FinanceTalking Financial Glossary

Open-Ended Investment Companies. OEICs are investment funds similar to investment trusts. They are open-ended because they can take money from new investors at any time. Equally they can pay back investors whenever the investor chooses. OEICs often adopt an umbrella structure where the investor can get access through the umbrella fund to a number of sub-funds which invest with different objectives.

Methods of borrowing for a company that do not show up on the published balance sheet.

A document which is sent to the shareholders of a company that is the subject of a takeover bid by the bidding company. It gives details of the terms and conditions of the offer being made.

When a company's shares are offered for sale to the public.

An invitation to the general public to subscribe for new shares in a company (as opposed to an offer for sale, which might involve existing shareholders selling some of their shares to the public).

The price at which a security is offered for sale by a marketmaker. The price at which the marketmaker will buy is the bid price.

A list of all the securities admitted to the UKLA's official list and admitted to trading on the main London Stock Exchange.

Operating & Financial Review. The OFR is the narrative section of a company's annual report. In the UK reference to OFR implies that the company has complied with the ASB's best practice guidance statement 'Operating & Financial Review'.

One-off items that are not expected to recur and which therefore do not constitute part of a trend. Examples might be acquisition integration costs, profits on disposal of businesses or non-current assets.

Operating Free Cash Flow. Op FCF is used in company valuation and is usually defined as EBITDA less cash tax, less investment in working capital, less maintenance level capital expenditure. It represents the cash that the company is free to spend on financing (interest and dividends) and discretionary investment.

A fund where the manager can take in new money at any time - unit trusts and mutual funds are examples of open-ended funds. See also closed ended funds.

Open-Ended Investment Companies (OEICs) are investment funds similar to investment trusts. They are open-ended because they can take money from new investors at any time. Equally they can pay back investors whenever the investor chooses. OEICs often adopt an umbrella structure where the investor can get access through the umbrella fund to a number of sub-funds which invest with different objectives.

An offer of shares to new investors with a clawback arrangement for those existing shareholders who wish to maintain their percentage stake and avoid dilution.

The Operating & Financial Review (OFR) is the narrative section of a company's annual report. In the UK reference to OFR implies that the company has complied with the ASB's best practice guidance statement 'Operating & Financial Review'.

Operating free cash flow is used in company valuation and is usually defined as EBITDA less cash tax, less investment in working capital, less maintenance level capital expenditure. It represents the cash that the company is free to spend on financing (interest and dividends) and discretionary investment.

A lease where the risks and rewards of owning the asset remain with the lessor - ie the lessor is usually responsible for insurance and maintenance and the asset remains on the lessor's balance sheet. See also finance lease.

Operating profit (the profit that the company makes from what it does, before taking into account interest, tax and dividends) as a percentage of revenue. Operating profit is also sometimes known as EBIT (earnings before interest and tax) or PBIT (profit before interest and tax) or operating income.

Operating profit is the profit that the company makes from what it does, before taking into account interest, tax and dividends. Operating profit is also sometimes known as EBIT (earnings before interest and tax) or PBIT (profit before interest and tax) or operating income.

A company with high fixed costs (costs that don't vary with sales) is said to have high operational gearing. The implication is that if sales volumes increase by a small amount, there will be a disproportionate increase in profits. Conversely, if sales volumes fall by a small amount, there will be a disproportionately large decrease in profit.

Operational expenditure. Opex is deducted from profits rather than capitalised in the accounts.

The benefits lost by not employing an economic resource in the most profitable alternative activity. In investment terms, opportunity cost is what you could have earned in the next best investment (for the same level of risk).

An option is a right, but not an obligation to buy or sell a fixed quantity of a commodity, currency or security at a fixed date in the future at a particular price. An option to buy is known as a call option and an option to sell is known as a put option. The purchaser can either exercise the option or allow it to lapse if unprofitable, in which case the loss is limited to the initial purchase price of the option, which is called the premium.

A dealer who buys and sells options on a stock exchange, commodities exchange or LIFFE.

A system for trading in shares. Buyers and sellers input their orders into a central computer which automatically matches bargains. The system in London is called SETS (Stock Exchange Electronic Trading System).

A market in which prices are determined by the publication of orders to buy or sell shares on an order book (see also order book).

A system for trading in shares. Buyers and sellers input their orders into a central computer which automatically matches bargains. The system in London is called SETS (Stock Exchange Electronic Trading System).

A resolution of the shareholders at a General Meeting that requires 50% of the vote in order to be passed.

A fixed unit of the share capital of a company. Ordinary shares (ords) usually carry one vote per share and rights to dividends which are decided by the directors each year and voted on by shareholders.

Ordinary shares. Afixed unit of the share capital of a company. Ordinary shares (ords) usually carry one vote per share and rights to dividends which are decided by the directors each year and voted on by shareholders.

Growth in revenue or profits excluding the impact of acquisitions.

The OTC Bulletin Board is an electronic quotation system in the US that displays real-time quotes, last-sale prices, and volume information for many over-the-counter (OTC) equity securities that are not listed on the Nasdaq Stock Market or the NYSE. Broker-dealers who subscribe to the system can use the OTCBB to look up prices or enter quotes for OTC securities. Although the National Association of Securities Dealers (NASD) oversees the OTCBB, the OTCBB is not part of the Nasdaq Stock Market. Companies which have been 'de-listed' from stock exchanges for falling below minimum capitalisation, minimum share price or other requirements often end up being quoted on the OTC Bulletin Board.

A market for trading securities which is outside the jurisdiction of a recognised stock exchange.

An option where the exercise price is higher than the current share price.

If a fund manager is outperforming the market, then his fund is performing better than the index that he has agreed to be measured against.

Usually refers to trading in shares on a market which is outside the jurisdiction of a recognised stock exchange.