FINANCIAL
GLOSSARY : F
Face value
The term used
to describe value of a bond when it matures, also known as the 'nominal'
or 'par' value.
Fee-based
adviser
An independent
financial adviser who earns a living by charging a fee for advice
rather than earning commission from financial companies for selling
their products.
Final
dividend
The final dividend
is paid after the annual accounts for the year have been published
and after the proposed dividend has been agreed by the shareholders
at the annual general meeting.
Final
salary scheme
The calculation
of your pension on retirement is based on a fraction of your pensionable
earnings for each year you've been a member of the pension scheme.
The most common fraction used is 1/6th and if you had been a member
of the scheme from the age of 25 to 65 ,this would give you the maximum
pension of 40/60 or 2/3 of your final salary.The fewer years that
you are in the scheme means a smaller pension. It is usual for the
pension to get regular increases and a provision is usually made for
a pension for your spouse if you die first, or if you die before the
retirement payment of the one-off payment.
Financial
Services Act 1986
The Financial
Services Act 1986 has established regulations for firms in the investment
service industry, including buying and selling of stocks. It has now
been overtaken by the Financial Services and Markets Act 2000 which,
amongst other things, has centralised regulatory power in the hands
of the Financial Services Authority.
Financial
Services Authority (FSA)
The single statutory
financial regulator in the UK. In order to do business in the UK most
financial service firms must get permission from the FSA.
The FSA regulates
banks, building societies, credit unions, insurance and investment
firms and independent financial advisers. The FSA is also responsible
for Lloyd’s Insurance Market and in 2004 its powers will be
extended to cover general insurance advice and mortgage lending. However,
the FSA does not cover loans, credit, occupational pension schemes
and their administration
Financial
Times Stock Exchange 100 Index (FTSE 100)
The FTSE 100 index
is a share price index for 100 different shares quoted on the London
Stock Exchange, The share are intended to be of a sufficiently broad
cross section, so that movements in the index of share prices would
be typical of movements in the value of the portfolio of shares of
an average investor.
Financial
Times Stock Exchange 250 Index (FTSE 250)
The UK stock Market
index that measures the performance of the 250 companies below the
FTSE 100 companies.
Financial
Times Stock Exchange Actuaries All-Share Index (FTSE-A-All-Share)
The 'All Share',
measures the performance of over 900 publicly quoted companies and
is the broadest based of the UK stock market indices.
Financial
Times Stock Exchange SmallCap Index
This is the index
for the 'All-Share' market minus the top 350 companies.
Fixed
interest security
A fixed interest
security is an investment which has a return consisting of income
in the form of interest payments and either a redemption value of
the security when it eventually matures or the market value of the
security if the investor sells it before maturity.
Fixed-rate
mortgage
A mortgage where
the rate of interest is fixed for a set period of time. The advantage
of this type of mortgage is that the investor can budget accurately.
Even if interest rates rise or fall and lenders alter their mortgage
rates in line, your monthly payments will stay the same. You usually
have to pay a premium on the lender's standard variable rate for such
certainty, but many borrowers think it's worth it for the peace of
mind it brings. They can also prove to be good value if interest rates
rise more sharply than expected. Bear in mind that if you switch lenders
before the fixed-rate period is up, you'll have to pay a redemption
penalty.
Flexible
Mortgage
A new type of
mortgage that is becoming more popular, especially among the self-employed
and other people who may experience uneven cash flow. It allows you
to vary your monthly payments without any penalty, and even to take
a payment holiday for a while. You can also borrow, or 'draw down',
from the loan when you need to. The ability to overpay can save you
a lot of interest over the term of the loan. Flexible mortgages often
incorporate a current account, too, encouraging the idea that borrowings
and savings can be run more efficiently in one pot.
Flotation
or floatation
Flotation is the
process of making a company's shares available to the general public
by obtaining a quotation on the Stock Exchange. Also referred to as
"going public" or "obtaining a Stock Exchange listing".
Free-standing
Additional Voluntary Contributions (FSAVCs)
See Additional
Voluntary Contributions.
Front-end
loading
The initial sales
charges that you have to pay when you invest in a mutual fund, such
as, a unit trust. This charge is mainly for the cost of the adviser.
Future
A form of forward
contract to buy or sell a set quantity of shares or commodities in
the future at a pre-agreed price.
