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The Financial Services and Markets Act 2000 is the Act of Parliament of the United Kingdom that created the Financial Services Authority (FSA) as a regulator for insurance, investment business and banking. This was the Act by which Gordon Brown removed responsibility for regulating the banking industry from the Bank of England, a decision that […]

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The FSA Handbook sets out all the FSA’s rules made under powers given to the FSA by the Financial Services and Markets Act as well as rules based on this and other Acts. It is legally binding. The Handbook is updated almost daily and anyone involved in the financial industry is well advised to check […]

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Many employers offer a pension scheme to their employees though because of various recent changes in how these have to be accounted for this is becoming less common outside of the “public sector”. If you are a member of an occupational pension scheme your retirement income will be based on the years of service and […]

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In the context of UK regulations a qualified investor (“QI”) is one who falls within the definition contained in Section 86(7) of the Financial Services and Markets Act (“FSMA”) and who is listed on the Qualified Investor Register (“QIR”) maintained by the Financial Services Authority (“FSA”). The Financial Services Authority maintains a register of QIs, […]

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One of the most common questions we receive asks for a definition of a closed-end fund and a definition of an open-end fund. A closed-end fund is an investment vehicle with a fixed number of issued shares, which are not normally redeemable for cash or securities until the fund liquidates. Because there are a fixed […]

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Established in 1990, the Alternative Investment Management Association (AIMA) is the only truly global hedge fund association. It represents all practitioners in the alternative investment management industry – including hedge fund managers, prime brokers, legal and accounting services and fund administrators. The association centres it activities on education, regulation, policy development and in the establishment […]

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An alternative investment is an investment product other than traditional investments such as stocks and shares, bonds or cash investments. The common features of alternative investments have been summarised as follows: Poor liquidity  Difficulty in determining current market values  Limited historical risk and return data  Extensive investment analysis required Some common alternative investments are: real […]

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Private equity is the term which refers to money (capital) invested directly into private companies (those which are not listed on any stock exchange) by individual investors or funds. Private equity is often used to buy out public companies (those listed on stock exchanged) and delist them. Perhaps in a management buyout situation. Typically capital for […]

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The simple definition of real estate is “ A piece of land, including the air above it and the ground below it, and any buildings or structures on it.” The legal definition, at least in those countries such as the which are or were part of the British Empire or Commonwealth (and thus whose legal […]

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The terms “liquidity” or “liquid market” or “liquid asset” refer to the ease – or otherwise – with which an investment or asset can be sold. A liquid asset can be sold quickly, with minimal loss of value and typically this could refer to a stock or share traded on a major market. The essential […]

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In theory this is a simple concept. If Company A has earnings of £1 million and has 5 million shares in issue then the earning per share is £0.20. However there are some complicating factors. The fact is that companies have great flexibility in how they choose to report earnings per share. There are numerous […]

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Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a given stock. Dividend yield is calculated by dividing the annual dividend paid per share by […]

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This is the price of a share in a company divided by the dividend paid on it. Unlike the P/E ratio this is a matter or fact and cannot be fudged by accounting sleight-of-hand which can massage the “earnings” quite substantially. So if a share is trading at £20 and last year the company paid £1 […]

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This is in fact a fairly simple one. P/E Ratio is a company’s share price divided by the earnings per share. So, if a company’s shares are currently trading at £10 a share and if the earnings for the previous 12 months are £0.85 the share has a P/E ratio of 11.76. The P/E ratio […]

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The Bank of England today announced that it was commencing a programme of “Quantitative Easing” designed to stimulate the economy. For a few weeks now the term quantitative easing has been bandied about. Sometimes this is also referred to as “printing money”. Now I don’t know about you but I can’t see why just printing […]

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The Bank for International Settlements is an organisation that fosters co-operation between central banks and other agencies in pursuit of monetary and financial stability. It provides facilities for international financial operations and acts as agent or trustee in international financial settlements. Its banking services are available exclusively to central banks (such as the Bank of […]

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This is a spread which is rendered unprofitable because of unreasonably high agents’ commissions. See also: Spread Bid-Offer Spread

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Spread

Published on February 5, 2009 by in All Articles, Guide to City Jargon, Investing

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The “spread” is the difference between the purchase price and the share price of a security (stock, share etc). You will find it mentioned in many reports and quotes in the newspapers on on financial websites.   See Bid-offer Spread

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This is the difference between the higest buying price (offer price) that a buyer is prepared to offer and the lowest selling price (bid price) that the seller is prepared to accept.

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If you can convert an asset to cash easily and quickly, with little or no loss of value, the asset is said to have liquidity. For example if you have shares or bonds in a well known company, such as Ford, GE or Microsoft, you could sell these easily within a few hours just by […]

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