the London Stock Exchange which is designed for smaller and growing companies.

Annuity:

A permanent return from a one-off cash investment. Annuities often form the main payout mechanisms for pension funds after retirement.

AER (Annual Equivalent Rate):

A tightly-defined representation of the true interest rate that you can expect to receive on a cash investment. Because all AERs are calculated in the same way, they make it easier to compare the various rates on offer.

APR (Annual Percentage Rate):

Similar in spirit to AERs, but directed toward borrowers rather than investors A tightly-defined representation of the true interest rate that you can expect to pay on a loan, etc. As with AERs, APRs make it easier to compare the rates on offer.

Arbitrage:

The practice of buying stocks, bonds, currencies etc in one kind of market and then selling them another market, in the hope of exploiting a difference between the prices quoted in those markets.

Balance Sheet:

One of the three main parts of a company's financial statements. The balance sheet shows the company's assets and sets them against its liabilities to produce a figure known as the Net Asset Value.

Bear:

Strictly ...

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