Glossary: T to Z

T

Takeover: When one company buys another. Takeovers can either be friendly, where the target company is happy to be bought, or hostile, when the approach is not welcomed.

Tax: It pays for the hospitals, roads, police and much more. Stop whinging.

Tax relief: A saving of tax arising from the right to deduct particular types of payments or losses from taxable income or gains. This includes payments for specific purposes that are statutorily allowable, as well as the general right to deduct losses from gains for capital gains tax purposes, or business losses from other income for income tax purposes.

Technical Analysis: The strategy of studying price charts and other market data, such as trading volumes, to predict future price movements. If you ask us, it's a little bit dubious.

Tender Offer: When a company wishes to buy back its shares it might do so via a tender offer. Shareholders say what price they are willing to sell their shares for and the company accepts the best offers it receives.

TESSA: Tax Exempt Special Savings Account. In 1999, it was replaced by the Individual Savings Account.

Total Return: What investors are most interested in. The total amount of growth in value - in whatever form - that something provides. For shares, this is made up from price rises and dividends.

Treasury: The government's finance department.

U

Underperformance: What occurs in the office the day after a particularly heavy office party the night before. This is also what many professionally managed investments do, as compared to the index.

Underwriter/Underwritten: The stockbrokers who help a company come public in a New Issue. They underwrite (vouch for) the stock. When a company has been brought public, the shares have been underwritten.

Unit Trust: Your money is invested with thousands of others in one pooled fund. Presiding over the fund is a manager or managers responsible for achieving the fund's stated investment objective. Most unit trusts underperform the index and have high charges.

V

Valuation: The determination of a fair value for a security. If you don't use some reasonable method, then you have what is technically called a "guess" or a "hope."

Volatility: The degree by which a share price tends to move. The more the price jumps about, the more volatile the share.

Volume: The number of shares that have been traded in any defined period. It can give some indication of the validity of associated price movements. If only a few shares are traded a sharp price movement may not be very meaningful. Heavy trading in a share may signify a major development.

W

Wall Street: Also known as "The Street" in US cocktail-party patter, this is the main drag in New York City's financial district.

Warrant: A certificate, usually issued along with a bond or preferred stock, entitling the holder to buy a specific amount of securities at a specific price, usually above the current market price, for an extended period, anywhere from a few years to forever.

Widget: A widget is universal catch-all name to describe things that factories make and, hopefully, sell for a profit. They are solid things that hurt if you drop them on your toe. Things like fridges.

Wisdom: The state of being Wise. For example, the financial services establishment who seek to sell you inherently underperforming investments that are hobbled by heavy charges.

Wise: See Wisdom.

Working Capital: The amount of money tied up in a company just to keep it running. This usually means stocks of widgets it has made but not yet sold, debtors, creditors and cash in the bank.

X

XD: An abbreviation for eX-Dividend.

Y

Yield: The annual income provided by a fund expressed as a percentage. Normally calculated by dividing the current price of the fund into the dividend income. See also Dividend Yield.

Yield Curve: A graph illustrating the projected yield from government securities (including gilts) over the next 10 years or so. It stretches from overnight money to the 10-year bond. In a normal market, money costs more in the future, but when an economy is approaching a recession it is common to see short term costing more than long term money. The yield curve shows you this and also shows how your mortgage might be affected.

Yield Gap: Also often expressed as the yield ratio. It is the difference between yields on 10-year bonds and dividends on the All Share Index. Typically, bonds yield twice as much as equities because they have no growth. The yield gap is watched closely by many "value investors".

Z

Zamboanga: A dance performed by joyous Fools at midnight on the night of the full moon closest to April Fool's Day. Also, a town in the Southern Philippines, bordering the Sulu Sea and renowned for piracy.