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52-Week High/Low The highest and lowest price at which a stock traded in the past 12 months, or 52 weeks. Absolute Return The return that an asset achieves over a period of time. This measure simply looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - faces over a period of time. Absolute return differs from relative return because it is concerned with the return of the asset being looked at and does not compare it to any other measure. Actual Return The actual gain or loss of an investor. Auction A mechanism used by the Stock Exchange to fulfill its obligation to the buyer of a security. It is done when the seller is unable to deliver the script sold by him. The security in question is offered by a member who has ready possession of the script. Acquisition When one company purchases a majority interest in the acquired. Allotment The number of shares allotted to a partcipant in IPO against the actual number of securities he had applied for. American Depository Receipt (ADR) A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. American Depository Share (ADS) A share issued under deposit agreement that represents an underlying security in the issuer's home country. The terms American depositary receipt (ADR) and American depositary share (ADS) are often thought to mean the same thing. However, an ADS is the actual share trading, while an ADR represents a bundle of ADSs. Analyst A financial professional who has expertise in evaluating investments and puts together buy, sell and hold recommendations on securities. Also known as a "financial analyst" or a "security analyst". Annual General Meeting (AGM) A mandatory yearly meeting of shareholders that allows stakeholders to stay informed and involved with company decisions and workings.
GLOSSARY OF STOCK MARKET
Annual Report A company's annual statement of financial operations. Annual reports include a balance sheet, income statement, auditor's report, and a description of the company's operations. Annuity A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years. Appreciate An increase in any investments value. For example, if shares of stock you own in a company have risen from five to ten, it has "appreciated". Not quite the word to use to describe your blood pressure after you finds you have just invested in a dud stock Approved List The list that tells you which shares are approved for the purpose of pledging them with the bank against loan. Only these shares will be eligible for "loans against shares" facility. This list of approved securities is periodically revised. Arbitrage The difference between price of a security in two different exchanges. The difference can be used to make profits by persons holding a security to sell the same at an exchange where its price is high and buy it at an exchange where it is available at a lower price. Ask The price a seller is willing to accept for a share, also known as the offer price. Ask Size The number of shares a seller is selling at a quoted ask price. Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. Asset Allocation Fund A mutual fund that splits its investment assets among stocks, bonds and other investment vehicles in an attempt to provide a consistent return for the investor. Average Daily Share Volume The number of shares traded per day, averaged over a period of time, usually one year. Helps in determining the level of activity of the share on the market and in choosing only currently active stocks.
GLOSSARY OF STOCK MARKET
Average Annual Growth Rate The average increase in the value of a portfolio over the period of a year. Average Annual Return The historical return of a mutual fund. Average Maturity The average time to maturity of securities held by a mutual fund. Changes in interest rates have greater impact on funds with longer average life. Average P/E Ratio Average price/earnings ratio of stocks owned by a mutual fund. Average Return The simple average of a series of returns generated over a period of time. Back door listing A strategy of going public used by a company that fails to meet the criteria for listing on a stock exchange. To get onto the exchange, the company desiring to go public acquires an already listed company. Backend load Sales charge paid when selling a mutual fund - also known as deferred load. (For instance, alimony can be said to be a back-end load) Bad Debt A debt that is not collectible and therefore worthless to the creditor. This debt, once considered to be bad, will be written off by the company as an expense. Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. Balanced Fund A mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. Bankruptcy The state of a person or firm unable to repay debts. Bar Chart A style of chart used by some technical analysts, the top of the vertical line indicates the highest price a
GLOSSARY OF STOCK MARKET
security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading. Basis Point A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixedincome security. Bear Market A weak and falling market where buyers are absent (Usually because they burnt their fingers when they held on too long to their shares when the market was rising.) Generally correlates with recession. An opportunity to buy at low prices, in hope (usually) fulfilled if you wait long enough) of an upturn. Low capital investors may have a problem in holding on to stocks for a long period. This is the reverse of the bull market. Hence, the strategy would also be reversed but be cautious. It is more difficult to tell when a falling stock is going to reverse direction than to predict when a rising is likely to fall. Bear Market A market condition in which the prices of shares are falling or are expected to fall. Best Ask The lowest quoted ask price for a particular share among those offered from competing market makers. Best Bid The highest quoted bid for a particular share among all those offered by competing market makers. Blue Chip Stock Shares of well-established and financially strong corporations, with little investment risk and a history of earnings and dividend payments. These stocks usually form the base of a portfolio and allow for higher gain (and higher risk) speculation in other stocks. Investment in such stocks is more for capital appreciation than for return on investment since most blue chips trade at high market prices. Best to allocate a portion of your annual income for the purchase of investment stocks over the long term. Blue Chip A nationally recognized, well-established and financially sound company. Bond A debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate Bond A bond is a debt instrument issued by an entity for the purpose of raising capital. A long term promissory note issued by a corporation. A bond can be issued by a corporation or other entity such as state or municipal governments or the Central Bank of the country. Bonds normally have a set maturity (term) and interest (coupon) rate associated with them. In simpler word, you are in effect lending money to the
which is followed by a steady increase. 7 . Book Value The net asset value of a company. Bonus Shares Shares allotted to the existing shareholders by capitalizing the reserves into additional capital. Boom A period of time during which sales or business activity increases rapidly. though the number of total shares increase. calculated by total assets minus intangible assets (patents. commodity. Book Closure A company closes its register of members for updating the records to facilitate payment of dividends or issue of tights of bonus shares. Bottom Fisher An investor who looks for bargains among stocks whose prices have recently dropped dramatically. Book value Total shareholder equity from the balance sheet divided by the number of shares outstanding. The investor believes that the recent price drop is temporary and a recovery is soon to follow. the price of the shares normally goes up. Book closure is the period during which this process is done and deliveries are not affected in the clearing house. at which point you get back your principal investment. When the market expects a company to come out with a Bonus Issue. Book Building The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors. the proportional ownership of shareholders does not change. Bottom The lowest point or price reached by a financial security. Bottom Line Refers to a company's net earnings. Bond Rating A grade evaluating the quality of a bond Book Closure A company's announcement of a dividend or bonus to investors.GLOSSARY OF STOCK MARKET entity which issues the bonds for a specified period in return for a fixed rate of return till the bonds mature. Following a bonus issue. index or economic cycle in a given time period. goodwill) and liabilities.
Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support. Broker An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. often more than warranted by the fundamentals and usually in a particular sector. usually so structured as to be repaid from proceeds of a public offering. there are 30 diversified stocks traded on the Mumbai Stock Exchange which are thought to be representative of the market in general. Full service brokers are those that provide a wide range of investment services. research and advice. Bubble A surge in equity prices. 7 . or to establish a floor price for public offer. Bourse A stock exchange Breakout A technical analysis term meaning a stock price has moved above or below a previous trading range. Brokerage Account An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage. which is usually followed by heavy volume and increased volatility. Discount brokers are not in the business of giving investment advice they usually work on salary. Bridge/Mezzanine Funding Financing for a company expecting to go public within 6-12 months. In this index. Broad Based Fund (sub-account) A fund which has a minimum of 20 shareholders without any single investor holding more than 10 percent of the shares and units of the fund is known as broad Based Fund. thereby generating income on the number of his clients' trades. BSE Sensex A stock index (one of many) commonly used as an indicator of changes in the general level of the stock prices in India . followed by a drastic drop in prices as a massive selloff occurs.GLOSSARY OF STOCK MARKET Breakout A price movement through an identified level of support or resistance. which then carries out the transactions on the investor's behalf. commodities or other property. limit their services to trade executions and collect substantially lower fees. A full service account representative usually works on a commission basis. Broker An agent who handles the public's orders to buy and sell stocks.
