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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
Book Value The net asset value of a company. Bonus Shares Shares allotted to the existing shareholders by capitalizing the reserves into additional capital.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. commodity. Bottom The lowest point or price reached by a financial security. index or economic cycle in a given time period. The investor believes that the recent price drop is temporary and a recovery is soon to follow. 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. When the market expects a company to come out with a Bonus Issue. Bottom Fisher An investor who looks for bargains among stocks whose prices have recently dropped dramatically. the proportional ownership of shareholders does not change. Bottom Line Refers to a company's net earnings. 7 . Bond Rating A grade evaluating the quality of a bond Book Closure A company's announcement of a dividend or bonus to investors. Book value Total shareholder equity from the balance sheet divided by the number of shares outstanding. goodwill) and liabilities. the price of the shares normally goes up. at which point you get back your principal investment. which is followed by a steady increase. Boom A period of time during which sales or business activity increases rapidly. Book closure is the period during which this process is done and deliveries are not affected in the clearing house. Book Building The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors. Following a bonus issue. calculated by total assets minus intangible assets (patents. though the number of total shares increase.
Broker An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. Bourse A stock exchange Breakout A technical analysis term meaning a stock price has moved above or below a previous trading range. 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. which then carries out the transactions on the investor's behalf. 7 . 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 . often more than warranted by the fundamentals and usually in a particular sector. which is usually followed by heavy volume and increased volatility. In this index. A full service account representative usually works on a commission basis. 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. Broker An agent who handles the public's orders to buy and sell stocks. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support. limit their services to trade executions and collect substantially lower fees. Bridge/Mezzanine Funding Financing for a company expecting to go public within 6-12 months. there are 30 diversified stocks traded on the Mumbai Stock Exchange which are thought to be representative of the market in general. thereby generating income on the number of his clients' trades. commodities or other property. or to establish a floor price for public offer. Bubble A surge in equity prices. Full service brokers are those that provide a wide range of investment services. research and advice. Discount brokers are not in the business of giving investment advice they usually work on salary.GLOSSARY OF STOCK MARKET Breakout A price movement through an identified level of support or resistance. followed by a drastic drop in prices as a massive selloff occurs. usually so structured as to be repaid from proceeds of a public offering.
it can be executed depending on which type of exchange the stock is listed. 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. A critical decision is when to sell on a bull market. If the Bull Run still continues. that is. Buy Transaction When you place an order for stock. 10. too. that is the share prices reverse direction. Buy A recommendation to purchase a specific security. sell your shares and put the money in your bank. They hold back selling in expectation of still higher gains and sometimes are left high and dry when the market crashes. Book your specified profit. You then offer your sympathy to investors who did not disinvest and had to bear heavy loses. whereas the second can be a little time consuming. and is in the form of bars rather than coins. Buy and Hold A passive investment strategy in which an investor buys stocks and holds them for a long period of time. regardless of fluctuations in the market. decide your margin of profit. There will come a time when the Bull Run stops. Sell immediately and rest content that you have been wise enough to book profits at different points of the Bull Run . 7 . It takes time for a stock order to be sent by the broker to the stock exchange floor. There are two methods of execution (i) the online exchange which is connected via satellite. and repeat the procedure.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. invest a lesser sum. Bull Market A rising market where buyers far outnumber the sellers. Bull Market A financial market of a certain group of shares in which prices are rising or are expected to rise. Rising stock prices (generally occur during boom years). The total time is an estimated 20 minutes. 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.5% pure). A person on the stock market floor bids to find a buyer for the stock. 20 percent or wherever) and then sell at that point. which is executed on the floor of the exchange. Bullion Gold and silver that is officially recognized as high quality (at least 99. Anything that goes up has to come down is a law of physics that holds well in the stock market. the best procedure is to decide within yourself that you will satisfied by a specified margin eg profit on your investment (say. The first method is instantaneous. Your losses are thus restricted to the period after your last profit taking. They hold back money in this phase of the market. Ignore them. or (ii) the outcry method. 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. 15. Duck if they take a swing at you. Amateur investors could lose a lot of money in this phase of the market.
