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Balanced fund

This is a fund which invests in a mixture of shares, cash and other assets to produce a less volatile return than a share-only fund.

Bank base rate

The bank base rate is set by the Bank of England and determines the cost of borrowing money. An increase in the base rate will increase the rates for mortgages and loans. However, savers should receive higher interest rates on their savings.

Bargain

Term used for a share transaction.

Basis point

A hundredth of 1% (0.01%).

Bear market

This is when there is a widespread decline in share prices. Bears believe share prices will fall.

Benchmark

This is a standard against which the performance of shares or funds are measured. For UK funds, often it is one of the leading indices such as the FTSE 100.

Bid/Offer spread

The offer price is what you pay if you want to buy an investment and the bid price is what you get when you want to sell. The difference between the offer price and the bid price is known as the spread. The size of the spread depends on the sales, management and marketing costs of the investment, and the amount of profit margin built in by the market maker.

Blue chip companies

Large and creditworthy companies such as those listed in the FTSE 100.

Boiler room

Boiler room scammers typically use high-pressure tactics to sell shares which may not exist, by cold-calling potential victims.

Bond

A bond can mean several things. A fixed rate savings account is often referred to as a bond, as are many insurance company-investments. Strictly speaking, a bond is a long term debt such as a corporate bond: in return for you lending the company money, you are paid income for as long as that debt lasts.

Bonus account

A savings account where the rate quoted includes a bonus which will only be paid if, for example, you do not withdraw money during a set period.

Bridging loan

This is a short term loan, designed to provide temporary financing until more permanent financing is arranged. It is often used by purchasers of a property who need funds for a limited period of time - for example until they sell their existing home.

Building society

This is a savings and mortgage institution which is owned by its members.

Bull market

This is when there is a widespread rise in the price of company shares and securities. Bulls expect share prices to rise.

Buy-back

A company may buy back its own shares in order to reduce the overall number of shares available on the market. This will usually have the effect of increasing the share price.

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