Rising stock prices (generally occur during boom years). There are two methods of execution (i) the online exchange which is connected via satellite. the best procedure is to decide within yourself that you will satisfied by a specified margin eg profit on your investment (say. The total time is an estimated 20 minutes. A critical decision is when to sell on a bull market. Long term investors are usually less harmed since their perspective is 3 to 5 years or even more and the market tends to level out over a period of time. decide your margin of profit. Duck if they take a swing at you. that is the share prices reverse direction. Buy and Hold A passive investment strategy in which an investor buys stocks and holds them for a long period of time. Anything that goes up has to come down is a law of physics that holds well in the stock market. Bull Market A financial market of a certain group of shares in which prices are rising or are expected to rise. too. or (ii) the outcry method. it can be executed depending on which type of exchange the stock is listed. 15. Book your specified profit. whereas the second can be a little time consuming. Your losses are thus restricted to the period after your last profit taking. You then offer your sympathy to investors who did not disinvest and had to bear heavy loses. regardless of every one predicting that share prices are sure to go up still further and you would be a fool to sell at this point. Bull Market A rising market where buyers far outnumber the sellers. and is in the form of bars rather than coins. and repeat the procedure. If the Bull Run still continues. Amateur investors could lose a lot of money in this phase of the market.5% pure). A person on the stock market floor bids to find a buyer for the stock. Sell immediately and rest content that you have been wise enough to book profits at different points of the Bull Run . They hold back selling in expectation of still higher gains and sometimes are left high and dry when the market crashes. 20 percent or wherever) and then sell at that point. Buy Transaction When you place an order for stock. Ignore them. sell your shares and put the money in your bank. Bullion Gold and silver that is officially recognized as high quality (at least 99. 10. Buy A recommendation to purchase a specific security. that is. 7 . There will come a time when the Bull Run stops. The stock is then purchased or sold and the broker finally notified of the price and how much money to deduct from the customer's account plus his broker fee. regardless of fluctuations in the market. which is executed on the floor of the exchange. It takes time for a stock order to be sent by the broker to the stock exchange floor. They hold back money in this phase of the market. invest a lesser sum.GLOSSARY OF STOCK MARKET Bull An operator who expects the share price to rise and takes a position in the market to sell at a later date. The first method is instantaneous.
Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price.GLOSSARY OF STOCK MARKET Buy Back The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Capitalization The value of a company as measured by the market price of its common shares. Capital Gains Tax A type of tax levied on capital gains incurred by individuals and corporations. Capital Turnover Annual total Revenue as a percentage of total assets. Capital Gain An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. CAGR The year-over-year growth rate of an investment over a specified period of time. that is. multiplied by the total number of shares that have been issued Capitalize When costs of items such as buildings. In the corporate world all major deals are leveraged. Try doing this in your personal life and you will probably go to jail. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate Call Option An option where the buyer gets the right to buy the underlying security at a specified future date. or to eliminate any threats by shareholders who may be looking for a controlling stake. 7 . Companies will buyback shares either to increase the value of shares still available (reducing supply). Capital gains distributions (if any) are usually made annually. Capital Employed Total liabilities and equity less non-interest bearing liabilities. funded by someone else. equipment and other items with a useful lifetime exceeding one year are categorized as assets to be depreciated over a number of years. rather than being expensed in the year of purchase. The gain is not realized until the asset is sold. Capital Gains Distribution Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. Buyout Funding Funds provided to enable a corporation to acquire another enterprise or product line or business.
For example. The netted purchase and sale positions of the trading. Banks are reluctant to authorize loans against assets which have encumbrances and prefer a clear title. The fraction amount depends on the security being traded. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. as well as all cash outflows that pay for business activities and investments during a given quarter.GLOSSARY OF STOCK MARKET Carry Forward Settlement where positions are carried forward from one settlement to another settlement. This represents an encumbrance on the title. Closely Held Shares The shares held by individuals closely related to a company. to another person. That asset be mortgaged. sold. Cash Settlement Payment for transactions done in one settlement on the due date. rented or otherwise transferred. and is now selling for 11.50. Clear Title A title to an asset proves your legal ownerships of that asset. The Exchange may relax the limit after a cooling off period of about half an hour. temporarily or permanently. Cash Flow per Share Cash flow from operating activities divided by average number of shares. The +1. Change in Stock Price The change in stock price is recorded in points. if stock XYZ opened at 10.50 it would be up +1.50 is the change in stock price. Clearing House It is a legal counter party to both legs of every trade. Cash Flow Statement This document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources. 7 . Circuit Breaker A mechanism used to restrain the market when it gets overheated. Members are settled through the clearing house Choppy Market A stock market condition whereby prices swing up and down considerably but with no resulting overall price movement in either direction.
7 . Commodity A basic good used in commerce that is interchangeable with other commodities of the same type. If you feel that your bank works at a snail's pace. try defaulting on a loan . Share price is determined by supply and demand for fund Collateral It is used to provide a guarantee for a loan. Common Shareholder An individual. these figures are most often made for the quarter. fiscal year and next fiscal year. business or institution that holds common shares in a company. Stockholders participate in a company's profits or losses through dividends and changes in the stock's market value. Closed-End Fund Investors of such a fund buy shares from other share holders and sell shares to other investors. Consensus Estimate A figure based on the combined estimates of the analysts covering a public company.the bank will encase your collateral so fast you'll never know what hit you till it is too late. This will also give the holder the right to vote on corporate issues such as board elections and corporate policy. along with the right to any common dividend payments. giving the holder an ownership stake in the company. Commodity Index An index that tracks a basket of commodities to measure their performance. Close The closing price is the last traded price for the stock on a particular day. Commission A fee charged by brokers for their service in facilitating investment has to be handled through brokers registered on that exchange. The previous close is the price a stock closed on the previous day. Can be encased by the bank if you default in any way on repayment of interest or principle of your loan or other obligations. Common Stock Equity or ownership in a corporation. It includes negotiable instruments. analysts give a consensus for a company's earnings per share and revenue.GLOSSARY OF STOCK MARKET Closing Price The final price at which a security is traded on a given trading day. Generally. shares or goods and titles to immovable assets. Commodities are most often used as inputs in the production of other goods or services.
Most trades are entered and closed out within the same day. Default Failure to pay back a debt. De-merger A corporate strategy to sell off subsidiaries or divisions of a company. Crash A major decline in a financial market.GLOSSARY OF STOCK MARKET Correction Corrections are generally temporary price declines. Day Trader A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. 7 . Debenture A type of debt instrument that is not secured by physical asset or collateral. Debt An amount of money borrowed and owed by one party to another.Dematerialization The move from physical certificates to electronic book keeping. interrupting an uptrend in the market or asset. the major stock exchange in India. Debt to Equity (Total) Total (short and long term) debt divided by total shareholder equity. Both corporations and governments frequently issue this type of bond in order to secure capital. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions. Day Order The quantity that remains untraded is not cancelled until the end of the day. Debt to Equity (long term) Total long term debt divided by total shareholder equity. Cum Rights A share is described as cum rights when the purchaser is entitled for current rights Demat . Debentures are backed only by the general creditworthiness and reputation of the issuer. Dalal Street A term that refers to the Bombay Stock Exchange.
