A pension scheme generated by a company or organisation for the benefit of its employees. In 'contributory' schemes both the employer and employee contribute to a fund which grows free of tax during the savings period. In 'non-contributory' schemes, only the employer contributes.

The amount paid out to the employee on retirement will depend on the type of scheme:

• with a defined contribution plan, the amount paid is calculated by reference to the contributions put in
• with a defined benefit plan, the amount paid depends on the number of years service and the final salary of the employee

At retirement the employee draws a pension income which is subject to tax.

An unregulated over-the-counter market established in 1995 by J.P. Jenkins, a broker specialising in smaller companies, and authorised by the Financial Services Authority.

There are around 200 companies listed on OFEX, many of them small, young companies with a high-tech bent. Admission to OFEX is decided by a panel of 'wise men' and the only requirement is that companies must publish financial reports twice a year. So the risks are high.

Liquidity of OFEX companies is poor as trades are carried out on a matched bargain basis - that is, you can only sell if J.P. Jenkins finds a buyer for your shares - and the bid/offer spreads can be wide. This doesn't mean you shouldn't invest in OFEX companies. The market serves a useful purpose. It just means that OFEX is risky.

OFEX shares are regarded as 'business assets' for CGT purposes in the UK.

The OFEX website is www.ofex.com.

1. In the stock market, offer means that a seller is willing to sell a share at a given price.
2. In contract law, an offer is one half of the contract equation, the other being 'acceptance'. Once an offer is accepted, whether verbally or in writing, both buyer and seller are bound by an agreement, provided that 'consideration' has been provided. Contracts for the sale of land have to be in writing.

One of the ways a company can float its shares on a stock exchange is to issue a prospectus announcing its intention to issue new shares, set a price for them, and invite the public to apply for them at the advertised price. The alternative route is to issue shares and 'place' them in the hands of a number of institutions who then release them on to the secondary market.

Placing is much cheaper for companies than an offer for sale and, since the London Stock Exchange scrapped its rule requiring large flotations to include an offer to the public, companies have increasingly come to market by way of placing. This can be frustrating for private investors who can only buy the shares in the ' secondary' market (i.e. post-new issue trading) and feel they are denied the opportunities that institutions get.

Generically, the price at which securities are offered for sale. Specifically, uses of the term include:

• the price at which a new issue of shares is offered to the public
• the price at which a market maker offers to sell shares
• the price at which units can be purchased from an institution in a unit trust

The bid price is the price at which market makers will buy shares and the difference between the bid price and offer price is called the spread.

1. Liquidating a purchase of futures or options through the sale of an equal number of contracts of the same delivery month, or the covering of a sale of futures or options through the purchase of an equal number of contracts of the same delivery month
2. Matching total long with total short contracts for the purpose of determining a net long or net short position
3. Non-competitively matching one customer's order with another, a practice that is permissible only when executed as required by the Commodity Exchange Act, CFTC regulations and rules of the futures exchange

An independent official who investigates the complaints of individuals against companies or public authorities. Ombudsmen do not have any formal power to reverse decisions but they have substantial moral authority over companies or national or local government agencies.

Within financial services, there are different Ombudsmen for banking, building societies, insurance, pensions, and investments.

If you have a complaint about your treatment by a financial services company, the first thing you should do is make the complaint directly to the compliance officer or senior management of the company. If the outcome is unsatisfactory, you can then take it to the Ombudsman who will investigate and consider all the facts of the case, and make a recommendation. The company will not always follow the Ombudsman's recommendation, but usually will.

'OEICs' are hybrid investment funds that have some of the features of an investment trust and some of a unit trust.

Like investment trusts, OEICs are companies that issue shares on the London Stock Exchange, and which use the money raised from shareholders to invest in other companies. Unlike investment trusts, they are open-ended which means that when demand for the shares rises the manager just issues more shares. With an investment trust, if demand exceeds supply, the response may be a rise in the share price.

The price of OEIC shares is determined rather differently. More like a unit trust, in fact, with the key factor being the value of the underlying assets of the fund. But in contrast to unit trusts, there is no bid/offer spread with OEICs, so the price of the shares should be the same whether you are buying or selling.

OEICs are popular on the continent but were only launched in the UK in 1997. There are around 300 up and running, with a wide range of investment objectives. You can put an OEIC into an ISA.

An open offer, also known as an entitlement issue, is an offer made by a quoted company to its shareholders inviting them to buy new shares in the company at a set price, which is normally lower than the current market price.

The purpose, as with a rights issue, is to raise new capital for the company. Unlike a rights issue, an open offer cannot be traded or sold on by the shareholder - usually, if you do not take up your entitlement, it lapses. Because of this, when an open offer is announced, you will be allocated sub shares, not nil paid shares.

The other way that open offers differ from rights issues is that sometimes you will be allowed to apply for more than your strict entitlement under what is known as 'excess application'. Shareholders tell the company (or its registrar) how many shares they want to buy, including any excess shares, and pay over money to cover their application. The company, before announcing the offer, will have determined how much capital it wants to raise, and the number of shares it needs to sell in order to raise the amount. When it has received all applications, it will either scale them back (if more shares have been applied for than it wants to sell) or it will issue all the shares requested (including any excess applications). If a shareholder's application is scaled back, he or she will be repaid funds for the shares not actually issued.

One point worth noting is that shareholders who hold the relevant company shares in a PEP, ISA and SIPP will only be able to take up their entitlement rights if they have enough money in those accounts to pay for the new shares.

For the purposes of CGT, the acquisition date for an open offer is the acceptance date that a client took up their entitlement.

An option takes the form of a contract that gives its holder the right but not the obligation to buy or sell a fixed number of shares (or other instrument) at a fixed price on or before a given date.

• A CALL option is an option to BUY shares. Call options generally rise in price if the underlying shares rise in price (and vice versa).
• A PUT option is an option to SELL shares. Put options generally rise in price if the underlying shares fall in price (and vice versa).

Note that the holder has a right, not an obligation. This means that he can decide to exercise the option to buy or sell the shares if he wants, but he doesn't have to if he decides that it is not in his interests to do so. The main criterion for that decision is whether the exercise price of the option is higher or lower than the current price of the underlying share.

Options can exist over a number of different classes of asset including property, chattels, and most types of financial assets. For most people, they relate to ordinary shares, and the options are called equity options. In London they are traded on LIFFE.

Some stocks, in particular loan notes, give their holders the right to convert the stock into cash at particular times during the stock's life. In the case of loan notes, the opportunity will often occur at the time the interest payments are made which may be half-yearly or quarterly. Holders of stock who want to redeem will know in advance when the dates are, and invariably have to give formal notice to the company in advance of their wish to redeem. Government bonds (gilts) also carry an option to redeem sometimes.

Companies are incorporated with an authorised share capital - for instance 1,000 ordinary £1 shares. They do not have to issue all the authorised shares, but can issue as many as they like up to the authorised number.

Once issued the shares can be traded either privately or on an exchange if the company has listed them. The price at which they trade will have nothing to do with the par value, but will be determined by market forces. Broadly speaking, if there are more willing buyers than sellers, the price will rise; if there are more sellers than buyers, it will fall.

Shares usually come with a right to vote at the company's Annual General Meeting, and an entitlement to a share of dividends declared. They are, however, unsecured. This means that shareholders are last in the queue if a company goes bust and has to sell off its assets. If the amount realised is enough to pay off all creditors, the shareholders may salvage something. If it isn't, the shares will be worthless.