Glossary

AAA:

Triple A; this is the highest grade assigned to companies, financial institutions and countries by rating agencies. The triple A rating indicates creditworthiness.

AEX:

The Amsterdam Exchange index; the index of the 25 largest funds quoted on the Amsterdam stock exchange, Euronext Amsterdam, measured by their market value and their effective turnover rate. Shares are quoted on the AEX on the basis of the effective turnover rate in the previous calendar year.

AFM:

The AFM is the Netherlands Authority for Financial Markets. It is the body responsible for supervising the operation of everyone who is active in the markets for savings, lending, investment and insurance. The AFM has the power to impose penalties on banks, but also on investors who may, for example, have traded with insider information.

AMX:

The index of the 25 funds which after the funds in the AEX index are most frequently traded on the Amsterdam stock exchange, Euronext Amsterdam; this index is also referred to as the Midcap index.

Active investment management:

A style of investment management whereby decisions regarding purchases and sales are routinely based on future expectations of equity market price movements. Over the long term, the intention is that active investment provides a return which is above the benchmark.

Annual financial statements:

A company’s annual financial statements consist of the balance sheet, the profit and loss account and the notes to both.

Arbitrage:

The simultaneous purchase and sale of certain equities in different equity markets in order to benefit from the price differences.

As, if and when issued:

The trade in securities which are not, as yet, issued.

Asset Management:

Investment management.

Assignment:

When writing share options there is a chance of being assigned; the assignment means that the underlying value (of the share) will have to be purchased (a put option) or sold (a call option) at the strike price.

At the money:

An option is at the money, if the strike price of the option is equal to the market price of the underlying security.

Authorised (share) capital:

The maximum amount of share capital that a company may issue as shares.

Basis point (BPS):

A basis point is a unit that is equal to 1/100th of 1%, a (= 0.01%). If for example a return increases from 8.50% to 9.25%, the return reflects a change of 75 basis points.

Bear Market:

A market/stock exchange in which prices are falling and are expected to fall further.

Benchmark:

An objective ‘yardstick’, for example an equity market or an index against which the results of an investment portfolio are compared.

Bid price:

The price investors are prepared to pay to buy a financial instrument.

Blue chips:

The stock of large, renowned and sound corporations.

Bond:

A debt instrument issued by a company or government institution which is traded on the stock exchange. It entitles the holder to a fixed interest and repayment of the principal sum. Investors purchasing bonds are lending money to a corporation or government, in exchange for receiving interest. Bonds are issued for a fixed term.

Bond fund:

A mutual fund that only invests in bonds.

Bonus stock:

Stock distributed free of charge to shareholders from the reserves of a company.

Bottom out:

The stabilisation of the price of a share after it has been falling for a period.

Break out:

A sudden upwards surge in the price of a stagnating share price.

Broker:

A trader in securities.

Bull market:

A market/stock exchange in which prices are rising and are expected to rise further.

Bullet loan:

A loan which must be fully repaid in one payment at the end of the term of the loan.

Call option:

A right to buy an underlying value (e.g. a stock) at a specified price within a specific period of time. This right can be bought and sold just like the stock itself. Selling options is also referred to as writing options.

Cancellation:

Cancelling, annulling or revoking an instruction means that the order is withdrawn after it has been placed. No cancellation fees are charged on unfulfilled orders.

Cap:

The aim of buying a cap is to hedge against a high interest rate or stock price increase. A cap offers an upper limit to the amount that has to be paid.

Capital contract:

An agreement relating to a specified capital sum at the end of a term, the sum is to be used to purchase a pension.

Capital market:

The market for long-term funds (longer than one year on issue) where, inter alia, shares and long-term bonds are traded. It is the opposite of the money market.

Cash settlement:

The settling of certain financial transactions in cash. This is particularly relevant for derivative transactions which have a non-deliverable underlying value, for example an index option.

Cash dividend:

A dividend in the form of money.

Chart:

A graphical depiction of equity market price fluctuations.

Clicker:

A guaranteed product which usually follows a certain index. If the index rises, the guaranteed value paid at the end of the product’s term may also rise.