such as a mutual fund or ETF.GLOSSARY OF STOCK MARKET Debt to Equity Ratio Long-term debt divided by shareholders' equity. The derivative is a contract between two or more parties. Minimum net worth stipulation required by SEBI for registering a DP is Rs. Deferred revenue When a share is bought or sold for the purpose of receiving or effecting deliveries. Its value is determined by fluctuations in the underlying asset like commodities. Depositories An organization which holds securities of investors. It is comparable with a branch of 7 . 100 crore. facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. banks. in which core holdings are fixed income investments. The DP maintains the client's securities account balances and keeps him informed about the status of holdings. In other words. bonds. stocks. Debt Fund An investment pool. Depository Participant (DP) A DP is a representative of the depository in the system. on average. showing the relationship between long-term funds provided by creditors and funds provided by shareholder. stockbrokers. can become DPs. than equity funds because the overall management costs are lower. etc. custodians. etc Dematerialisation It is a process by which an investor gets physical certificates converted into electronic balances maintained in his account with the Depository Participant (DP).The fee ratios on debt funds are lower. According to SEBI regulations. transfers securities between accounts on the instruction of the account holder. Deflation A general decline in prices. Derivative A security whose price is dependent upon or derived from one or more underlying assets. often caused by a reduction in the supply of money or credit. financial institutions (FI's). It can be compared with a bank. Deferred Expense Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid. on request in electronic from through a registered Depository Participant (DP). It holds securities in an account. It is the opposite of inflation. a high ratio may indicate high risk. low ratio may indicate low risk. the shares are 'dematerialized'. Delisting The removal of a listed security from the exchange on which it trades.
currency. yield higher returns and pose a lower risk than any individual investment found within the portfolio. Book your profits (or cut your losses) as you go. Diversification The acquisition of a group of assets in which returns on the assets are not directly related over time. Dip A drop in the price of a stock that is temporary making it the ideal time to buy the stock. Of course. on average. the value of a call option on reliance (derivative) fluctuates with the price of reliance stock. future. A lot of thought goes into deciding on 7 . bullion. etc. The rationale behind this technique contends that a portfolio of different kinds of investments will. A precept common to all businesses: buy low sell high. Any increase over your purchase price is a gain.GLOSSARY OF STOCK MARKET a bank if a Depository is likened to a bank. 'highs' and 'lows' are relative not absolute. One usually gets into trouble when giving in to the thoroughly human instinct for the gap to increase (in case of gains) or decrease (in case of losses). don't allow them to accumulate too long. Derivatives A financial contract between two or more parties based on the future value of an underlying asset. it is any hybrid contract of a pre-determined fixed duration such as forward. Dividend Distribution of a portion of a company's earnings. Options and similar other instruments are examples. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables. live stock. Depreciation A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period. Discount The difference between a bond's face value and when to trade a security. A DP is offered depository services only after it gets proper registration from SEBI. commodities. The value is totally 'derived' from the value of the underlying asset such as securities. etc. Never forget. to a class of its shareholders. Diversification A risk-management technique that mixes a wide variety of investments within a portfolio. For instance. trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. an investor would not want to combine large investment positions in airlines. decided by the board of directors. and vice versa. linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities Disinvestment The action of an organization or government selling or liquidating an asset or subsidiary. diversification is essentially for investors not traders. option. Proper investment diversification is intended to reduce the risk inherent in particular securities. For example.
The limit fluctuates in line with the market price of the shares. But in this case it is based on the market values of shares put up as collateral against a loan. Generally. In this index. Of course. General Motors and IBM. It is not mandatory for accompany to distribute dividends. You can do it! Dividend Cash payment made to the shareholders out of the profits of the company. the end of a financial year. for instance. requires that you take into an account innumerable factors that could affect the health of the industry. Boeing. Dividend Yield Total of 12-months' dividend paid (historical or forecast) divided by the latest share price. Dow Jones Industrial Average (DJIA) A stock index (one of many) commonly used as an indicator of changes in the general level of the stock market prices in United States . Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. a financial and investment publisher based in New York . but you should also learn to recognize factors that may impact a particular industry. the Dow average is global leader and is usually reflected by exchange around the world.or mid-term future. Dow Jones & Company. (Dividend rate x nominal value of share)/100. rather than cash. in turn. 7 . you also have to keep in touch with global trends. It is like an overdraft limit. Chevron. Just a few of the 30 companies in the DJIA are: American Express. Bethlehem Steel. transportation stocks and bonds. This. also calculates averages for utility stocks. even zero. the percentage of corporate earnings paid out runs from 40 to 80 per cent. You will not be directly concerned at what happens on the Dow. there are 30 industrial stocks thought to be representative of industrial stocks in general. But remember. Documentation The papers that are needed to process your loan application. where the corporation keeps its entire earnings. At the same time. if a company is stingy on its dividend policy. A stock dividend gives the shareholders additional shares of stock or a fraction thereof. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices. The price used is usually the market price at the end of the period under review. but many times it is less. Disney.GLOSSARY OF STOCK MARKET investment avenues because you are not looking so much at the present status of the industry but at its short. Dividend Per Share The amount of dividend paid out per share. Is that fat fee you are paying your stock analyst looking more reasonable now? Drawing Power Valuation Valuation in stock markets affects your drawing power and hence your loan taking ability as it is reviewed from time to time as per the applicable market value adopted by the bank. you can always take an analyst's help. it is not going to find many investors. This calls for clear thinking and common sense. Coca-Cola. AT&T.
In the bizarre world of loan finance. EMI Equated monthly installments to be paid by the borrower in repayment of the loan taken (includes principal and interest). sale or acquisition of a company is intended Downgrade A negative change in the rating of a security. Emerging Markets Developing countries.Earnings Before Interest. If you think you can save some interest by pre-paying your loan be sure your EMI agreement does not contain a pre-payment penalty.DD An investigation or audit of a potential investment. Depreciation and Amortization EBITDA is a good metric to evaluate profitability EBIT Effective before interest and taxes. Taxes. EBITDA . They lose interest. the market believes that the company will generate extra value.Employee Stock Ownership Plan A qualified. Equity per Share Shows how much of a company's equity one share represents. Due Diligence . EPS .GLOSSARY OF STOCK MARKET Due Diligence The process whereby an in-depth examination of a company's business prospects is conducted. Usually when a merger. Equities Another name for shares. defined contribution. you see.Earnings Per Share EPS is the earning on each share of a company ESOP . If the market price is greater than the equity per share. lenders prefer that you do not repay your loan before the agreed term. employee benefit plan designed to invest primarily in the stock of the sponsoring employer. 7 . Effective Interest Rates The compounded interest rate calculated on the actual inflows and outflows of cash. Also known as operating income. Equity divided by number of shares at the close of the period.
GLOSSARY OF STOCK MARKET Ex Bonus A Share is described as ex dividend when the buyer is not entitled for the dividend. it increases your 'exposure'. that is. 7 . Exponential Moving Average . except that more weight is given to the latest data.EMA A type of moving average that is similar to a simple moving average. Expiry Date The date and time after which a writer of an option cannot exercise his rights. Ex-Dividend The trading of shares when a declared dividend belongs to the seller rather than the buyer. The seller remains the beneficiary. Earnings Surprise When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates. well-diversified group of stocks. Extended Hours Trading Trades executed before or beyond normal market hours. Exposure Limit The limit allowed to the broker by his exchange or to the customer by broker. FCCB . Earnings Estimate An analyst's estimate for a company's future quarterly or annual earnings. Equity Fund A mutual fund that invests in a broad. the bank feels insecure about the return of the loan. The seller remains the beneficiary. Exposure When the value of your asset/product pledged with a bank against loan is reduced by market price fluctuation or for other reasons.Foreign Currency Convertible Bond A type of convertible bond issued in a currency different than the issuer's domestic currency. The day after dividends is paid! Ex Rights A share is described as ex rights when the buyer is not entitled for the Rights. Ex rights shares are cheaper than Cum Rights and offer a good 'buy' opportunity for investment oriented players. It is the total value up to which one is allowed to hold open positions at any point of time. what happens in the famous Hollywood movie 'Indecent Exposure' is nowhere the bank could do to you if you do not reduce your exposure. And when a bank feels insecure.
