| Glossary of Financial Terms and Abbreviations |
| Personal Finance > Financial Glossary |
10-K: The official filing of end of year accounts a US company makes with the New York Stock Exchange.
10-Q: The official filing of quarterly accounts a US company makes with the New York Stock Exchange.
20-F: A document prepared for the US SEC by a foreign company listed on the New York Stock Exchange that tells you everything you need to know about a company. It is often more detailed than the report and accounts.
80-SLAM: A proprietary Motley Fool name, referring to the breathtaking amount of commission (sometimes 80%) charged on many Wise investment products in the first years of their existence. See Endowment, Free Standing Additional Voluntary Contributions and Front-End Loading.
Accountant: An actuary who wanted a more exciting life.
Accumulation Units: The designation given to unit
trusts where income is re-invested and not paid out.
ADR: American Depositary Receipt. Americans are funny about directly holding foreign shares and prefer instead to trade a receipt from a US bank that holds the underlying shares. Although normally the ratio is 1:1 (i.e. 1 ADR = 1 share), sometimes it isn't. BT, for instance, can be traded as an ADR in the USA.
Additional Voluntary Contributions (AVCs): Many try to enhance their occupational pension schemes by paying into one of these plans. Watch out for the hefty charges and dismal underperformance, though. Like Personal Pension Plans, they attract tax relief.
Adjusted Earnings: Companies don't have to produce adjusted earnings, but can choose to do so to clarify their results if the statutory figures are distorted by exceptional items.
Advisory Stockbroker: A stockbroker that offers advice on which shares to buy and sell. See execution-only stockbroker and churning.
Alternative Investment Market (AIM): AIM opened in 1995 for small, growing companies. It's less difficult to be listed here than on the London Stock Exchange and shares are higher risk and more likely to be difficult to buy and sell. See Liquidity.
American Depositary Receipt: See ADR.
Amortisation: An annual charge taken through the profit and loss account to allow for the fall in value of an asset. This term is often used in conjunction with an intangible asset.
Analyst: A financial professional who analyses securities to determine a "fair" or "intrinsic" value for those securities. The term is generally applied to almost any professional investor who does research of some kind.
Annual Management Charges: The annual fee charged by the investment managers to the investors to cover the cost of running the fund.
Annual Percentage Rate (APR): When you borrow money, this rate should always be quoted to you. It's the percentage rate which your loan will cost you each year, including all charges. Incredibly, APRs for credit cards can run to around 22%.
Annual Report: A yearly statement of a public company's operating and financial performance, punctuated by pictures of families enjoying the firm's products and/or services.
Annualise: Taking an item measured over a certain period and restating it on an annual basis. For instance, if it costs £10 million every month to run a factory, the annualised cost is £10 million x 12, or £120 million, since there are 12 months in a year. Simple.
Annuity: The investment you purchase with your pension fund, which will provide you with a regular income in your retirement. Because it is aimed at providing you with income, the majority of the fund is invested in bonds and government securities. The annuity seller has to guess how long you will you live and pays you an income accordingly. When you die the money stays with the annuity seller. Should you die very shortly after purchasing the annuity, this fact leads to a situation colloquially known as a 'Bummer'. The law currently requires a pension fund to purchase an annuity before you are 75.
Appreciation: Increase in the price (or value) of a share or other asset. Appreciation is one component of total return. Payment of an income, in the form, say, of a dividend, is another.
Arbitrage: The process in which one bank rips off another one by selling it something at the wrong price. OK, that was a bit facetious, even if it's pretty accurate. It's the process by which small, local price differences in a share are exploited and thus evened out. For instance, Unilever trades on the stock exchanges in London and in Holland and any changes in price in one market - say, through an institution selling off a large chunk of shares in London - will also rapidly be reflected on the other market through arbitrage.
Associate: A company that has between 20% and 50% of its shares owned by another is deemed to be an associate. The parent company is assumed to have some management input and is allowed to account for its share of the profits reported by the associate. This is usually more than the cash it actually gets.
Australian-Type Mortgage: As it sounds, a type of mortgage common in Oz. Interest due is calculated daily as opposed to yearly, which can make a significant difference to the cost for those on a repayment mortgage. Also more flexible and allows periods of both under- and over-payment of the mortgage to suit the borrower's changing financial circumstances.
