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Glossary Of Investment Terms (B)

The following are useful investment terms beginning with ‘B’

Balanced Fund
An investment portfolio which is diversified across a range of asset classes which typically include shares, fixed interest, property and cash.

Balanced Manager
An investment manager with experience in asset allocation and the supervision of portfolios containing a variety of different investments. The aim is to create a balanced investment approach with no over exposure in one investment area.

Base Rate
An interest rate set by the Bank of England which reflects the cost of borrowing money from the money markets.

Basic Rate Tax
The rate of tax you pay on income after you have earned in excess of the lower rate tax band allowance. The basic rate does change on a regular basis.

Basic State Pension
The flat rate (not earnings-related) State pension paid to all who have met the minimum National Insurance requirements. The amount of pension paid can increase depending upon an individual's personal circumstances, income, assets, etc.

Someone who has a negative opinion on an investment market and believes it will decline (As opposed to Bull).

Bearer Bond
A bond investment on which income is payable to the holder (the bearer).

Bear Market
A market in which prices decline sharply against a background of widespread concern.

An index or other market measurement which is used by a fund manager as a yardstick to assess the risk and performance of a portfolio. There are many different benchmarks to accommodate different types of investment mix.

This is someone who benefits from a will, a trust, a pension fund or a life insurance policy.

Best Advice
A requirement of the Financial Services Authority that a Financial Adviser, whether independent or tied to a single product provider, must provide best advice regarding the most suitable product, having first established a full understanding of the financial background. This is a vital element of the UK financial industry and one which is there to protect investors.

Beta is a quantitative measure of the volatility of a fund or portfolio, relative to the overall market. A beta above 1 indicates that a fund is more volatile than the overall market, while a beta below 1 represents a fund which is less volatile. A beta measurement is commonly used to measure the risk level of a particular investment/investment portfolio.

Bid Offer Spread
This is a form of charging whereby the prices at which units are bought and sold are different - the bid offer spread. The price of units which a customer can buy is higher than the price at which they can sell the same units. The difference is commonly referred to as the "turn".

Bid to Bid
Performance of funds is often quoted on this basis as it more accurately reflects the performance of the underlying assets - the lower of the bid/offer spread.

Blue Chip
Blue Chip is used when referring to leading companies on a stock market - more commonly related to those companies in the FTSE100 in the UK or other leading worldwide stock market indexes.

These are interest bearing securities which entitle the holder to income during their life, and repayment of the loan at a predetermined date - the maturity date. They can be issued by companies or governments and should not be confused with investment bonds.

Bond Ratings
A system for measuring the relative credit worthiness of bond issues using rating symbols, which range from the highest investment quality (least investment risk) to the lowest investment quality (greatest risk). The likes of Moody's and S&P are the two best known ratings agencies.

Bonus Shares
Shares issued free by a corporation to its existing shareholders on a pro rata entitlement basis.

Books Closing Date
The date a share registry is closed off after the declaration of a dividend, for the determining of the amount to be paid to each shareholder (this is different to the XD date).

Book Value
This is the value given to an investment on a company's balance sheet and often relates to the purchase price or latest valuation for the asset. Many assets are only valued periodically and the value may not reflect the current "market value".

Bottom Up Analysis
This is the investment style which considers individual shares, as opposed to sectors which may be in or out of favour in general. (The opposite to Top-Down Analysis - consideration of sectors first and then leading shares in any sector).

A broker is an agent who handles investors' orders to buy and sell securities, commodities, insurance policies or other investment types. For this service a commission is charged which, depending upon the broker and the amount of the transaction, may or may not be negotiated. The level of commission charged per transaction often varies from broker to broker.

Often referred to as commission, this is the fee charged by a broker for buying or selling an investment

A Bull is someone who is positive on the outlook for a particular investment market (as opposed to a Bear). This is where the terms bullish and bearish originate.

Bull Market
A Bull market is one which is in a general up trend (as opposed to a Bear market).

Buoyant Market
This is a market which is more bullish than bearish and showing signs of strength.

Buying Price
The price at which you can buy units in a Unit Trust or life fund

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