Click Funds:

A special sort of guaranteed mutual fund. Via a construction of derivative products, any price increases are fixed (clicked). Any subsequent fall in the price will, therefore, have no effect on the profit. The investor pays a one-off price for the product and collects any return (the clicks) at the end of the term.

Client profile:

A client profile can be used to decide what type of investor a person is.

Closed end mutual fund:

A mutual fund that is not always obliged to buy back or issue shares in accordance with the supply and demand of the investing public. This is in contrast to an open-end mutual fund.

Closing price:

The final price of a specific security before close of trading.

Commodity:

Raw materials whose price is entirely determined by supply and demand, such as oil, grain and coffee.

Convexity:

Convexity relates to the degree of curvature of an interest rate curve, whereby the curve shows the relationship between the price of a bond and the return. The more the interest rate falls the faster the price of a bond rises and the more the interest rate rises, the slower the price of the bond falls. Consequently, the form of the curve in the graph is convex.

Corporate governance:

Currently a frequently used term referring to how well, efficiently and responsibly an organisation is managed and directed, bearing in mind the organisation forms part of the society.

Coupon:

The part of a bond which when submitted gives a right to interest.

Coupon return:

The relationship between the interest payment on a bond and the equity market price of the same bond. The coupon return offers insight into the influence the purchase price of the bond has on the return of the bond.

Crash:

An equity market crisis causing a sudden collapse of the equity market prices.

Credits:

Bonds issued by companies.

Cum (dividend):

If shares are purchased cum dividend, it means that the shares will include the right to the previous year’s dividend payment.

Cumulative preference shares:

These are shares which are ranked first regarding the payment of the dividend. Should no dividend be paid out after a bad year then, when the profit recovers, the holders of the cumulative preference shares will be the first to receive a dividend for the year in which no dividend was paid (these are also referred to as “cumprefs”). The dividend payment is, as it were, saved up.

Currency:

Notes and coins which form the legal tender of a country.

Currency hedging:

This ensures that changes in the value of a foreign currency in respect of the euro do not influence the value of an investment.

Currency risk:

The risk that the value of the foreign currency held or to be held in the future, by an investor might fall in respect of the investor’s national currency.

Custodian:

An office which purchases equity and against these issues depositary receipts for shares with no voting rights attached. These are sometimes used as instruments to enable the voting rights at a general meeting of shareholders to be concentrated with a particular party.

DNB:

The Central Bank of the Netherlands (De Nederlandsche Bank) .

Day order:

Any order to buy or sell a security that automatically expires, if not executed on the day the order is placed. The opposite is a ‘good ‘til cancelled’ order otherwise referred to as an ‘open order’.

Deflation:

An appreciation in the value of money. A situation whereby the general price level declines and purchasing power rises.

Depositary receipts:

A security which represents equity and is issued by a custodian. A depositary receipt gives the right to receive the dividend, but not the right to vote. A depositary receipt has the same risks and opportunities as equity.

Deposits:

Money given in safekeeping at a fixed rate of interest and for a specified period.

Depressed:

A mood in the market which indicates that the prices in the market are fairly low.

Derived Products / derivatives:

Financial instruments that derive their price from an existing underlying value. These mainly consist of rights and obligations to buy or sell the underlying value at a certain date in the future; examples include: options, futures, FRAs, caps, floors, swaps, swaptions, warrants. The most common underlying value is a share. However, there are other values; for example, it is possible to take out futures and options on the rate of exchange of the dollar.

Devaluation:

The official lowering of a currency in respect of other currencies.

Disposal limit:

The balance in the securities accounts which is free to be spent. Also referred to as the spending limit.

Dividend:

The appropriated profit paid out by a company to a shareholder.

Dividend tax:

Tax withheld on any dividend received.

Dividend coupon:

Part of a share, the surrender of which entitles the holder to a dividend.

Dividend yield:

The dividend paid, expressed as a percentage of the price of the share.

Dow Jones Industrial Index:

The best well-known yardstick of the American Equity market. (Wall Street, New York Stock Exchange, NYSE). The index consists of 30 funds which each play a leading role in their sector.

