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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
This is a spread which is rendered unprofitable because of unreasonably high agents’ commissions. See also: Spread Bid-Offer Spread
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
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.
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 [...]
The generally accepted definition is that Cash Investments are short-term obligations, usually ninety days or less, that provide a return in the form of interest payments. Examples are money-market funds and short-term Certificate of Deposit. Putting your cash on deposit in a bank or similar institution is not considered a cash investment but a cash [...]
When a company or a government needs to raise cash, it may opt to borrow the money it needs from the public through the selling of bonds. The company or government department (the “issuer”) of the bond outlines how much money it would like to borrow and specifies a length of time it wants the [...]
This directive replaced the Investment Services Directive (ISD) in 2008. It is considered to be the most significal European Union legislation affecting investment intermediaries and financial markets since 1995. It extends the coverage of the ISD regime and introduces new and more extensive requirements for firms to ensure they give the best and most appropriate [...]
The FSA is an independent non-governmental body formed following reforms in the regulation of financial services. The supervision of banking and investment services (including pensions, life assurance etc) was merged with the responsibilities of the previous regulator, ”The Securities and Investments Board (SIB), which changed its name to the Financial Services Authority in 1997. The FSA’s four [...]
The European Economic Area consists of all the member states of the European Union plus three of the four European Free Trade Association (EFTA) states, namely Iceland, Norway and Liechtenstein. By treaty the EFTA states have been allowed to be part of the European Single Market without being required to join the EU. The Fourth [...]