7 . Capitalization The value of a company as measured by the market price of its common shares. In the corporate world all major deals are leveraged. CAGR The year-over-year growth rate of an investment over a specified period of time. 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. Capital gains distributions (if any) are usually made annually. The gain is not realized until the asset is sold. that is. Capital Turnover Annual total Revenue as a percentage of total assets. Try doing this in your personal life and you will probably go to jail. Companies will buyback shares either to increase the value of shares still available (reducing supply). equipment and other items with a useful lifetime exceeding one year are categorized as assets to be depreciated over a number of years. multiplied by the total number of shares that have been issued Capitalize When costs of items such as buildings. Capital Employed Total liabilities and equity less non-interest bearing liabilities. Capital Gains Distribution Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. funded by someone else. rather than being expensed in the year of purchase.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. Buyout Funding Funds provided to enable a corporation to acquire another enterprise or product line or business. 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. or to eliminate any threats by shareholders who may be looking for a controlling stake. 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. Capital Gains Tax A type of tax levied on capital gains incurred by individuals and corporations.
GLOSSARY OF STOCK MARKET Carry Forward Settlement where positions are carried forward from one settlement to another settlement. Closely Held Shares The shares held by individuals closely related to a company. Change in Stock Price The change in stock price is recorded in points. Cash Flow per Share Cash flow from operating activities divided by average number of shares. rented or otherwise transferred. and is now selling for 11.50. The fraction amount depends on the security being traded. The +1.50 it would be up +1. if stock XYZ opened at 10. 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. Clear Title A title to an asset proves your legal ownerships of that asset. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. to another person. This represents an encumbrance on the title. For example.50 is the change in stock price. Cash Settlement Payment for transactions done in one settlement on the due date. Clearing House It is a legal counter party to both legs of every trade. temporarily or permanently. Banks are reluctant to authorize loans against assets which have encumbrances and prefer a clear title. The netted purchase and sale positions of the trading. The Exchange may relax the limit after a cooling off period of about half an hour. 7 . Circuit Breaker A mechanism used to restrain the market when it gets overheated. as well as all cash outflows that pay for business activities and investments during a given quarter. That asset be mortgaged. Cash Flow Statement This document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources. sold.
Stockholders participate in a company's profits or losses through dividends and changes in the stock's market value. The previous close is the price a stock closed on the previous day. try defaulting on a loan . business or institution that holds common shares in a company. If you feel that your bank works at a snail's pace.the bank will encase your collateral so fast you'll never know what hit you till it is too late. Common Stock Equity or ownership in a corporation. 7 . shares or goods and titles to immovable assets. along with the right to any common dividend payments. 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. fiscal year and next fiscal year. Commodity Index An index that tracks a basket of commodities to measure their performance. Generally. Consensus Estimate A figure based on the combined estimates of the analysts covering a public company. Commodity A basic good used in commerce that is interchangeable with other commodities of the same type. Can be encased by the bank if you default in any way on repayment of interest or principle of your loan or other obligations. Closed-End Fund Investors of such a fund buy shares from other share holders and sell shares to other investors.GLOSSARY OF STOCK MARKET Closing Price The final price at which a security is traded on a given trading day. Commodities are most often used as inputs in the production of other goods or services. Share price is determined by supply and demand for fund Collateral It is used to provide a guarantee for a loan. these figures are most often made for the quarter. Common Shareholder An individual. giving the holder an ownership stake in the company. It includes negotiable instruments. analysts give a consensus for a company's earnings per share and revenue. This will also give the holder the right to vote on corporate issues such as board elections and corporate policy.