ECB:

The European Central Bank.

Emerging markets:

Regions which until recently had lagged behind in their economic development but which are now developing rapidly.

EMD:

Emerging Market Debt; a term for bonds issued by rapidly developing countries. This does not include loans from the Government and supranational organisations.

Equity Fund:

A mutual fund which only invests in equity.

Equity market index:

An equity market index is a way of measuring the mood in an equity market as a whole. The best known index is the Dow Jones Industrial Index. The Amsterdam stock exchange has, inter alia, the AEX index.

Euronext Amsterdam:

The Amsterdam stock exchange.

Excess subscription:

Subscribing to a new issue of shares or bonds in excess of the number an investor actually wants, as he/she is afraid that there will be so many subscriptions that he/she will be given fewer than he/she wants.

Ex dividend:

The value of a share the day after the dividend has been made available. The dividend is, therefore, no longer reflected in the price.

Expiry date:

The date on which an option expires.

FTSE:

The Financial Times Stock Exchange; the London stock exchange.

Floor:

An interest rate option that protects the holder from a fall in interest rates. The holder, by exercising, receives a cash settlement representing the difference between the strike level and the underlying interest rate, should the latter be lower.

FRA:

A Forward Rate Agreement is an instrument that determines the rate of interest to be paid or received on an obligation beginning at a future start date. The contract specifies the type of interest rates as well as the time period. The purchaser has an advantage, if future interest rates rise but is at a disadvantage, if future interest rates fall.

Financial Futures Market Amsterdam (FTA):

A market where futures are traded.

Financial year:

The period which is reported on in the (fiscal) annual report and the profit and loss account.

Fixed interest-bearing securities:

Investments with a fixed return (bonds), which pay the holder a fixed amount of interest throughout the lifetime of the investment and repay the principal on the expiry date.

Fund of funds:

Funds that are invested in other funds.

Future:

An agreement in which investors invest in the change in value of a product. There are, for example, futures in coffee and grain, but also in financial products, such as a share price index. Investors can purchase and sell futures agreements. Futures are traded on Euronext.life, the Amsterdam derivatives exchange, as well as other markets. Every day the stock exchange calculates how much the price of a product has risen or fallen since the previous day. If the price has risen, the difference is paid out; if the price has fallen, the investor pays the difference. In advance, investors decide the quantity of the product in which they wish to invest and for how long they plan to invest.

General Meeting of Shareholders:

Each quoted company organises a general meeting of shareholders each year (AGM = annual general meeting of shareholders); anyone holding shares in the company concerned is eligible to attend the meeting.

Government bonds:

Tradable debt instruments issued by the Government.

Growth fund:

Share in a company which is expected to show strong capital appreciation.

Guarantee contract:

A reinsurance contract in which all a pension fund’s risks are covered by a reputable insurer who falls under the supervision of the Dutch financial authorities. In this context, an essential condition is that on terminating the contract the pension fund may leave the accrued pension claims premium-free with the insurer without having to make any supplementary deposits or contributions.

Guarantee fund:

A structured investment product. Some of these products guarantee 100% of the sum paid in, others only guarantee a part of it. There are also variations of this type of fund which guarantee both the sum paid in and a certain return.

Hedge fund:

Private mutual funds which often have a high degree of leverage.

Hedging:

Covering an investment portfolio against the risk of adverse price movements by buying put options.

High yield:

Bonds are referred to as high yield, if they are issued by less creditworthy companies. The expected return on such loans is higher than on credits and Government bonds, but the risk is also higher.

Holding company:

A parent company that owns shares in one or more subsidiary companies.

High dividend:

Equity that pays a higher dividend than the average on the market.

In the money:

An option is in the money, if it has an intrinsic value. For a call option this is when the option's strike price is below the market price of the underlying security. For a put option this is when the strike price is above the market price of the underlying security.

Index:

A numerical relationship depicting a certain development or mood. There are index figures for inflation and for price changes in equity markets (e.g. AEX). By means of an index figure investors are, for example, offered a simple overview of the complicated subject of price movements on equity markets. This figure is represented as a percentage in comparison to a certain year.

