• Wed. Feb 21st, 2024

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Equity is the most confusing finance term in the UK [Study]

Finance Terms (Ahmad Faizal)

The Most Misunderstood Finance Terms in the UK

New reports show that UK inflation increased to 4% in December,1 with this, it’s never been more important to understand the current financial climate  Despite this, many people still find financial jargon confusing and intimidating.

With this in mind, City Index used Ahrefs, a search analytics tool, to find the top 50 most confusing financial terms based on their annual and monthly search popularity.

Highlights from the research:

  • Equity’ is the UK’s most misunderstood financial term, googled an average of 22,700 times a month and 272,000 times a year
  • ‘GDP’ (12,100 searches a month) andAcquisition’ (2,900 searches a month) come in second and third.
  • ‘Investment’ places 10th with 30,000 searches for its definition each month on average, just 400 searches fewer on average than ‘Overdraft’ (30,400 global searches per month).

The results:

Rank Finance term Monthly average searches for the definition (UK) Annual average searches for the definition (UK) Average monthly searches for definition (worldwide) Average annual searches for definition (worldwide)
1 Equity 22,700 272,400 277,000 3,324,000
2 GDP 12,100 145,200 162,000 1,944,000
3 Acquisition 2,900 34,800 106,000 1,272,000
4 Principal 2,400 28,800 104,000 1,248,000
5 Correlation 2,100 25,200 82,000 984,000
6 Asset 1,400 16,800 73,000 876,000
7 Net Worth 3,400 40,800 41,400 496,800
8 Gross Income 5,800 69,600 40,000 480,000
9 Overdraft 3,700 44,400 30,400 364,800
10 Investment 3,400 40,800 30,000 360,000

Equity is the most confusing finance term

Equity ranks as the most confusing finance term with an average of 277,000 monthly searches for its definition, with 8.1% of these searches coming from the UK. In comparison, the meaning and definition of ‘equity’ is searched 9,700 times each month in Australia and just 2,950 times in Singapore. Overall, the meaning of ‘equity’ is searched 58.4% more frequently than the term ‘GDP’ in second place with 162,000 monthly searches around the world. 

Rebecca Cattlin, a financial market expert at City Index, comments: “Equity refers to the figure that would be returned to a company’s shareholders if the business liquidated its assets and paid off any liabilities or debts. In simpler terms, if you own a business and your inventory, cash, and other assets equal £18,000 and any debts add up to £6,000 — you have £12,000 worth of equity — by subtracting any liabilities from your assets.”

‘GDP’ is the second most confusing finance term, with an average of 162,000 monthly searches for its definition around the globe. This is almost 35% more searches than acquisition in third place with 106,000 monthly searches. The definition of GDP is Googled over twice as frequently in India (17% of all global searches) than in the UK (6%). In total, the meaning of GDP is searched almost two million times each year (1,944,000). 

Rebecca Cattlin, a financial market expert at City Index, comments: “Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. GDP is used as a measure of the size and health of a country’s economy over a period of time. GDP falling shows that the economy is shrinking, and can be a sign of a looming recession.”

‘Acquisition’ is the third most widely misunderstood finance term, with its meaning searched for on average 106,000 times each month. Interestingly, as many as 90% of all searches for ‘acquisition definition’ come from the United States. 

Rebecca Cattlin, a financial market expert at City Index, comments: “An acquisition is when a company purchases most, or all of another company’s shares to gain control of that company. An example of an acquisition occurred in 2017 when Amazon purchased Whole Foods for £10.7bn, or Google’s acquisition of Android in 2005.”

Why it’s key to understand financial jargon in the current climate

It may be surprising to some that Equity is the most misunderstood finance term worldwide, with an average of 277,000 monthly searches for its definition. But why is it so important to understand financial jargon and specialised language?

Rebecca Cattlin, a financial market expert at CityIndex, comments:

Financial terms, such as GDP, have a huge impact on both business owners and the average consumer; perhaps, without many even realising it.

A looming recession as a result of shrinking GDP can lead to increasing mortgage prices for homeowners and increasing financial risks, such as business failure and bankruptcy

Therefore, it has never been more important to understand financial jargon, the economic world around us and how we are being affected.

If you wish to use this study, we kindly ask you to provide a link to www.cityindex.com/en-uk/. A linked credit allows us to keep providing you with future content that you may find useful.

Methodology: 

  1. CityIndex were keen to find out the financial terms which are the most confusing worldwide.
  2. To do this, a seed list of the 50 most used financial terms was selected from multiple articles such as FinanceBuzz, Capitalbenchmarkpartners.com, Fundera.com and Investopedia.com. The definitions of the financial words were also sourced from these sites.
  3. CityIndex then inserted each financial term from the list into the Ahrefs global database, to establish the global monthly average Google searches for the financial terms such as ‘ GDP meaning’ and ‘ Equity definition’. 
  4. The figures were then multiplied by 12 to obtain the average annual searches.
  5. All data was collected in January 2024 and is accurate as of then.
  6. *All definitions have been taken from Investopedia.com and expanded on by an in-house expert.

Notes to Editors:

  1. [1] Financial Times | “UK inflation unexpectedly increased to 4% in December”