Cum Rights A share is described as cum rights when the purchaser is entitled for current rights Demat . Crash A major decline in a financial market. Debenture A type of debt instrument that is not secured by physical asset or collateral. Debt to Equity (Total) Total (short and long term) debt divided by total shareholder equity.GLOSSARY OF STOCK MARKET Correction Corrections are generally temporary price declines. Debentures are backed only by the general creditworthiness and reputation of the issuer. Day Order The quantity that remains untraded is not cancelled until the end of the day. 7 . Most trades are entered and closed out within the same day. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions. Day Trader A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. De-merger A corporate strategy to sell off subsidiaries or divisions of a company.Dematerialization The move from physical certificates to electronic book keeping. Dalal Street A term that refers to the Bombay Stock Exchange. the major stock exchange in India. interrupting an uptrend in the market or asset. Debt to Equity (long term) Total long term debt divided by total shareholder equity. Default Failure to pay back a debt. Debt An amount of money borrowed and owed by one party to another. Both corporations and governments frequently issue this type of bond in order to secure capital.
It can be compared with a bank. stockbrokers. a high ratio may indicate high risk. etc. banks. bonds. such as a mutual fund or ETF. in which core holdings are fixed income investments. Depository Participant (DP) A DP is a representative of the depository in the system. financial institutions (FI's). In other words. stocks. Depositories An organization which holds securities of investors. It is the opposite of inflation.GLOSSARY OF STOCK MARKET Debt to Equity Ratio Long-term debt divided by shareholders' equity. often caused by a reduction in the supply of money or credit. 100 crore. Derivative A security whose price is dependent upon or derived from one or more underlying assets. It is comparable with a branch of 7 . The DP maintains the client's securities account balances and keeps him informed about the status of holdings. Deferred revenue When a share is bought or sold for the purpose of receiving or effecting deliveries. the shares are 'dematerialized'. Its value is determined by fluctuations in the underlying asset like commodities. Debt Fund An investment pool. According to SEBI regulations. Deflation A general decline in prices. on average. custodians. Minimum net worth stipulation required by SEBI for registering a DP is Rs.The fee ratios on debt funds are lower. facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. 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). can become DPs. showing the relationship between long-term funds provided by creditors and funds provided by shareholder. on request in electronic from through a registered Depository Participant (DP). Delisting The removal of a listed security from the exchange on which it trades. Deferred Expense Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid. transfers securities between accounts on the instruction of the account holder. low ratio may indicate low risk. than equity funds because the overall management costs are lower. It holds securities in an account. The derivative is a contract between two or more parties.
etc. A lot of thought goes into deciding on 7 . An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables. Diversification The acquisition of a group of assets in which returns on the assets are not directly related over time. Depreciation A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period. The rationale behind this technique contends that a portfolio of different kinds of investments will.GLOSSARY OF STOCK MARKET a bank if a Depository is likened to a bank. it is any hybrid contract of a pre-determined fixed duration such as forward. future. don't allow them to accumulate too long. A precept common to all businesses: buy low sell high. Options and similar other instruments are examples. the value of a call option on reliance (derivative) fluctuates with the price of reliance stock. For instance. diversification is essentially for investors not traders. Book your profits (or cut your losses) as you go. 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. trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. decided by the board of directors. an investor would not want to combine large investment positions in airlines. 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). bullion. A DP is offered depository services only after it gets proper registration from SEBI. to a class of its shareholders. Derivatives A financial contract between two or more parties based on the future value of an underlying asset. on average. and vice versa. The value is totally 'derived' from the value of the underlying asset such as securities. Discount The difference between a bond's face value and when to trade a security. commodities. Any increase over your purchase price is a gain. Never forget. Diversification A risk-management technique that mixes a wide variety of investments within a portfolio. Dip A drop in the price of a stock that is temporary making it the ideal time to buy the stock. etc. option. live stock. currency. For example. yield higher returns and pose a lower risk than any individual investment found within the portfolio. 'highs' and 'lows' are relative not absolute. Proper investment diversification is intended to reduce the risk inherent in particular securities. Of course. Dividend Distribution of a portion of a company's earnings.