Inflation:

A decline in the value of money; a situation whereby the general price level shows a continual rise.

ING IM:

ING Investment Management, the largest investor in the Netherlands, managing global assets worth EUR 400 billion in 31 countries.

In-house funds:

Mutual funds established and managed by banks and insurance companies. The ING’s own mutual fund is referred to as ING’s in-house fund (ING huisfondsen).

Insider information/ insider dealing:

This relates to being party to information which could affect the price of a certain share and which has not (as yet) been made public and, on the basis of which, security transactions are executed in order to make a profit. Trading on the basis of insider knowledge, i.e. insider dealing is an offence.

Institutional investor:

A large investor who invests professionally. Examples include pension funds and insurance companies.

Interim dividend:

A dividend payment made before a company's AGM and final financial statements.

Intrinsic value:

A term used in the trade of shares and options. For example in call options, the intrinsic value is equal to the share price of the underlying security less the strike price of the option. In the case of a share, it is the theoretical value of a share based on the actual value of the assets less the liabilities.

Investment horizon:

The length of time a sum of money is expected to be invested. During this period the individual cannot use this money for other expenditure. The investment horizon is important in order to make a considered decision as to which type of investment is best suited to the investor.

Investment company:

An organisation that pools capital from third parties and collectively invests it. The aim of this is to spread the risks.

Investment mix:

The division of an investment portfolio into categories, e.g. shares, bonds, real estate, liquid assets.

Joint Venture:

A cooperation between two or more companies. The cooperation can be either a one-off or continuous.

Junk bond:

A bond with an extremely low rating.

Large cap:

Stock in companies with a high market capitalisation value.

Leverage:

Using leverage a company can increase the return on its equity capital by financing part of it with (cheap) borrowed capital. By achieving a return on the investment that is higher than the interest on the borrowed capital the return realised on the equity capital will also be higher.

Limit:

The highest price at which a buyer is prepared to buy, the lowest price at which a seller is prepared to sell.

Limit order:

An order placed with a bank or broker not to buy above a certain price or not to sell below a certain price.

Liquidity funds:

Investment institutions which invest their investor’s money in short-term instruments. Due to the short-term nature of the investments, sensitivity to interest rate changes is low. These funds are also known as money market funds.

Liquidity risk:

The risk that it will be impossible, or virtually impossible, to trade an investment on the equity market.

Listing:

The price or exchange rate of financial instruments arrived at by the workings of supply and demand.

Loan capital:

The total of a corporation’s liabilities.

Local funds:

Stock that is only quoted on the equity market of the country where the registered head office is situated.

Long (or long position):

A position taken on the assumption that prices are about to rise.

Luxemburg funds:

Funds which are established in accordance with the laws of Luxemburg.

MSCI Index:

Morgan Stanley Capital International; an independent American investment institution providing equity indices for all the important investment areas in the world. These indices reflect the share price developments of a large number of quoted companies throughout the world.

Macroeconomic statistics:

Statistics which relate to a national or global economy; one example being the unemployment figures.

Margin:

Security for the bank in the form of a reserved balance. This is deducted from the amount available for spending. Margins are calculated the moment that unsecured options are written.

Market orders:

This is an instruction to buy or sell securities without a price limit being stipulated. The order will be executed in its entirety at either the first available rate or otherwise at the best possible rate.

Market risk:

The market risk corresponds to the general economic situation. It is a risk which affects all investments. Examples include: periods of economic growth and recession, as well as Government tax reforms. Fluctuations in the equity market can also be included here (share price volatility).

Market value:

The price which has to be paid for an item in a free market.

Matching:

Continually linking value changes in investments to the value changes in a large part of the obligations of a pension fund.

Mature market:

A market is said to be ‘mature’, if it is in balance.

Maturity:

A yardstick for the interest rate sensitivity of bonds.

Maturity mismatch:

A difference in maturities, the consequences of which can affect the value of the surplus both positively (in the event of an interest rate increase) or negatively (in the event of a fall in the interest rate).

MIFiD:

Markets in Financial Instruments Directive; a European guideline, one of the aims of which is to realise one market for financial products and services.

