Dictionary of Financial Terms -
- A company or group offering a range of financial services to its
customers. Usually applied to banks having subsidiary insurance companies.
- A business that holds money for its clients, lends money at
interest and trades generally in money.
- Bank Giro Credit (BGC)
- A one-off cash or cheque payment to an organisation or individual.
Processing a payment made using a Bank Giro Credit takes three working days.
- Bankers' draft
- A guaranteed payment delivered to your home address by registered
post. If we receive the request before 4 pm we'll send the draft to you on the same day.
- Base Rate
- the base interest rate determined usually by a country's central
bank (such as the Bank of England) upon which all other lending or savings interest rates are based.
- Basic State Pension
- The standard pension which individuals over retirement age receive
from the state (subject to National Insurance contribution conditions). The Basic State Pension is a fixed amount, not
connected to earnings.
- Bed Breakfasting
- The former practice of selling shares one day and buying them back
the following day so as to establish a realised loss (or gain) for tax purposes. The tax advantages were removed by the
Finance Act 1997.
- The person who is or will be the ultimate recipient of a benefit.
Examples could be someone named to receive a legacy under a Will or an individual nominated to receive benefit from a
- Benefit Basis
- The benefit structure of a group insurance policy or pension
arrangement. It defines the type and level of benefits for each category of membership. For example, life assurance
cover for one category of employees might be 3 x salary and for another category of employees it might be 4 x salary
(the categories must be clearly defined groups in terms of jobs carried out so as to ensure there is no illegal
- The monetary amounts payable by the insurance company to a
claimant, assignee, or beneficiary under the terms of an insurance policy.
- Benefits In kind
- Benefits other than cash, provided to a person through their
employment (for example, cars, or private medical insurance). These benefits are usually subject to tax. Inland Revenue
rules normally allow their value to be included in the calculation of maximum pension benefits.
- A sum of money or other property available upon the donor's
- Bid Offer
- Shares, units in unit trusts and other investment vehicles are
bought at one price and sold at another. The higher price is called the 'offer price' since this is the price at which
the unit trust company or other institution offers the security for sale. The lower price is called the 'bid price' and
is the price at which the investor can sell the security back to the institution in question.
- Bid-Offer Spread
- the difference between the prices at which you buy units from us
and sell them back to us. The buying (offer) price is usually higher than selling (bid) price and the difference
between them may vary within the limits of a formula laid down by the Financial Services Act 1986. Both offer and bid
prices are quoted for each of our funds on the Daily Prices page.
- Bid price
- The price at which you can sell a security or a unit in a unit
- otherwise known as fixed-interest securities, bonds are basically
IOUs which are issued by governments, financial institutions and companies. Generally, the issuer undertakes to pay
investors a fixed rate of interest for a fixed number of years (e.g. 7% for 5 years). The fact that the interest rate
is fixed makes bonds attractive because their return is so predictable. Bonds are traded in open markets, in the same
way as shares. (See also Gilts)
- An amount added to a basic figure. For instance bonus is added each
year to a with-profit life insurance policy, thus increasing the amount ultimately payable when a claim arises. See
- Bridging Loan
- If a house purchase arrangement involves the sale of one property
and the purchase of another it will normally be most convenient if the two deals are concluded simultaneously. If this
is not possible and the purchase of the second property is to be concluded before the sale of the first is completed
then additional financing may be necessary. This is a 'bridging loan' & it bridges the gap between the two
- Building Campaign
- A drive to raise funds for construction or renovation of buildings.
- Building Society
- A financial institution owned by its members (rather than by
shareholders) which pays interest on deposits and lends money on the security of property to enable members to buy
their own homes. The distinction between building societies and banks (which have historically offered a much wider
range of financial services but often at a higher cost) is now much reduced and the main difference is often the
question of ownership.
- Bulk Transfer
- The transfer of a group of pension scheme members and their scheme
assets from one occupational pension scheme to another.
- Buy Back
- 1) A payment made to reinstate into SERPS a person belonging to a
contracted out pension scheme.
2) Reinstatement of life assurance cover after a claim has been
paid on critical illness under a policy that provides cover against critical illness and death. (Normally a policy of
this type will cease on the claim being paid; the life assurance cover is then automatically cancelled.)
- Buy Out
- The purchase of an insurance policy for a pension scheme member in
lieu of benefits from the scheme following the termination of pensionable service.
- This is when you buy a property to rent it out rather than live
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