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Glossary Of Investment Terms (D)

The following are useful investment terms beginning with ‘D’

An individual who places orders to buy or sell securities.

A type of debt security backed by the general credit of the issuer and not by a specific security.

A statistical measure dividing a sample into ten numerically equal groups - often referred to with the performance of investment funds.

Deferred (delayed) Annuity Purchase
An option available to a member of certain types of pension scheme, under which the purchase of an Annuity can be delayed to no later than age 75.In the meantime, income can be withdrawn from the fund. Pension regulations change on a regular basis and you must always seek advice before taking any action.

Defined Benefit
An occupational pension scheme where the final pension an employee receives is linked to the size of their final salary. Also referred to as Final Salary Schemes, they are very expensive for companies to fund and are becoming very rare.

Defined Contribution
An occupational pension scheme where the contributions made by the employer and employee are set, and the final pension an employee receives depends on the size of their fund on retirement (and annuity rates at the time). Also referred to as Money Purchase Schemes, they are becoming the more common type of company pension fund arrangement in the UK.

Defined Contribution Fund
A pension fund in which the amount of the contribution payable (as distinct from the end benefit) is defined. In these funds, the benefit payable to a member on retirement constitutes the aggregate of contributions to the fund (both employer and employee) in respect to the member, plus the investment earnings on those contributions. Unlike a defined benefit fund, the investment risk in a defined contribution fund is borne by the fund members.

A general price decline during which consumer spending is substantially curtailed, bank loans contract and the amount of money in circulation is reduced. It is the opposite of inflation and generally applies to more than just a temporary decline - deflation is often evident prior to a depression such as that seen in 1930s America.

The transfer of possession of securities from one individual or firm to another in fulfilment of contracts made on an exchange, and on terms which meet all of the requirements of that exchange.

Deposit Account
A savings account from a bank or building society that pays interest on the amount of money held in it.

The writing-down of the cost of an asset over the life of that asset - an accounting practice common around the world.

A prolonged slump in economic activity, characterised by rising unemployment and serious falls in production and consumption of goods.

A derivative is a generic term for a financial contract that derives its value from an underlying security, liability or index. Derivatives come in many varieties, including forwards, futures, options, warrants and swaps.

Development Capital
Usually refers to investments in relatively small, unlisted companies, either in a start-up position or embarking on new or turnaround ventures. The transaction entails a potential high investment risk, but offers the potential for above average future profits. See also Venture Capital.

The creation of new shares or conversion of convertible stock which dilutes the shareholding of other ordinary shareholders.

Direct Debit
An electronic payment system which allows funds to be transferred from one bank account to another.

Discretionary Trust
This is a type of trust where the trustees can decide who will benefit from the trust, and how much they will get.

A payment to shareholders/unit holders of which the most common form is a dividend.

Distribution Fund
A fund which is invested in order to provide an income to unit holders/shareholders.

The spreading of investment funds among classes of securities and markets in order to diversify exposure to any one investment group or market. This is a fundamental law of investment meaning simply: "don't put all your eggs in one basket".

A payment to shareholders/unit holders from a company/investment group.

Dividend Discount Model
A model for determining the price of a security based on the discounted value of its projected future dividend payments. These models are very sensitive to interest rates.

Dividend Warrant
If a company pays a dividend it provides each shareholder with a dividend warrant. This gives information about the Dividend such as the class of share, the amount and the tax credit. You must retain dividend warrants as supporting documentation for your tax returns.

Dividend (distribution) Yield
The return on share/investment which is calculated by dividing the gross dividend rate by the market price of the share - shown as a percentage.

Dow Jones
A set of indices compiled daily from New York Stock Exchange closing prices

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