Midcap index:

The index of the 25 funds which after the funds in the AEX index are most frequently traded on the Amsterdam stock exchange, Euronext Amsterdam; this index is also referred to as the AMX.

Mixfunds:

A mutual fund that invests in shares, bonds, real estate and fixed interest-bearing securities.

Money market:

The market in which banks, corporations and governments lend or borrow money in the short term (max 2 years).

Mortgage bond:

A bond issued by a mortgage bank. These bonds are issued continuously at the market rate prevailing at that moment.

Mutual Fund:

A mutual fund is a fund in which money from various individual investors is collectively managed by fund managers. It is a practical way of spreading investments, i.e. diversifying. Moreover, the collective approach offers advantages not always achievable by an individual alone: with a relatively small amount of money investors can spread their risks fairly widely, they are assured of professional management and the costs are lower than they would be were the investors to trade in individual stock.

NASDAQ:

National Association of Securities Dealers Automated Quotations; an electronic (stock exchange) floor in New York, which specialises in the trade of shares of IT related companies.

nFTK:

The Netherlands’ new financial assessment framework; this ensures that each year pension funds value their future pension obligations in cash at the market interest rate prevailing in that year.

Nikkei:

The Japanese stock exchange.

NYSE:

The New York Stock Exchange is an American stock exchange; it is the world’s largest stock exchange and is situated on Wall Street in New York.

Net return (or net yield):

The net return (or net yield) assumes that any related taxes or costs have been deducted from the return on a security. The net return is the relationship between this result and the money invested.

Nominal value:

The value shown on the shares, bonds or other negotiable instruments.

Offer price:

The price at which sellers are prepared to sell a certain security.

Open-end mutual funds:

An open-end mutual fund consists of a variable quantity of shares. If, on balance, there is a demand for the fund, extra sharers are issued. If there is more supply than demand, the fund will buy shares. This is the reverse of a closed-end mutual fund which is not obliged to buy back or issue shares.

Opening price:

The first price quoted for a specific security at the start of trading on any day.

Option:

An option gives the right to buy or sell a specific amount of shares, indexes or currencies (the underlying value) at an agreed price during a specified period of time. The party which has the right is referred to as the holder or the buyer. The party which has the obligation to buy or sell is the writer or the seller. There are both call options and put options.

Optional dividend:

A dividend giving the shareholder the option to choose between receiving the dividend in cash or in new shares.

Option writing:

The selling of a call option or a put option; on receipt of a premium, investors accept the obligation to deliver the shares at the strike price or respectively to take up shares at the strike price.

Out of the money:

An option is out of the money, if in the case of a call option the equity market price is lower than the strike price; and vice versa in the case of a put option.

Over the counter (OTC):

Some companies do not have an official equity market quotation, consequently their share prices are not quoted. OTC shares can only be traded via the institutions which issued these shares.

Par:

A price is quoted as par, when it is equal to the nominal value of the bond.

Passive investment management:

A style of investment management whereby a benchmark is tracked.

Perpetual bond:

A bond with no maturity date. Perpetual bonds are not redeemable, but pay a steady stream of interest forever.

Preference shares:

Shares which have priority over ordinary shares in respect of the appropriation of profits.

Preferential subscription rights:

Existing shareholders can acquire preferential rights when subscribing to new stock issues. This is known as a preferential subscription right. To exercise this right, the issuing body will issue a dividend coupon. This right can normally be traded.

Price:

For example, the price of a share, option or bond.

Price earnings ratio (P/E ratio):

The valuation ratio of a company's current share price compared to its per-share earnings. By means of the price-earnings ratio, investors try to determine whether a share is ‘expensive’ or ‘cheap’.

Price risk (of securities):

The risk of a fall in price of a financial instrument in which an investor has invested, as a consequence of which the investor would suffer a loss.

Price target:

The projected price of a specific share.

Priority shares:

Shares which give the holder a casting vote in respect of important decisions affecting the company. Ordinary shareholders do not have this right.

Private Equity:

A broad term which refers to investments in companies which are not quoted on the equity market. The difference is primarily the way in which the money for an investment is collected, that is privately as opposed to publicly.

