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Index |
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An arithmetic mean of selected
stocks intended to represent the behaviour of the
market or some component of it. One example is the
FTSE 100 which adds the current prices of the one
hundred FTSE 100 stocks and divides the results
by a pre-determined number, the divisor. |
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Index Funds |
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A fund that attempts to achieve
a performance similar to that stated in an index.
The purpose of this fund is to realise an investment
return at least equal to the broad market covered
by the indices while reducing management costs. |
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Index Linked Gilt |
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A gilt, the interest and capital
of which change in line with the Retail Price Index. |
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In the Money |
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A condition where an option has
a positive intrinsic value. |
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Intrinsic Value |
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A component of the market value
of an option. If the strike price of a call option is
cheaper than the prevailing market price, then the option
has a positive intrinsic value, and is “in the money”. |
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Investment Grade |
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Something classified as investment
grade is, by implication, medium to high quality.
1) In the case of a stock, a firm that has a strong balance
sheet, considerable capitalization, and is recognized
as a leader in its industry.
2) In the case of fixed income, a bond with a rating of
BBB or higher. |
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