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Equity glossary

Equity glossary

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Categories:Types, Brochures
Published by: bapna_ravish on May 19, 2009
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Equity glossaryAAll or None (AON) OrderAn order with this condition should be matched either with the entire orderquantity or none at all.Arbitrage The business of taking advantage of difference in price of a security traded on twoor more stock exchanges, by buying in one and selling in the other (or vice versa).Quite simply it means you try to buy something cheap in one place, tomake a profit selling it somewhere else. Given the speed at which the financialmarkets now operate, in practice the simultaneous purchase of foreign exchange,securities, commodities or any other financial instrument in one market and thesale in another at a higher price.American Depository Receipt (ADR)A stock representing a specified number of shares in a foreign corporation. ADR'sare bought and sold in the American markets just like regular stocks. An ADR isissued by a U.S. Bank, consisting of a bundle of shares of a foreign corporation thatare being held in custody overseas. The foreign entity must provide financialinformation to the sponsor bank. ADR's are listed on either the NYSE, AMEX, orNASDAQ.American Depository Share (ADS)A share issued under deposit agreement that represents an underlying security inthe issuer's home country. The term ADR and ADS are thought to be the same,they sort of are. ADS is the actual share trading while ADR represents abundle of ADSs.At bestAn instruction from the client to the broker authorizing him to use his discretionand try to execute an order at the best possible price. An 'at best' order is validonly for the day it is placed.Averaging The process of gradually buying more and more securities in a declining market (orselling in a rising market) in order to level out the purchase (or sale) price
ArbitrationSettlement of claims differences or disputes between one member and anotherand between a member and his clients, authorised clerks, sub-brokers etc.,through appointed arbitrators. BBearer Security This is a bond or a share for which there is no other proof of ownership than thephysical possession of the security. No official record or register of ownership iskept, the owner is the "bearer" of the share or bond certificate. This means thatthese certificates are easily traded without formality. If you own bearer securities,look after them! No dividend is paid to such shares and no interest paid to suchbonds. Instead the certificate will have several coupons attached. These must bephysically removed from the certificate and presented to the originating companyfor payment of any dividend or interest to be made.Bears These stockmarket animals are pessimists, they expect share prices or any othertype of investment to fall. In a 'bear market' the general sentiment is that pricesare going to go lower and majority of dealers will sell as quickly as possible for fearof holding shares which diminish in value.Bears, like 'bulls' drive the market.Basis Point (BP) The smallest measure used in quoting yields on fixed income securities. One basispoint is one percent of one percent, or 0.01%.Bear MarketA prolonged period of falling securities prices in a stock market.BondA debt security, or an IOU, issued by a company or government agency is called abond. A bond investor lends money to the issuer and, in exchange, the issuerpromises to repay the loan amount on a specified maturity date; the issuer usuallypays the bondholder periodic interest payments over the period of the loan.Badla
Carrying forward of transaction form one settlement period to the next withouteffecting delivery or payment. Badla involves carrying forward of a transactionfrom one settlement period to the next. The carry-forward is done at the making upprice, which is usually the closing price of the last day of settlement.A badla transaction attracts the following payments / charges :(a) ‘margin money’ specified by the stock exchange board; and(b) contango or badla charges (interest charges) determined on the basis of demand and supply forces.Bargain Transaction between two members of the exchange. The terms "dealings" and"contracts" also have identical meanings.Blue ChipsBlue Chips are shares of large, well established and financially sound companieswith an impressive records of earnings and dividends. Generally, Blue Chip sharesprovide low to moderate current yield and moderate to high capital gains yield. The price volatility of such shares is moderate.BonusA free allotment of shares made in proportion to existing shares out of accumulated reserves. A bonus share does not constitute additional wealth toshareholders. It merely signifies recapitalization of reserves into equity capital.However, the expectation of bonus shares has a bullish impact on marketsentiment and causes share prices to go up.Book ClosureDates between which a company keeps its register of members closed for updatingprior to payment of dividends or issue of new shares or debentures.BullA bull is one who expects a rise in price so that he can later sell at a higher price.Bull MarketA rising market with abundance of buyers and few sellers.Base Price This is the price of a security at the beginning of the trading day which is used todetermine the Day Minimum/Maximum and the Operational ranges for that day.

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