Profitability:

The result achieved in a specific period after a certain investment has been made. The profitability is expressed as a percentage of the amount invested.

Prospectus:

A document giving extensive financial and other information about a company which wishes to issue financial instruments.

Put option:

A right to sell an underlying value (e.g. shares) at a specified price within a specific period of time. This right can be bought and sold just like the shares itself. Selling options is also referred to as writing options.

Ratio:

A numerical relationship which enables comparisons to be made more easily.

Real-time price information:

The most up-to-date information on share prices.

Recession:

A slowdown in economic growth over at least two successive quarters.

Recommended equity prices:

An indication of the expected opening price issued prior to the start of trading.

Resistance level:

The price level at which there is sufficient supply in the market to call a halt to a stock price rise. Recent high points in a stock price graph often act as the resistance level (Recent low points are referred to as the support level).

Retail:

In retail banking, private individuals are the most important clients. All large Dutch banks undertake retail banking.

Revaluation:

An upwards revaluation of a currency in respect of other currencies in a system of fixed exchange rates.

Rights issue:

An issue with preferential subscription rights for the existing shareholders of the company concerned; preferential subscription rights are allocated on the basis of the number of shares held by the shareholder in the company. This right enables the holder to subscribe to the shares which are to be issued.

Risk-return relationship:

The relationship between the expected risk in respect of the expected return.

Roll over:

Rolling an option position over occurs when investors wish to retain their option positions beyond the month of expiry of the options. This is achieved by closing the position and taking the same position with a new exercise date further in the future.

SAA:

Strategic Asset Allocation.

SAS-70:

Statement on Auditing Standards No. 70, also referred to as third party assurance. It is a certification standard for investment managers certifying the quality of the services outsourced to them have been audited.

SEC:

The Securities & Exchange Commission; an American government body which supervises the trade in securities on the American equity markets.

Securities:

The collective name for shares, bonds, warrants, options, futures and all other products traded on the stock exchange.

Securities credit:

Credit extended for the financing of the purchase of securities, whereby the securities act as the collateral.

Securities issue:

The issue of financial security instruments such as shares and bonds.

Shaky:

The mood in the market when stock prices are falling.

Shareholders’ equity/Equity capital:

Share capital plus the company’s reserves.

Share premium:

The positive difference between the nominal share price and the share price received when the company issues shares or bonds.

Share premium bonus:

Bonus shares from the capital accrued as a share premium reserve. These are tax free for private investors.

Share premium reserve:

Fiscal reserves as a result of cash being paid for shares issued at above their nominal value. Tax free bonus shares may be issued and share dividends paid from these reserves.

Shareholder value:

Frequently, a strategic ambition of companies is to increase the shareholder value.

Short (or short-position):

A position taken on the assumption that prices are about to fall.

Slow:

Mood in the equity market when trading is subdued.

Small caps:

Shares in companies with a low market capitalisation value.

Sox:

Legislation named after the American senators Sarbanes and Oxley. The legislation imposes numerous rules - related to the soundness of the corporate management - on companies quoted on American equity markets (and affiliated foreign equity markets) or on foreign companies with divisions quoted on American equity markets.

Spending limit:

An amount of money that is free to be spent, for example, to buy equity. An example of the calculation of a spending limit: Balance in the securities account + securities credit – outstanding orders – margin obligations.

Split up:

The dividing of shares into smaller denominations.

Stock:

An individual investing in stock purchases a share in the company and, therefore, becomes a shareholder. The owners of shares in a company are entitled to a share of the profit and to cast a vote at the general meeting of shareholders. The price of the share is determined on the stock exchange.

Stockbroker:

A member of the equity market who, on behalf of clients, acts as an intermediary and advisor in the purchase and sale of securities.

Stock deposits:

The total of the securities given by a client to a bank for safekeeping.

Stock dividend:

A dividend payment made in the form of additional shares, rather than a cash payout.

Strike price:

A price agreed in advance at which a purchaser can purchase a call option and the seller must sell the call option.

