Financial Glossary
Key terms explained in plain English, no jargon, no complexity. We appreciate our industry uses a lot of financial ‘jargon’, which can make it difficult to decipher information and correspondence. In order to try to assist with this, we have created a glossary of many of the terms you may come across. If you would like further clarification on any of the definitions, or cannot find a particular term, we would be happy to assist further.
Default Risk
This is the possibility that the issuer of a bond will be unable to make payments when they are due.
Deflation
Fall in the general level of prices of goods and services in the economy.
Defensive Stocks
Shares in companies whose business conditions are not particularly linked to the Business Cycle. They provide goods for which demand does not tend to be affected by Recession – utilities and basic food producers, for example.
Deposit Account
A savings account from a bank or building society that pays interest on the amount of money held in it.
Dividend
A payment made by a company to its shareholders. The size of the payment is usually determined by the size of the company’s profits, although a company does not have to pay a dividend at all.
Dividend Yield
Dividend Yield
The Dividend per share expressed as a percentage of the share’s market price.
Defined Benefit Pension
A type of workplace pension (also called a "final salary" scheme) that promises a specific retirement income based on your salary and years of service. These schemes place the investment risk on the employer, not the employee.
Diversification
Spreading investments across a range of assets, sectors and geographies to reduce the impact of poor performance in any single area. The central principle is that different assets often respond differently to the same market events.
Duration
​A measure of the sensitivity of the price of a Bond to changes to interest rates. Similarly, the Duration of a Bond fund measures the sensitivity of all the Bonds in that fund to movements in interest rates. It is a widely used measure of how risky a Bond or a portfolio of Bonds is.