Boeing. Dow Jones & Company.GLOSSARY OF STOCK MARKET investment avenues because you are not looking so much at the present status of the industry but at its short. the end of a financial year. You can do it! Dividend Cash payment made to the shareholders out of the profits of the company. It is like an overdraft limit. Coca-Cola. Dividend Per Share The amount of dividend paid out per share. even zero. 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 . But remember. In this index. Documentation The papers that are needed to process your loan application. there are 30 industrial stocks thought to be representative of industrial stocks in general. At the same time. A stock dividend gives the shareholders additional shares of stock or a fraction thereof. you can always take an analyst's help. you also have to keep in touch with global trends. This. General Motors and IBM. the percentage of corporate earnings paid out runs from 40 to 80 per cent. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices. also calculates averages for utility stocks. Of course. The limit fluctuates in line with the market price of the shares. rather than cash. Chevron. But in this case it is based on the market values of shares put up as collateral against a loan. it is not going to find many investors. AT&T. but many times it is less. if a company is stingy on its dividend policy. (Dividend rate x nominal value of share)/100. requires that you take into an account innumerable factors that could affect the health of the industry. transportation stocks and bonds. Generally. the Dow average is global leader and is usually reflected by exchange around the world. The price used is usually the market price at the end of the period under review. 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. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. This calls for clear thinking and common sense. 7 . in turn. You will not be directly concerned at what happens on the Dow. It is not mandatory for accompany to distribute dividends. Dividend Yield Total of 12-months' dividend paid (historical or forecast) divided by the latest share price. Bethlehem Steel.or mid-term future. for instance. Just a few of the 30 companies in the DJIA are: American Express. Disney. where the corporation keeps its entire earnings. but you should also learn to recognize factors that may impact a particular industry. a financial and investment publisher based in New York .
Earnings Before Interest.GLOSSARY OF STOCK MARKET Due Diligence The process whereby an in-depth examination of a company's business prospects is conducted. EBITDA . Depreciation and Amortization EBITDA is a good metric to evaluate profitability EBIT Effective before interest and taxes. Usually when a merger. Emerging Markets Developing countries. lenders prefer that you do not repay your loan before the agreed term.Employee Stock Ownership Plan A qualified. defined contribution. 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. Equities Another name for shares.Earnings Per Share EPS is the earning on each share of a company ESOP . EMI Equated monthly installments to be paid by the borrower in repayment of the loan taken (includes principal and interest). Equity per Share Shows how much of a company's equity one share represents. the market believes that the company will generate extra value. Due Diligence . They lose interest. Effective Interest Rates The compounded interest rate calculated on the actual inflows and outflows of cash. sale or acquisition of a company is intended Downgrade A negative change in the rating of a security. If the market price is greater than the equity per share. 7 . EPS . employee benefit plan designed to invest primarily in the stock of the sponsoring employer. you see.DD An investigation or audit of a potential investment. Also known as operating income. Taxes. In the bizarre world of loan finance. Equity divided by number of shares at the close of the period.
Earnings Surprise When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates.Foreign Currency Convertible Bond A type of convertible bond issued in a currency different than the issuer's domestic currency. that is. it increases your 'exposure'. 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. FCCB . Earnings Estimate An analyst's estimate for a company's future quarterly or annual earnings. The seller remains the beneficiary. It is the total value up to which one is allowed to hold open positions at any point of time. Exposure When the value of your asset/product pledged with a bank against loan is reduced by market price fluctuation or for other reasons. Exponential Moving Average . Extended Hours Trading Trades executed before or beyond normal market hours.EMA A type of moving average that is similar to a simple moving average. the bank feels insecure about the return of the loan. except that more weight is given to the latest data.GLOSSARY OF STOCK MARKET Ex Bonus A Share is described as ex dividend when the buyer is not entitled for the dividend. Ex-Dividend The trading of shares when a declared dividend belongs to the seller rather than the buyer. Expiry Date The date and time after which a writer of an option cannot exercise his rights. 7 . well-diversified group of stocks. Exposure Limit The limit allowed to the broker by his exchange or to the customer by broker. The seller remains the beneficiary. what happens in the famous Hollywood movie 'Indecent Exposure' is nowhere the bank could do to you if you do not reduce your exposure. Equity Fund A mutual fund that invests in a broad. And when a bank feels insecure.