Foreign Direct Investment An investment abroad. Futures are traded either electronically or via open outcry on a traded either electronically or via open outcry on a trading floor on the Exchange offering the particular contract. Flat Rate of Interest Percentage representation of the amount of annual interest on the total loan amount. Fundamental Analysis Fundamental analysis is to produce a value that an investor can compare with the security's current price in hopes of figuring out what sort of position to take on that stock. Futures Contract An agreement between parties for specified asses for performance on a fixed day in future.GLOSSARY OF STOCK MARKET FDI . usually where the company being invested in is controlled by the foreign corporation. quantity and quality of a futures contract is standardized and specified while the price is set at the time a contract is opened and is negotiated between buyers and sellers. Fiscal Year Any 12-month period that a company uses for accounting purposes.Foreign Institutional Investor An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. The delivery period. Fund Of Funds A mutual fund that invests in other mutual funds. 7 . it is the original cost of the share shown on the certificate. A futures contract is a legally binding agreement to buy or sell commodities to buy or sell commodities or financial securities at fixed time in the future at a price agreed upon today. Financial Porn A slang term used to describe sensationalist reports of financial news and products causing irrational buying that can be detrimental to investors' financial health. For shares. Float The number of shares outstanding minus what is owned by insiders and what the company is holding back (treasury stock. FII .) Fully Paid Shares Shares issued in which no more money is required to be paid to the company by shareholders on the value of the shares. Face Value The nominal value of a security stated by the issuer.
Guidance Information that a company provides as an indication or estimate of their future earnings. 7 . Growth Fund A diversified portfolio of stocks that has capital appreciation as its primary goal. The shares are held by a foreign branch of an international bank. Gilt Fund A mutual fund that invests in several different types of medium and long-term government securities in addition to top quality corporate debt. GDP The forfeited output of a country's economy. Gross Margin Gross profit divided by sales. and/or research and development. Going Public The process of selling shares that were formerly privately held to new investors for the first time.Global Depositary Receipt A bank certificate issued in more than one country for shares in a foreign company. and thereby invests in companies that reinvest their earnings into expansion. acquisitions. Also known as Initial public offering (IPO). GDR . GAAP . Greenshoe Option A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. standards and procedures that companies use to compile their financial statements. Green Field Investment A form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.Generally Accepted Accounting Principles The common set of accounting principles. Goodwill The amount by which a company's shareholder equity exceeds the value of its hard assets.GLOSSARY OF STOCK MARKET Futures A financial contract obligating the buyer to purchase an asset (or a seller to sell an asset) at a predetermined date and price.
The same old choice: should I sell now and make a profit or wait for a while in hope that the price will go up further? Hypothecation Pledging assets against a loan using properties such as securities as collateral for loan. or wait for a further increase.25? Sell. you have to look for another investment avenue where the return is less but the risk is also correspondingly less. weekly. hand on to him.GLOSSARY OF STOCK MARKET Gross Profit Profit a company makes on goods and services before considering overhead expenses. This can be expressed daily. What would you do if. Let's say you buy a new offering at Rs. Guarantor A person who promises to pay your debts if you are unable to pay them yourself. on the first day of listing on the exchange it is quoted at Rs. Hot Stock A stock whose price rises quickly the day it goes public. High The highest price that was paid for a security during a certain time period. and monthly or for a 52-week period. With a little paper work. 7 . Haircut The difference between prices at which a market maker can buy and sell a security. Like when you may like to cover possible loss by also backing the horse for a place. but are expected to grow. Hedging A practice of taking one market position to offset potential losses in another. the lender can sell your collateral to realize his payments. but not transferring legal ownership to the lender . Strictly for long term investors who have a vision for the future and are not interested in maximizing short term profits. Growth Stocks Stocks that pay low dividends. For example using a futures a contract to reduce the impact of price fluctuations in a cash or physical market. Gross profit is sales minus cost of sales. the high for the day can be 20. For example. He's like money in a bank. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market. In securities trading. since there is no win or place. It helps to know the price history of a security over a period of time as an additional support for current buy or sell decision. but the high for the year can be 50.10. If you find a good guarantor. Never let him down. Hammering The rapid and concentrated sale of a stock thought to be overvalued by the market.which does not mean that you will not lose your collateral if you default on repayment.
It is representative of the market sentiment. Initial Public Offering . Income Fund A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends.IPO The first sale of stock by a private company to the public. In And Out The purchase and sale of a security within a short period of time. Normally. In a short sale. banking. Holding Period In a long position. In the case of financial markets. etc is made up of the highly traded stocks in that particular sector. Iceberg Order A large single order that has been divided into smaller lots. Hedge Fund An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage. are a miniscule percent of the total listed shares. an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. The BSE Sensex is based on 30 stocks as is New York 's Dow average. for the purpose of hiding the actual order quantity. in number. short and derivative positions in both domestic and international markets with the goal of generating high returns. Utilities. a hedge consists of taking an offsetting position in a related security. These 30 stocks. Usually they represent about 80 to 85 percent of the market capitalization and trading. usually by the use of an automated program. holding period refers to the time between an asset's purchase and its sale. Industry Group Companies in related businesses. usually on the same day. Income Statement A record of a company's sales and expenses over a particular year or quarter Index / Indices An index is managed and publishes either by a stock exchange or a professional financial and investment body. but in terms of value of trade and market capitalization. they represent anything up to 85 per cent. long. the length of time for which the short position is held. Sectored indices like Industrial. Normally the index components are the highly traded stocks of that exchange.GLOSSARY OF STOCK MARKET Hedge Making an investment to reduce the risk of adverse price movements in an asset. such as a futures contract. Index A statistical measure of change in an economy or a securities market. 7 .
rather than an increase in the companies own business activity. If cement prices are going up. subsequently.GLOSSARY OF STOCK MARKET Inflation Increase in the prices for goods and services. but the system is so widespread and disparate and the judicial system. Contrary to what you might think after some time on the stock exchange. you can afford to speculate in higher risk stocks. and. If you are holding cement shares. But the system is being tightened up so think twice before you place that buy order for XYZ shares. For the stock market player. It is legally in most countries for anyone to make a securities trade based on what they believe to be inside trading result in large fines or imprisonment or both. each of them having a different impact on the fundamentals of the cement industry. or securities not generally available to the public gained from a source inside the company. there really are such stocks. Consistent does not mean ?for ever?. Income Stocks Stocks that have consistently paid high dividends. If you can't leave it your analyst. a surge in construction activities or higher government taxes? There could be a number of reasons. should you hold on to them. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks. buy more or sell? Try and figure it out. But remember you have to keep an eye on the fundamentals of the company. it could be both good and bad news. SEBI is trying to improve its monitoring system. In India . The rate at which prices are rising. It does not mean that anything you buy will now cost you 2 percent more than it did last time. is it because there is a shortage in output. Insider Information Any knowledge about a company. Inflation Rate An important economic indicator. 7 . its products. so time consuming and cumbersome that most insider trades are seldom reported or detected. which it's numerous levels of appeals. that would be insider trading. this means he pays more for what he uses. For instance if your daughter-in-law's sister's husband is working for a large public limited organization and lets fall during a family get-together that his company is planning to buy company XYZ and you immediately place a buy order for XYZ shares. So. Inorganic Growth A growth in the operations of a business that arises from mergers or takeovers. For the common man. Inflation The rate at which the general level of prices for goods and services is rising. purchasing power is falling. Index Fund A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance. it means it is rising at the rate of 2 percent per year based on current prices. when the inflation rate is 2 percent.
mutual funds. as opposed to the current value based on the stock price. banks. certificates of deposit. They handle the distribution of blocks of previously issued securities. financial institutions. etc. usually a stock brokerage firm. Interest Money charged by a lender to a borrower for the use of his or her money. etc Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Intraday Stock trading tracked in periods shorter than one day. Investment Anything of value purchased to provide capital appreciation and /or income. so spend lavishly on her. Usually calculated by adding the current value of estimated future earning to the book value. maintain markets for securities already distributed. antiques and real estate. that would be speculation not investment). For instance the trades during the first two hours or last two hours of the trading day. Investment Bank An organization. etc. Insider Trading The buying or selling of a security by someone who has access to material. trademarks. nonpublic information about the security. 7 .GLOSSARY OF STOCK MARKET Insider Information Material information about a company's activities that has not been disclosed to the public. bonds. An intermediary between an issuer of securities and the investing public. Also. consulting on mergers and acquisitions. Institutional Ownership Shares of a company owned by pension funds. either through secondary offering or through negotiations. It is illegal when the material information is still nonpublic. Insider trading can be illegal or legal depending on when the insider makes the trade. unit investment trusts. Intangibles Soft assets such as patents. handling corporate borrowing. your wife's jeweler is an investment. Intrinsic Value A term favored by value oriented fundamental analysts to express the actual value of a corporation. mutual fund. Payment made at periodic investments on an investment. and act as finders in private placement of securities. involved in taking a new company public IPO. money market funds and collectibles (not lottery tickets. Investments may also include artwork.Examples include stocks.
