Bond A certificate of debt, generally long term,
under the terms of which an issuer contracts,
inter alia, to pay the holder a fixed principal
amount on a stated future date and, usually,
a series of interest payments during its life.
Bonus Issue A free issue of shares to a company’s existing
shareholders. No money changes hands and
the share price falls pro rata. It is a cosmetic
exercise to make the shares more market-
able. Also known as a capitalisation or scrip
issue. Affects the specification of derivatives
based on the underlying share.
Bretton Woods Agreement An agreement that set a system of exchange
rate stability after the Second World War, with
all member currencies having a par value
pegged to the US$, allowing a 1 per cent
variance. This was agreed by major econo-
mists from 44 countries. The International
Monetary Fund and the World Bank were
set up at this conference. The dismantling
of the Agreement led to the launch of the first
financial futures contracts in 1975.
Brokers Agents, often members of a stock exchange
firm or exchange members themselves, who act
as an intermediary between buyer and seller.
A commission is charged for this service.
Broker/Dealer Firm that operates in dual capacity in the
securities marketplace: as principal trading
for its own account and as broker represent-
ing clients on the market.
Broking The activity of representing a client as agent
and charging commission for doing so.
Building Societies Institutions that provide a safe haven for
investor’s deposits and who charge interest
on long-term mortgages and loans on prop-
erty. Since the 1986 Building Societies Act,
the services societies are able to provide have
widened to include those traditionally offered
by banks and insurance companies. Many
have indeed converted into banks as a result.
Bull Investor who believes prices will rise.
Bull Market A market in which prices are rising, and
buyers are more predominant than sellers.
Usually refers to equity markets.
170 Glossary of derivatives terms