Subordinated Bond:

This is a loan which, in the event of bankruptcy, will only be repaid after all the ordinary bonds and other loans have been repaid. The risks are greater than those on an ordinary loan, but the interest rate is usually higher.

Swap:

An exchange of comparable securities with the objective of achieving a higher return.

Swaptions:

The right at some specified future date to enter into a swap at a certain interest rate. This means that the investor is safeguarded against the consequences of a possible fall in the rate of interest to below this level.

Syndicate:

A temporary combination of bankers whose objective is to take on collective responsibility for the placement of shares or bonds which are to be issued.

Technical analysis:

An investment philosophy whereby, on the basis of historic information, an attempt is made to predict future developments in equity market prices.

Term:

The period in which a certain security can be traded.

Tombstone:

Advertisements placed after the issue of new shares. These advertisements display the names of the banks and brokers who organised the issue.

Topix:

An important Japanese equity market which is more broadly based than the Nikkei index; it follows the price movements of the 1700 most important Japanese shares.

Treasury notes:

A collective name for long-term, interest-bearing debt instruments issued by the Government.

Treasury bills:

A collective name for short-term, interest-bearing debt instruments issued by the Government.

Trend line:

A trend line is a straight line joining up a number of prominent points in a graph. In a graph of an equity market, the trend line shows the direction of the trend in the equity market prices.

Turnover:

The turnover of securities is the total number of securities traded during a specific period. The turnover of a company is the total number of goods/services sold multiplied by the price.

Underlying value:

Shares, bonds, currencies, goods, raw materials or other instruments to which an option or future relates. For example an ING share option has an ING share as its underlying value and an AEX option has the AEX index.

Underperformer:

Stock whose price has risen less or has fallen more than a specific index. A share which does better than the index is referred to as an outperformer.

Upgrade:

Also to improve or to renew; these are all terms used to refer to upward adjustments being made to investment advice.

VEB:

Vereniging van Effectenbezitters, this is the Dutch Investors’ Association.

Venture capital:

This is another word for risk capital which is often provided to start-ups. These businesses can grow very quickly if things go well, but if they fare badly they also can go bankrupt just as quickly. The person providing the capital is, therefore, taking a relatively high risk.

Volatility:

The level of movement (the degree to which share prices rise and/or fall) in one or more shares, a whole market or the stock exchange. This term is particularly used in the options trade, where it is deemed one of the factors which determine the price of an option.

Volume:

The number of contracts or transactions handled in a specified period of time, for example in one trading day.

WFT:

Financial Supervision Act (Wet op het Financieel Toezicht). This act regulates the supervision of the financial sector in the Netherlands. The supervision relates to: the relationship between those demanding capital and investors supplying it; the relationship between investors and intermediaries; the organisation of the equity markets and the relationship between investors themselves.

Warrant:

A warrant is a sort of option which gives an investor the right to buy or sell securities at a previously agreed price on or before a specified date. The main difference between options and warrants is that warrants are issued and guaranteed by the company/or a financial institution, whereas options are exchange instruments introduced on stock exchanges.

Weak:

The mood in the equity market when prices are low.

Wholesale bank:

A wholesale bank concentrates on providing a service to large and medium-sized companies.

Window dressing:

Adjusting an investment portfolio in such a way that the end year reporting portrays as favourable a picture as possible.

Yield:

Also referred to as the return, generally the return on a loan. There are various ways of calculating the return (for example the coupon return or the effective return).

Yield curve:

A graph which shows the relationship between the return on loans with different terms to maturity. A rising curve means that the short-term yield is lower than the long-term yield. A downward sloping curve indicates that the long-term yield is lower than the short-term yield. In the latter case, there is said to be an inverse interest rate structure.

Yield gap:

The difference in the yield on government bonds and ordinary bonds. The yield gap is also known as yield ratio. This ratio compares the dividend yield on equities with the yield on long-term government bonds.

Zero Bond:

A bond on which no interest is paid. Issue and trade are carried out at way below par. The return is gained at maturity when the bond is redeemed (at par).

Zero Bond:

A bond on which no interest is paid. Issue and trade are carried out at way below par. The return is gained at maturity when the bond is redeemed (at par).