Joint Venture Two companies joining together to start a new entity. as when an investor borrows money from his broker ?on margin' and so is able to buy more stock than he otherwise could. keeping the current entities untouched to start a business. the greater the financial leverage.KPI A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their strategic and operational goals. Inventory Raw materials.GLOSSARY OF STOCK MARKET IPO (Initial Public Offering) Equity or other issue which is presented to the market for the first time. he repays the broker the loan amount and keeps the profit himself. leverage can involve debt. usually between 90 to 180 days. Lead Underwriter Brokerage house in charge of IPO. work in process. or the act of distributing such securities. Interim Dividend A dividend payment made before a company's AGM and final financial statements. For individuals. If the stock goes up. Key Performance Indicators . 7 . not through debt but by offering the prospect of a high return for little or no investment. Issue Any securities of a company. Because of this effect. The more long-term debt there is. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself. During these initial days of trading. IRR (Internal Rate of Returns) Internal Rate of Return is the rate at which the lender accounts for interest. company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. warrants. financial leverage is popularly called ?trading on the equity'. Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it. Rights. Leverage Any means of increasing value and return by borrowing funds or committing less of one's own money. futures and option contracts also provide leverage. For corporations. and finished goods that have not been shipped to customers. The market value of the company rises and so do its shares. IPO Lock-Up A contractual caveat referring to a period of time after a company has initially gone public. it refers to the ratio of debt (in the form of bonds and preferred stock outstanding) to equity (in the form of common stock outstanding) In the company's capital structure.
That's where the money will go. or commodity. Say you have pledged stocks worth Rs. This decision-making is necessary to cut losses due to lower prices or sudden reverses in rising share prices. A U. Multiply this instance by thousands and you can imagine the margin pressure that is exerted on the market. Depth of market to absorb buy and sell activity of even large orders at prices appropriate to supply and demand. Liability A financial obligation or debt. can make more money on an investment on the BSE than the U.50 (50 per cent).) only if the price rises to a specified level. Load Funds Mutual funds that carry a sales commission. contact. today. Long Position A bull position in a security. which is a percentage of the market value of the stocks pledged. The market must also adapt quickly to new information and incorporate that information into the stock's price. The lender is immediately going to ask you to pledge more stocks (or pay cash) to bring the level up to 200 per cent of the loan. 7 . Limit Order A market order that specifies the highest or lowest price at which the customer is willing to trade securities. To buy or hold a long position is the state of actually owning a stock. Liquidity is one of the most important characteristics. or money value of shares traded daily. An order to a broker to buy a certain stock (future.100 on the market against which you are given a loan of Rs. Load A sales commission paid when you buy (front-end) or sell (back-end) a mutual fund. The legal definition of short term and long term capital gains varies from country.75. So is taxation based on those classifications? This is one of the reasons investors buy and sell stocks around the world.the FII sees a better opportunity elsewhere in the world. Leveraged Buy Out Take over of a public corporation using borrowed funds. security. investor (FII).S. Now suppose the market value of the pledged stocks goes down to Rs. The day-even minute . Mutual funds and other institutional buyers prefer high liquidity stocks so they can easily move in and out of positions.S. This is when the market falls and we have what is known as a ?bear' market.GLOSSARY OF STOCK MARKET The downside: most individuals pledge existing stocks with their bankers or brokers for the loan. Liquidity A measure of the number of shares. bourse. It is the opposite of a short position. etc. Long-term Gain A gain on the sale of a capital asset where the holding period was twelve months or more and profit was subject to the long-term capital gains tax.
GLOSSARY OF STOCK MARKET Long-term Investments Balance sheet item reflecting investments in other companies. Such number makes round lots. Margins are at the sole discretion of the bank and may even vary from scrip to scrip. 7 . or for a 52 week period. Limit Order An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. a long-term asset can be held for as little as one year or for as long as 15 years or more. etc. Helps you understand whether today's price is an aberration or a logical extensive of a trend. For example. The difference in the value of shares pledged and the loan amount sanctioned. His exposure limit is fixed based on the margin money brought in by him. Margin Call A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. An upfront payment made by the customer to take a position in the market. This can be expressed daily. weekly. Lot A fixed minimum number in which shares are bought and sold. Margin Borrowed money that is used to purchase securities. this expression is used to describe a very bad investment that causes an investor to lose everything he or she has invested.200. monthly. Depending on the type of security.100.Mergers And Acquisitions A merger is a combination of two companies to form a new company. anything less makes odd lots. Trading lots can comprise 5. Low (price) The lowest price a security or commodity has reached in a certain period of time such as a daily low or annual low. Long Term Holding an asset for an extended period of time. Liquidity The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. The margin for demat shares is35 percent. The margin for physical shares is 50 percent (that is you can borrow only up to 50 percent of the values of your pledged shares. the low for the day can be 10. M&A . 50 or 100 shares depending on the face value of shares. Losing Your Shirt In the investment world. while an acquisition is the purchase of one company by another with no new company being formed. 10. then it will have to pledge shares worth Rs. If one wants to borrow Rs. but the low for the year can be 5.
Mark to Market A notional profit or loss of a long or short position as compared to the current market price. Market Value The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. Market lots The minimum trading lot on a stock exchange. 7 . Authorization for a broker to buy or sell securities at the best price that can be negotiated at the moment. Market Price It is the price a particular stock is currently selling for during the operating hours of the stock market. It is the last sale price of a particular stock on the previous day. Total number of shares multiplied by the official price quoted on the stock exchange. the market lot is just one share. Market Open/Close Price. draft. acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. Market Order An order where no price specification is mentioned at the time of placement and market prices apply. Market Timing The act of attempting to predict the future direction of the market. Also known as "market price". however mergers increase market liquidity. Market Liquidity Use to track money flow into and out of the markets. Conversely. negative case flow may indicate that fund managers may need to liquidate some holdings to meet redemption requirements. Positive cash flow can serve as an indicator that fund managers have cash to put into the markets at the next buying opportunity. Market Perform Market perform is a neutral assessment of a stock and is neither strongly positive or negative. Additionally. Medium Term An intermediate period of time to hold an asset. IPO's reduce market liquidity.GLOSSARY OF STOCK MARKET Market Capitalization Total market value of the company on the stock exchange. Maturity Date The date on which the principal amount of a note. On compulsorily dematerialized shares for all classes of investors. typically through the use of technical indicators or economic data.
