27/08/10

By Michelle Williams, AngelNews

There are so many investment-related terms in the market; we have many more definitions to keep you going. Happy reading!

Accredited Investor

A term used in both the US and the UK to refer to investors who have been accredited as wealthy enough to invest in high risk investments - the definition of which is defined in law in each jurisdiction.

Administrative Receivership

The new term for receivership in the UK. If a company is no longer financially viable an administrative receiver may be appointed to run the company, probably with a view to selling it as a going concern. The company is then said to be in an administrative receivership or, more commonly, in receivership.

Alternative Assets

Higher risk non-traditional asset class including private equity, venture capital, hedge funds and real estate. In return for the high risk that they represent these asset should, in theory, generate higher returns for investors.

AIM/Alternative Investment Market

AIM is the London Stock Exchange's global market for smaller, growing companies. Since AIM opened in 1995, more than 1200 companies have been admitted. Collectively, these companies have raised more than 14 billion US dollars whilst on AIM. There are no specific suitability criteria for companies to qualify for AIM. However, under the AIM rules, all companies must produce an admission document making certain disclosures about such matters as their directors' backgrounds, their promoters, business activities and financial positions. Importantly, all AIM companies are required to have a nominated adviser (popularly known as a "nomad") from the register of such advisers published by the Exchange. This nominated adviser is responsible, amongst other duties, for warranting to the Exchange that a particular company is appropriate for AIM. Once admitted to AIM, a company has certain ongoing disclosure requirements and needs to retain a nominated adviser at all times. Ordinarily, once a company has been on AIM for 2 years it will have the opportunity to seek admittance to the main market by using a special expedited procedure. AIM is operated, regulated and promoted by the London Stock Exchange. Email: aim@londonstockexchange.com Tel: AIM Helpline:+44 (0) 20 7797 4404. Website: www.londonstockexchange.com

Amortization

An Accounting procedure that gradually reduces the book value of an intangible asset through periodic charges to income. See Depreciation (qv).

Asset Backed

An investment which is covered by assets, perhaps land or buildings or intellectual property, is said to be asset backed. If the business fails, the losses to the investor will be less, since the assets will be sold and the proceeds distributed to creditors, lenders and investors, so reducing or eliminating any losses.

"B" Round

A financing event in an unquoted company whereby investors such as venture capitalists are sufficiently interested in a company to provide additional funds after the "A" round of financing. Typically new investors are invited to join existing shareholders in such a round of financing. Any later rounds are called "C", "D", and so on.

Basis Point/BPS

This is a measure of the yield of an instrument, equal to 1/100th of 1% of yield. For example a yield increase from 1.0% to 1.5% has grown by 50 basis points.

Bear Hug

An offer made directly to the Board of Directors of a target company, often as a threatening gesture prior to a hostile offer to the shareholders.

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