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. Fund Of Funds A mutual fund that invests in other mutual funds. 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. it is the original cost of the share shown on the certificate. 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. Futures Contract An agreement between parties for specified asses for performance on a fixed day in future. usually where the company being invested in is controlled by the foreign corporation. The delivery period. Flat Rate of Interest Percentage representation of the amount of annual interest on the total loan amount. 7 . 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. For shares.GLOSSARY OF STOCK MARKET FDI . 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.Foreign Direct Investment An investment abroad.) 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. Float The number of shares outstanding minus what is owned by insiders and what the company is holding back (treasury stock. 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. FII . Face Value The nominal value of a security stated by the issuer.
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.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. Gross Margin Gross profit divided by sales. Growth Fund A diversified portfolio of stocks that has capital appreciation as its primary goal.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.Generally Accepted Accounting Principles The common set of accounting principles. Also known as Initial public offering (IPO). GDR . Goodwill The amount by which a company's shareholder equity exceeds the value of its hard assets. Guidance Information that a company provides as an indication or estimate of their future earnings. 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. The shares are held by a foreign branch of an international bank. and/or research and development. Going Public The process of selling shares that were formerly privately held to new investors for the first time. standards and procedures that companies use to compile their financial statements. GDP The forfeited output of a country's economy. acquisitions. GAAP . 7 . 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.
Like when you may like to cover possible loss by also backing the horse for a place.GLOSSARY OF STOCK MARKET Gross Profit Profit a company makes on goods and services before considering overhead expenses. hand on to him. since there is no win or place.25? Sell. weekly. With a little paper work. This can be expressed daily. What would you do if. For example using a futures a contract to reduce the impact of price fluctuations in a cash or physical market. but not transferring legal ownership to the lender .which does not mean that you will not lose your collateral if you default on repayment.10. Growth Stocks Stocks that pay low dividends. In securities trading. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market. the high for the day can be 20. 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. 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. Let's say you buy a new offering at Rs. Hot Stock A stock whose price rises quickly the day it goes public. and monthly or for a 52-week period. you have to look for another investment avenue where the return is less but the risk is also correspondingly less. the lender can sell your collateral to realize his payments. or wait for a further increase. Hammering The rapid and concentrated sale of a stock thought to be overvalued by the market. Haircut The difference between prices at which a market maker can buy and sell a security. 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. He's like money in a bank. If you find a good guarantor. Hedging A practice of taking one market position to offset potential losses in another. but are expected to grow. but the high for the year can be 50. For example. 7 . High The highest price that was paid for a security during a certain time period. Gross profit is sales minus cost of sales. Never let him down. Strictly for long term investors who have a vision for the future and are not interested in maximizing short term profits.
In the case of financial markets. such as a futures contract.IPO The first sale of stock by a private company to the public. Initial Public Offering . Sectored indices like Industrial.GLOSSARY OF STOCK MARKET Hedge Making an investment to reduce the risk of adverse price movements in an asset. These 30 stocks. 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. Usually they represent about 80 to 85 percent of the market capitalization and trading. short and derivative positions in both domestic and international markets with the goal of generating high returns. Holding Period In a long position. for the purpose of hiding the actual order quantity. 7 . etc is made up of the highly traded stocks in that particular sector. Industry Group Companies in related businesses. they represent anything up to 85 per cent. in number. long. a hedge consists of taking an offsetting position in a related security. Index A statistical measure of change in an economy or a securities market. Iceberg Order A large single order that has been divided into smaller lots. usually on the same day. Utilities. Normally. Hedge Fund An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage. It is representative of the market sentiment. In a short sale. usually by the use of an automated program. banking. an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. In And Out The purchase and sale of a security within a short period of time. holding period refers to the time between an asset's purchase and its sale. Normally the index components are the highly traded stocks of that exchange. The BSE Sensex is based on 30 stocks as is New York 's Dow average. the length of time for which the short position is held. Income Fund A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends. are a miniscule percent of the total listed shares. but in terms of value of trade and market capitalization.
