Shares glossary

New to investing? Here's our shares jargon buster.

Analysts

Experts who assess the performance and potential of companies listed on the Stock Exchange and the market as a whole. They advise which shares to buy or sell. More and more of the media are relying on analysts' opinions.

Assets

A company's holdings. The value of an organisation's assets helps give you a basic idea of what that organisation is worth financially.

Blue chip

Companies with the most highly-valued shares.

Broker

A company or person authorised to trade in shares on the Stock Exchange.

Contract note

If you're buying or selling shares, your broker will send you full confirmation of the transaction, known as a contract note. This is your receipt for the transaction.

CREST

An electronic system which records share transactions. CREST provides details of who owns shares without the need for a share certificate (which is particularly useful for those people who deal often in large numbers of shares). CREST replaced the Talisman system in 1997.

Dividend

A percentage of a company's after-tax profits paid to shareholders.

Earnings per share

A company's net profit divided by the number of ordinary shares it has in circulation.

Equity

Another word for shares.

FTSE 100

An index (the 'footsie') of the top 100 companies (by market capitalisation) listed on the London Stock Exchange.

Gross

Before tax is taken off.

Individual Savings Account

Introduced by the government in April 1999 to replace PEPs and TESSAs, an ISA is a tax-efficient way of holding shares or saving money. (The favourable tax treatment of ISAs may change in the future.)

Market Capitalisation

How the Stock Exchange measures the value of a company. You can work it out by multiplying the share price by the total number of shares in circulation.

Net

After tax and any other charge is taken off.

New issues

Where a company decides to become a public limited company by releasing its shares for sale on the Stock Exchange.

Options

an agreement to trade in shares at a fixed price at some point in the future, if you choose to. The two most common types are a 'call-option'which lets you buy shares, and a 'put option' which lets you sell them.

Price/Earnings ratio

A good way to measure what confidence investors have in a company. Simply divide the current share price by the last published earnings per share.

Proxy

Someone you can choose to vote for you at a Company General Meeting.

Rights Issues

Give existing shareholders in a company the chance to buy more shares in that company.

Securities

The general name for stocks and shares. Most commonly, stocks are fixed-interest securities and shares make up all other types.

Share Dealing Club

Allows you to pool your resources with others and decide jointly where to invest. The ProShare organisation is a useful first point of contact.

Share Register

A company's list of all its shareholders.

Tax credit

an amount which can be counted against the income tax you have to pay on dividends. The tax credit is currently one-ninth of the dividend which means lower- and basic-rate taxpayers have no further tax to pay according to UK law at present.

Tax voucher

This is sent to shareholders with their dividend payment. It is proof of how much has been paid to you and also what the tax credit is. The law says you must keep a record of everything you receive in dividends, so keep your tax voucher in a safe place.

Transfer

Selling your shares to someone else or giving them as a gift.

Yield

A measurement of the income from your investment each year against its current value on the market.