Stocks are said to be in an uptrend when above their MA and in a downtrend when below. A moving average represents data in a manner that smoothens fluctuations and highlights possible trends. As a general rule. The most widely followed MAs are 50 days and 200 days. In today's market. The 10-day Moving Average (MA) is the average closing price for the past 10 days. Momentum Analysis Usually involves looking for stocks in a strong uptrend (high relative strength). The linger the averaging period. Money Supply The amount of money in circulation. strong earnings growth. whose shares have to be offered as security for obtaining loans. bonds and other securities. Moving Average A rolling set of averages calculated over a time series of values. Minimum Number of Companies Accepted The minimum number of companies. that determine the size and rate of growth of the money supply. Long -term investors tend to look at the 200-day MA while active traders are more likely to pay attention to the 50-day MA. Many investors look at both.000 crore Monetary Policy The actions of a reserve bank of india. if the value of some shares drop in the market they may be offset by the other shares which have risen in price. it's best to avoid stocks trading below both their 50 -and 200-day MAs.GLOSSARY OF STOCK MARKET Mid Cap Companies having a market capitalization between Rs 500 crore and Rs 1. Moving averages take into account some number of price periods (a new period is added and the oldest is dropped from the calculation) to show average price over time. Moving averages are one way to view historical price levels. the more lag you will see between the average and the most recent prices. Banks also profitability of a number of companies. Each shareholder participates in the gain or loss of the fund. Municipal Bonds Debt instrument issued by a state or local agency. which in turn affects interest rates. Money Market The securities market dealing in short-term debt and monetary instruments. For example. 7 . Units are issued and can be redeemed as needed. may include relative strength only. Not for amateur investors. It is possible to weight more recent prices by linearly or exponentially smoothing the average lines. The Reserve Bank of India attempts to control the growth of the economy by regulating the increase or decrease in money supply. and increasing earnings forecasts. It is in your interest to pledge the shares of an number of companies when you take a loan. Mutual Fund A security that gives small investors access to a well-diversified portfolio of equities. in case of IDBI Bank the shares to be offered as security should be of at least of two companies.
bonds or other securities administered by a team of one or more managers from an investment company who make buy and sell decisions on component securities. also there are several open ended mutual funds which are insurance linked. if you hold a unit in a mutual fund. There are two types of mutual funds. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. open and closed ended. No-load Fund0073 Mutual funds that do not carry a sales commission.S. NAV . This system allows small investors to participate in the reduced risk of large and diverse portfolio that they could not otherwise afford to build themselves. divided by number of shares. the NAV is the value today of your unit.NAV varies on a day-to-day basis since the market value of securities changes regularly. they issue more units as people want them. Open-end funds are so called because their capitalization is not fixed. and is related to the total value of the Index. Non-operating Income Income not derived from basic business of company 7 .GLOSSARY OF STOCK MARKET Mutual Fund A portfolio of stocks.The Index is market value weighted. The total market value divided by the total number of units of the scheme on a specific date is the NAV. but only reinvest the return on the existing portfolio. such as the ability to write cheques against their units. Its basically marketing with for an investor with limited funds and/or limited knowledge of the market. These funds do not accept new contributions from investors. The return on the funds holdings is distributed back to its contributors. They also have the benefit of professional managers overseeing their money who have the time and expertise to analyze and pick securities. stand ready to buy back their old shares and are not normally listed in exchanges.Net Asset Value The total value of the fund's portfolio less liabilities. Net Asset Value per Share Equity excluding minority interests. The mutual funds which are insurance linked. or shareholders. Units in closed -end funds. based common stocks listed on the NASDAQ stock Market. This means that each company's security affects the Index in proportion to its market by total shares outstanding. Open -end funds sells their own shares to investors. Net Profit Ratio Profit from operations as a percentage of revenue. like other stock. minus various fees and commissions. some of which are listed on stock Exchanges. NASDAQ Composite Index The NASDAQ Composite Index measures all NASDAQ domestic and non-U. are readily transferable in the open market and are bought and sold.To simplify. Non-operating Expense Expenses not due to the basic business of company. Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund. Many open-ended funds allow contributors extra perks. is calculated throughout the trading day.
Offer The price at which a share is available in the market.GLOSSARY OF STOCK MARKET Normalized Earnings Profits a company can be expected to achieve taking out cyclical effects and unusual events such as onetime write-offs caused by late product releases. Open Offer A secondary market offering that is similar to a rights issue in which a shareholder is given the opportunity to purchase stock at a price that is lower than the current market price. The Clearing Corporation of the National Stock Exchange. NSCCL National Securities Clearing Corporation Limited. NSE National Stock Exchange Odd Lots Stocks sold in quantities of less than a specified minimum number. customer bankruptcies and the like. Open Order A limit order that does not expire at the end of the trading day. Open End Fund A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. Open-end funds also buy back shares when investors wish to sell. For example. it costs less to trade in round lots. One Night Stand Investment Buying a security with the intention of holding it for the long term. but subsequently panicking and selling it the following day. is the stock 7 . Offering Price The price at which publicly issued securities are made available for purchase. the fund will continue to issue shares no matter how many investors there are. It is like a limit or circuit. Generally. Most exchange has limits of how high or low the stock can trade on the following day. Opening Price Opening price is normally determined by the price at which a stock finished selling on the previous day. If demand is high enough. Online Trading The act of placing buy/sell orders for financial securities and/or currencies with the use of a brokerage's internet-based proprietary trading platforms. and is based on a percentage of the last traded of the previous day.
Order Modification A facility available in the trading system where one is allowed to modify an earlier order. Operating Cash Flow Surplus cash generated from a company's basic operations without regard to income tax entries such as depreciation and amortization. Overbought Refers to a stock that has risen sharply in price or to the market as a whole after a period of vigorous buying which. Order Cancellation A facility available in the trading system where one is allowed to cancel the order placed earlier.00. A single security or a market which. if they shriek loud enough. and if XYZ stock finished selling ay 20. Also known as core earnings. or just about anything else the company feels like excluding to make its earnings look better. acquisitions or mergers. this is where everybody starts screaming "scam" and. Organic Growth The growth rate that a company can achieve by increasing output and enhancing sales. SEBI starts a probe. earnings excluding special items or operating earnings.00 and 18. it is believed has declined to an unreasonable level. Operating Earnings Earnings without considering certain expenses such as inventory write downs.00 the previous day then the maximum or minimum opening price the following day will be 22. This excludes any profits or growth acquired from takeovers. Changes in levels of inventories. Operating Margin Operating income divided by sales.GLOSSARY OF STOCK MARKET exchange has a upper or lower limit of 10. severance pay. it is sometimes said. Also see Free Cash Flow. depreciation and amortization charges. Also applies sometimes to overbought situations. ongoing earnings. accounts receivable and accounts payable also affect cash flow. Operating Income Sales minus all expenses except income taxes and other items not relaxed to basic business. Oversubscribed A situation in which the demand for an initial public offering of securities exceeds the number of shares issued. Usually. This reduces the scope of overnight off-market deals which are illegal. 7 . has left prices "too high". Oversold The reverse of over-bought.
