EXPLANATION OF FINANCIAL TERMS
Used to measure a company's
debt. Debt is expressed as a percentage of equity in a company's balance sheet.
There is no absolute comparison but a figure of several hundred per cent probably
means the company has either borrowed a lot of money or has no capital left.
An investment in Government
debt. You get a modest level of interest on a reasonably safe investment. Also
called gilt edged stock, Treasury stock. Gilts are issued by the Government in
units of £100 and pay a fixed rate of interest to a fixed repayment day.
Some are index-linked to protect investors against inflation. Private investors
can buy gilts via the National Savings Stock Register at Post Offices or at stock
Gross interest rate
The amount paid before any
tax has been deducted. The net interest rate is the amount paid after Savings
Tax of 20 per cent has been taken off. When comparing savings accounts it is important
to make sure they are compared on the same basis. Most bank and building society
accounts quote their rates gross, but rates on guaranteed income bonds and other
types of insurance bonds are quoted net of basic-rate tax. Although they quote
the gross rate, bank and building societies actually pay savers the net amount
of interest on the assumption that they are tax payers.
Group personal pension
A series of personal pension
plans with one provider organised by an employer who may or may not make contributions