FinanceTalking Financial Glossary

Mergers & Acquisitions. In practise this definition extends to many other corporate activities, eg disposals, joint ventures etc.

The main market is the London Stock Exchange, as opposed to the Alternative Investment Market.

Funds which are managed by a professional fund manager - made up of investments in a wide range of securities, managed to provide a low risk investment for the smaller investor, usually in the form of a unit trust etc.

Sometimes a group of managers within a company will decide that they would like to own the part of the business that they currently operate. The management might therefore put in a bid for the business. This is called a management buy-out (MBO). A variation on this is when an outside management team acquire a business (a management buy-in).

Sometimes a group of managers within a company will decide that they would like to own the part of the business that they currently operate. The management might therefore put in a bid for the business. This is called a management buy-out (MBO).

The trading period, Monday to Friday, during which the market makers on the London Stock Exchange must quote buying and selling prices for shares and during which the order book is open.

Margin usually refers to profit margin - the profit as a percentage of revenue. See also margin call.

A call to a client from a commodity broker, financial futures broker, or stockbroker to increase the margin, ie the amount of money or securities deposited with the broker as a safeguard.

The additional cost of producing an extra unit of output.

Mark to market is an accounting procedure under IFRS by which assets are 'marked,' or recorded, at their current market value, which may be higher or lower than their purchase price or book value.

Market abuse involves the release of inaccurate information or information likely to give a false or misleading impression as to the price of a security. It also covers the misuse of price-sensitive information. Market abuse is illegal.

Market capitalisation. The stock market value of a company's equity ? the number of shares multiplied by their market price.

The stock market value of a company's equity ? the number of shares multiplied by their market price.

A portfolio containing all available investments in a market, in amounts proportional to the total market value of each individual security.

The price of a raw material, product, service, security, etc., in an `open market, such as a stock exchange, commodity market etc.

One of the risks inherent in dealing on a market, the obvious ones being, buying on a market that subsequently falls and selling on a market that subsequently rises.

The value of an asset if it were to be sold on the open market at its current market price.

The additional return that investors expect from a stock market investment, over and above what they could get risk-free (ie compared to government bonds or bank interest).

A security that can be bought or sold on a stock exchange.

A dealer in securities on a stock exchange who undertakes to buy or sell shares as principal and is therefore obliged to post prices on the exchange's electronic notice board at particular times. Marketmakers are wholesalers rather than retailers of shares.

A method of selecting the optimum investment portfolio, devised by H.M. Markowitz.

In accounting, an amount is deemed to be material if it would make a significant difference to your understanding of the accounts. Auditors audit the accounts to within the bounds of materiality ? often set at 5% of profit or 0.5% of revenues.

Management Buy Out. Sometimes a group of managers within a company will decide that they would like to own the part of the business that they currently operate. The management might therefore put in a bid for the business. This is called a management buy-out (MBO).

Mortgage-Backed Securities. Publicly traded loans which are secured on mortgages. The interest and repayment of the loan is made from the money received from the mortgages.

An unsecured note or bond issued with a maturity of about three to six years.

A member of a company. A shareholder of a company whose name is entered in the company's register of members.

A legal document that sets out the rules which govern a company in its relations with the outside world. It states the name of the company, its country of registration, the objects of the company (the activities it may pursue), the authorised share capital, nominal value of the shares etc.

Originally a bank which specialised in foreign trade finance. Merchant banks then diversified into arranging all types of finance and advising companies on IPOs and take-over bids, managing investments and underwriting new issues. Most of the UK merchant banks are now part of international investment banking groups.

The combination of two or more organisations, usually of similar size, for their mutual benefit.

A method of accounting for a merger, whereby the balance sheets of both parties are simply added together and the profits are restated as though the companies had always been together. Merger accounting is no longer permitted by most accounting systems.

An intermediate level in the funding of a company, lying between the equity and the debt. The investor may not be prepared to take more shares because of the risk, but it may not be feasible to borrow because of the requirement to pay interest and make capital repayments. The mezzanine funding might take the form of a convertible loan or preference shares. It may also be referred to as hybrid finance.

An intermediate level in the funding of a company, lying between the equity and the debt. The investor may not be prepared to take more shares because of the risk, but it may not be feasible to borrow because of the requirement to pay interest and make capital repayments. The mezzanine funding might take the form of a convertible loan or preference shares. It may also be referred to as hybrid funding.

Mid cap companies are those whose shares are listed on the London Stock Exchange and fall into the FTSE mid 250 index - ie they are the 250 largest companies after the top 100.

Mid-swap is the price calculated as the midpoint between the bid and offer prices (buy and sell prices) on currency or interest rate transactions (swaps).

Minority interest refers to the part of a group's net assets that is financed by outside shareholders, as opposed to group shareholders. This happens when subsidiaries are not wholly-owned. Minority interest could similarly refer to the part of profit after tax that belongs to minority shareholders.

The mix is the breakdown of sales or profits by segment, geography or product group.

Monopolies and Mergers Commission. The MMC used to be the UK body charged with looking after competition policy - now called the Competition Commission.

Momentum investors invest in stocks whose price, earnings, or earnings estimates are advancing at a faster rate than the market or other stocks in the same sector. Momentum investors generally look for stocks experiencing upward earnings revisions or producing positive earnings surprises. Relatively high portfolio turnover rates due to a short-term (often quarterly) focus ? tend to liquidate positions at the slightest hint of a disappointment or deceleration in earnings.

A money broker arranges short-term loans in the money market - ie between banks and dealers in government securities.

Processing money acquired illegally so that it appears to have come from a legitimate source.

Markets for short-term money such as the market between banks. The capital markets by contrast, are those for long term funding such as the bond market and the equities market.

A monoline is an insurer writing only a single line of insurance contracts ? such as credit insurance (similar to a financial guarantee). Securitisation transactions often make use of monoline insurance contracts as credit enhancements. Monolines, in effect, insure against the risk that a bond will default, allowing the rating of the monoline to be assumed by the debt security. The issuers of the debt security pay the monoline a fee for the insurance and in return can expect to pay a lower interest charge due to the high credit rating. Estimates suggest that the monoline insurers guarantee about $2.4 trillion of bonds.

The MMC used to be the UK body charged with looking after competition policy - now called the Competition Commission.

A large US debt rating agency. A company that issues a bond can apply to Moody's to give the bond a rating. The rating gives investors an indication of how likely they are to receive interest and get repaid. The rating is in effect a probability of default. The highest rating (lowest probability of default) is AAA. The lowest is D (in default).

Publicly traded loans/bonds which are secured on mortgages. The interest and repayment of the loan/bond is made from the money received from the mortgages. Also known as an MBS.

Medium Term Note. An unsecured note/bond with a maturity of about three to six years.

The main multi-manager fund categories are funds of funds and manager of managers. The first invests in funds, whereas the second invests in stocks and shares through appointed investment managers.

Typically a fund, a life insurance company or a building society which is owned by investors, policy holders or depositors. Mutuals have no shareholders and apart from benefits and running expenses there are no other withdrawals from the fund. Any surplus profits belong to the policyholders.

A mutual fund is a fund that is mutually owned by its investors. These funds are ideal for individual investors who do not know which shares to buy. They therefore pool their money with other investors and a fund manager makes the decisions.

A type of life-assurance company that grew out of the Friendly Societies. Mutuals have no shareholders and apart from benefits and running expenses there are no other withdrawals from the fund. Any surplus profits belong to the policyholders.