In India they are called low-Capped stocks and BSE has a separate index for them. It is not the market price. Payout Ratio Percentage of earnings paid out in dividends. Pay Out The designated day on which the Clearing House effects payment and deliveries to the membersPension Fund A fund established by an employer to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees. often highly speculative. Pledge To deposit securities with a lender as security for money borrowed. a company could issue rights to purchase shares at a substantial discount after a merger. Pay In The designated day on which the members pay securities and fund to the clearing house. to find the index for these stocks outpacing the Sensex. These stocks offer larger returns but at higher risk. When a bull market is raging. 7 . Poop And Scoop A highly illegal practice occurring mainly on the Internet. Low-priced issues. A small group of informed people attempt to push down a stock by spreading false information and rumors. Par Value The face value of a bond. It is not unusual. Poison Pill Steps taken by a corporation to thwart a hostile takeover attempt. For instance. Portfolio The group of assets . Par Value The face value or the price of a share. Frequently used as a term of disparagement although some penny stocks have developed into investment-caliber issues. or bond that is written on the certificate. or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger.such as stocks.GLOSSARY OF STOCK MARKET P/E Ratio . debenture. If they are successful. selling at less than $1 a share. Penny Stocks This term is typical to the USA stock markets.Price-Earnings Ratio PE ratio or PE multiples is the ratio arrived by dividing Current market Price by Earnings per share of that stock. they can purchase the stock at bargain prices.held by an investor. bonds and mutuals .
and should earnings rise significantly the preferred holder is stuck with the same fixed dividend while common holders collect more. Debt instruments. Public Company A company that has issued securities through an initial public offering and which are traded on at least one stock exchange. the premium is synonymous with the options price. the premium is the amount by which the price exceeds the face. In other words. you have to pay a little extra upfront if you want to be shielded from the fluctuations of enquiry stock. For bonds and preferred stock. it carries no voting rights. For options markets. Premium The difference between the higher price paid for a fixed-income security and the security's face amount at issue. misleading. Profit Taking The action of selling stock to cash in on a sharp rise. Pump And Dump A scheme attempting to boost the price of a stock through recommendations based on false. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings and have priority over common stock in the payment of dividends. 7 . or par value. Pro-Rata Used to describe a proportionate allocation. This action pushes prices down temporarily. You are stuck with a fixed return regardless of how high interest rates climb. It is like a fixed deposit in a bank. or greatly exaggerated statements. you can congratulate yourself on a wise decision. Public Offering The sale of equity shares or other financial instruments by an organization to the public in order to raise funds for business expansion and investment.GLOSSARY OF STOCK MARKET Preferred Stock A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Price Target A projected price level as stated by an investment analyst or advisor. If interest rates fall. The fixed income stream of preferred stock makes it similar in may ways to bonds. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. Convertible preferred shares can be converted into common stock according to predetermined conditions. Private Company A company whose ownership is private. However. On the other hand.
earnings from continuing operations and net sales. Quarterly Earnings Report A quarterly filing made by public companies to report their performance. which compares the quarter of one year (Q1 2007) to the same quarter of the previous year (Q1 2006). bond. Rights Offering (Issue) Issuing rights to a company's existing shareholders to buy a proportional number of additional securities at a given price (usually at a discount) within a fixed period. but which it cannot exceed. Record Date The date established by an issuer of a security for the purpose of determining the holders who are entitled to receive a dividend. Research and Development (R&D) Costs of developing new products and services. Quick Ratio Cash and cash equivalents plus accounts receivables divided by current liabilities. Quote Prices at which a share can be bought or sold. for a certain period of time. if you have not held the fund for the prescribed minimum time. or mutual fund. The highest bid to buy and the lowest offer to sell any stock at a given time. Redemption The return of an investor's principal in a security. Included in earnings reports are items such as net income. Rally A period of sustained increases in the prices of stocks or indexes.Quarter on Quarter A measuring technique that calculates the change between one financial quarter and the previous financial quarter. Registrar An institution or organization that is responsible for keeping records of bondholders and shareholders. Rematerialisation Process of converting the shares from electronic form to physical form. rights or bonus. This is similar to the year over year measure. Resistance The price at which a stock or market can trade. earnings per share. 7 . such as a stock.GLOSSARY OF STOCK MARKET QOQ . Redemption Fee Fee charged when you sell a mutual fund.
7 . plus other long term liabilities. or risen to resistance. usually seen as a price chart pattern. Rights Issue Issue of new shares to the existing shareholders at a price which is normally lower than the current market price of the old shares. Return on Equity After tax income (latest 12 months) divided by shareholders equity (from balance sheet). SEBI . Revenue A company's sales. Return on investments After tax income (latest 12 months) divided by total of shareholders equity plus long term debt. it is issued in a fixed ratio to those shares which are already held. and then reverses the up or down trend convincingly. Saturday Night Special A slang term used to refer to a surprise takeover attempt. Round Lots Stocks sold in specified share quantities. Rollover A point where a stock price has fallen to support.Profit after tax and minority interests as a percentage of average equity excluding minority interests. Road Show Presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offering.GLOSSARY OF STOCK MARKET Resistance Historical price level at which rising prices have stopped rising and either moved sideways or reversed direction. Profit from operations plus financial income as a percentage of average capital employed.Securities And Exchange Board Of India The regulatory body for the investment market in India. Return on Assets After tax income divided by total assets. Risk The potential to lose money (principal and any earnings) or not to make on an investment.
Shares A unit of ownership interest in a corporation or financial asset. Simple Moving Average . the date by which a buyer must pay for the securities delivered by the seller. Settlement Date The date by which an executed security trade must be settled.SMA A simple. Spinoff The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. company. The two main types of shares are common shares and preferred shares. A stoplimit order will be executed at a specified price (or better) after a given stop price has been reached. It is composed of 30 of the largest and most actively-traded stocks on the BSE. Sensex An abbreviation of the Bombay Exchange Sensitive Index (Sensex) . or arithmetic. Shareholder Any person. Share Capital Funds raised by issuing shares in return for cash or other considerations. Stop-Limit Order An order placed with a broker that combines the features of stop order with those of a limit order. Short Sale A market transaction in which an investor sells borrowed securities in anticipation of a price decline and is required to return an equal amount of shares at some point in the future.GLOSSARY OF STOCK MARKET Sector Fund An investment fund that makes investments solely in businesses that operate in a particular industry or sector of the economy. or other institution that owns at least 1 share in a company. Small Cap Refers to stocks with a relatively small market capitalization. moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. 7 . It is a company with a market capitalization less than Rs 500 crore. That is.the benchmark index of the Bombay Stock Exchange (BSE). Short Term Holding an asset for short period of time.
Book value is the shareholders equity divided by the number of outstanding shares. It is designed to limit an investor's loss on a security position. or 1500. pilot projects.00 a share and the price of the stock drops to 35. commercial production or marketing. and therefore becomes a part owner of the corporation. A stock purchased at 10. Settlement The process of paying for stocks you purchase. beta stage development.GLOSSARY OF STOCK MARKET Stop-Loss Order An order placed with a broker to sell a security when it reaches a certain price. however. Theoretically. For instance. Carefully check all tips on short sales before deciding to act on them. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. a stock has had difficulty falling below. Shares A unit representing a measure of ownership in a corporation. or receiving credit from your broker for the stocks you sell. Selling Short The reverse of the usual stock market technique. there is more risk involved with short selling because a stock price could continue to rise forever and the short seller's loss could be infinite. your profit is 15. This does not mean you should walk into a Reliance office and ask for a glass of water. Not for the common investor.00 a share. not covering launch expenses. Shareholders Equity The difference between the totals of assets and liabilities shown on a company's balance sheet. if you sell short 100 shares of XYZ Corporation at 50. you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker. Short Covering Buying stock to return stock previously borrowed to make delivery on a short sale. typically provided by angel (venture) investors. Shareholder A person who buys stock in a corporation. usually for product development.00. 7 . Then as the price of that security declines. Short sellers lose when the price of the stock ascends rather than descends.00 a share can. historically. Most stock transactions must be settled within three business days. only fall to zero and that is the maximum loss that would be incurred. and make a profit. unless you are very sure of yourself. short selling is based on the anticipation that a particular security price will go down. but it will be accompanied by some odd looks. etc. Seed Capital A small amount of capital provided to an entrepreneur.00. Support The price level which. You will get the water as a matter of courtesy.
