Term Definition
Bond A loan, usually taken out by a government or company, which normally pays a fixed rate of interest over a given time period, at the end of which the loan is repaid.
Credit The borrowing capacity of an individual, company or government. More narrowly, the term is often used as a synonym for corporate bonds.
Economic cycle Regular expansions and contractions of an economy, traditionally following through repeating phases of expansion, prosperity, contraction and recession.
Equities Shares of ownership in a company.
Gross Domestic Product (GDP) The value of all finished goods and services produced within a country's borders, over a specified period of time. GDP is generally expressed as an annual figure.
Government bonds Bonds issued by governments.
Inflation The rate of increase in the cost of living. Inflation is usually quoted as an annual percentage, comparing the average price this month with the same month a year earlier. There are two inflation indices in the UK – the Retail Prices Index (RPI) and the Consumer Prices Index (CPI).
Real yield The yield on an investment, adjusted for changes in prices in an economy.
Risk premia The difference between the return from a risk-free asset, such as a high-quality government bond or cash, and the return from an investment in any other asset. The risk premium can be considered the 'price' or 'pay-off' for taking on increased risk. A higher risk premium implies higher risk.
Valuation The worth of an asset or company based on its current price.
Yield This refers to either the interest received from a bond or to the dividends received from a share. It is usually expressed  as a percentage based on  the investment's cost, its current market value or its face value.