Most stock exchange have a rigid rules regarding short selling. To go short you "borrow" stock from the broker/dealer. then sell the stock. A short sale can only take place on an "up tick"" or 'zero-plus tick'. This increase in the number of shares result in the proportionate decrease of share price. For example. (Also called cash trading) Spread The spread is the difference between the bid price and the offer price. as of a particular date. Spot Trading Trading in commodities that will be delivered immediately. Split An increase in the number of shares outstanding. Speculators Investors who seek large capital gains through relatively risky investments. Short-term Gain The profit realized from the sale of securities or other capital assets held twelve months or less. with the intent to buy the stock back at a lower price than you had initially sold it for.GLOSSARY OF STOCK MARKET Short Position Stock options. Solvency Ratio Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end. or future contracts sold and not covered as of particular date. 7 . a company declares a "3 for 1 " stock split. the price of the stock is currently 60 a share. Standard Deviation A measure of a mutual fund or stock's historical volatility. a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share. Short-term Debt Borrowing that must be repaid within one year. Short position also means the total amount of stock an individual has sold short and has not covered. Short-term Investments Stocks and other liquid securities. As in a split the total stock holders equity remains the same. A reverse split is where the total number of shares is decreased and the stock price increases proportionally. The shareholders equity does not change. The player should ascertain these rules from a registered broker of the exchange. Short Sale To sell a stock you do not currently own.
Sub-accounts A sub-account includes institutions (established or incorporated outside India ) and those funds. a reverse stock split brings about the decrease in the number of shares in a corporation. 7 . Stop Loss Order An order placed with a "trigger price". because it prevents the security from falling below a certain price. usually watermarked and patterned to make it hard to forge.GLOSSARY OF STOCK MARKET Stock Certificate The actual document that is evidence of stock ownership. It is placed to minimize the losses and the order cab be either for a purchase or a sale. Alternately. There are two categories of sub-accounts : (1) broad-based/proprietary sub-accounts which are allowed to individually invest up to 10% of the total issued capital. For examples.These order types instruct the broker to execute at market once a specific price level is reached and traded at. a two-for-one split means that shareholders will receive two new shares for each old share. Stock Split An increase in the number of outstanding shares in a corporation. This is usually n\brought about by the division of existing shares. making a total of three. This order is very often referred to as a "stop loss" order. and (2) Foreign corporate and foreign individuals who are not allowed to exceed 5 percent of the issued capital. Stop Order An order to buy or sell a security conditioned on a specific price. If the target company is publicly traded. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts. Stops Can be either a buy or a sell stop. Stock Option Contract allowing holder to buy or sell given number of shares of a particular stock at a given price by a certain date. the acquiring company will make an offer for the outstanding shares. usually seen as a price chart pattern Takeover A corporate action where an acquiring company makes a bid for an acquiree. A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices. or portfolios (established outside India ) whether incorporated or not and corporate and individuals on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor. Support Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction.
the symbol ?f? on the New York Stock Exchange (U. acquisitions. Ticker A ticker is a trading screen information display showing the current price. Trailing EPS The sum of a company's earnings per share for the previous four quarters. The method includes analysis of price patterns. but still higher than the nearest preceding price. such as past prices and volume. Tick The tick is the direction in which the price of stock moved on its last sale. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market. Tick The minimum upward or downward movement in the price of a security. An up-tick means the last trade was at a higher price than the one before than the price was at a higher price than one before it and a down -tick means the last sale price was lower than the one before it. but instead use charts and other tools to identify patterns that can suggest future activity. future. option etc.GLOSSARY OF STOCK MARKET Technical Analysis A method of evaluating securities by analyzing statistics generated by market activity. Technical analysts do not attempt to measure a security's intrinsic value.A) will bring you information about Ford Motor Company. Don't try to understand it unless you are a maths gold medalist. The movement is caused by technical as opposed to fundamental factors affecting sentiment. ?ONGC? 7 . Top Line A reference to the gross sales or revenues of a company. option. etc of a particular stock. Tangible Book Value Book value minus goodwill and intangible assets. Ticker Symbol A ticker symbol represents a particular security (company. typically for market expansion. etc. Technical Rally An upward movement in a security's price following a declining trend. volume.S. A zero-plus tick means the transaction was at the same price as the one before. For example.) on the exchange it is trading on and is used to retrieve information about that security from that exchange. Third Stage Capital Capital provided to an enterprise that has an established commercial production and basic marketing setup. Technical Analysis An analysis of a stock or future based strictly on numbers. product development etc.
Turnover Rate Turnover is the relationship between the float and the average monthly volume of a stock.GLOSSARY OF STOCK MARKET will show you the information of the Oil and Natural Gas Commission on the National Stock Exchange of India. Undersubscribed A situation in which the demand for an initial public offering of securities is less than the number of shares issued. Treasury Notes Debt securities issued by the central government that mature over a specified number of years. Trailing Twelve Months (TTM) The last four reported quarters. 7 . the more volatile the stock and the greater potential for wider swings in price (both ways). Ticker symbols can be used to retrieve information from a financial publication such as your daily paper's business section. 100 per cent turnover means a fund. The best measure of a firm's total debt. Today. Trader An employee of a broker/dealer or other financial institution who specializes in handling purchases and sales of securities for the firm or its clients. Underperform An analyst recommendation that means a stock is expected to do slightly worse than the market return. The higher the turnover rate. Top A technical analysis term meaning the stock price is going down from here. ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly. Turnover Ratio How often a mutual fund changes its portfolio holdings. Commission varies with the size of the trade. changes all the stocks in its portfolio once a year. Transaction Costs The costs of trading securities. sold at a discount and redeemed at full face value. Total liabilities All monies owed regardless of how classified on the balance sheet. Treasury Bills Shorts-term debt issued by the central government. including the broker's commission and taxes. on average.
He is a fixed interval investor. Value Traded This is the total monetary value of all trading in a security for the market day. or transaction.GLOSSARY OF STOCK MARKET Upgrade A positive change in the rating of a security. the venture capitalist will nurse you through. Volume The total number of shares. 7 . Venture Capitalist An investor involved in financing a company's operations before going public. or other units of a security traded in a certain time period. without security/charge on assets) but also brings onto the table extremely Valuable domain knowledge. Volatility Volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. strategic advice. then. he's taking all the risks on an untried idea. Some countries also provide for underwriting on best effort basis Valuation The process of determining the current worth of an asset or company. business contacts. bonds. failing which the firm would take the securities being offered (that is. etc. in exchange for an ownership percentage. Warrant A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Undervalued A stock trading below its fair value. more risky venture. It is calculated by multiplying the volume traded by the average sale price. Vested Interest A financial or personal stake one entity has in an asset. whom the entrepreneurs approach without the risk of ? takeover'. If you have a good idea that can be commercialised and you can convince the venture capitalist of the workability of your idea and of your own ability in seeing it through. Underwriter An investment banking firm committed to successful distribution of a public issue. brand-equity. A venture capitalist not only brings in moneys as ?equity capital' (that is. buy) into its own books. His return is high but. Offsetting the high risk the investor takes is the promise of high return on the investment. Venture Capital Professional moneys co-invested with the entrepreneur usually to fund an early stage. security.
Year Over Year A method of evaluating two or more measured events that compares the results of measurement at one time period with those from another time period. Working Capital Current assets minus current liabilities. Warrants may be issued over securities such as shares in a company. Wall Street A street in the city of Manhattan . on an annualized basis. YOY . Zero Dividend Preferences Zero dividend preference shares are Preference shares which receive no dividends throughout their lives.Dividend Buying the shares trading in XD will not entitle you for the dividend which is already declared but not yet been issued. 7 .GLOSSARY OF STOCK MARKET Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. a currency.Ex. which is traded on a Stock Exchange's equity market. Warrant A warrant is a financial instrument issued by a bank or other financial institutions. New York where several major brokerage firms and stock exchanges are located. an index or a commodity. Dalal Street is the Indian counterpart in Mumbai. XD . Yield Yield is the annual rate of return for any investment and is expressed as a percentage.
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