Contrary to what you might think after some time on the stock exchange. For the stock market player. its products. buy more or sell? Try and figure it out. but the system is so widespread and disparate and the judicial system. so time consuming and cumbersome that most insider trades are seldom reported or detected. that would be insider trading. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks. If you are holding cement shares. 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. when the inflation rate is 2 percent. 7 . rather than an increase in the companies own business activity. there really are such stocks. it means it is rising at the rate of 2 percent per year based on current prices. But the system is being tightened up so think twice before you place that buy order for XYZ shares. or securities not generally available to the public gained from a source inside the company. you can afford to speculate in higher risk stocks. Inorganic Growth A growth in the operations of a business that arises from mergers or takeovers. and. each of them having a different impact on the fundamentals of the cement industry. If you can't leave it your analyst. But remember you have to keep an eye on the fundamentals of the company. So. Inflation The rate at which the general level of prices for goods and services is rising. Index Fund A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance. this means he pays more for what he uses. For the common man. which it's numerous levels of appeals. In India . it could be both good and bad news. subsequently.GLOSSARY OF STOCK MARKET Inflation Increase in the prices for goods and services. should you hold on to them. Income Stocks Stocks that have consistently paid high dividends. Inflation Rate An important economic indicator. a surge in construction activities or higher government taxes? There could be a number of reasons. 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. Insider Information Any knowledge about a company. If cement prices are going up. purchasing power is falling. Consistent does not mean ?for ever?. It does not mean that anything you buy will now cost you 2 percent more than it did last time. SEBI is trying to improve its monitoring system. is it because there is a shortage in output. The rate at which prices are rising.
unit investment trusts. maintain markets for securities already distributed. For instance the trades during the first two hours or last two hours of the trading day. Investments may also include artwork. banks. consulting on mergers and acquisitions. so spend lavishly on her. certificates of deposit. financial institutions. Investment Bank An organization. as opposed to the current value based on the stock price. Institutional Ownership Shares of a company owned by pension funds. mutual funds. Payment made at periodic investments on an investment. An intermediary between an issuer of securities and the investing public. 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. Usually calculated by adding the current value of estimated future earning to the book value. usually a stock brokerage firm. Intrinsic Value A term favored by value oriented fundamental analysts to express the actual value of a corporation. trademarks. involved in taking a new company public IPO. and act as finders in private placement of securities. etc. Investment Anything of value purchased to provide capital appreciation and /or income. antiques and real estate. bonds. that would be speculation not investment). It is illegal when the material information is still nonpublic. handling corporate borrowing. Also. your wife's jeweler is an investment. Insider Trading The buying or selling of a security by someone who has access to material.Examples include stocks. either through secondary offering or through negotiations. Intraday Stock trading tracked in periods shorter than one day.GLOSSARY OF STOCK MARKET Insider Information Material information about a company's activities that has not been disclosed to the public. Intangibles Soft assets such as patents. 7 . money market funds and collectibles (not lottery tickets. nonpublic information about the security. etc. Insider trading can be illegal or legal depending on when the insider makes the trade. mutual fund. Interest Money charged by a lender to a borrower for the use of his or her money. They handle the distribution of blocks of previously issued securities.
Joint Venture Two companies joining together to start a new entity. not through debt but by offering the prospect of a high return for little or no investment. For individuals. IPO Lock-Up A contractual caveat referring to a period of time after a company has initially gone public. If the stock goes up. leverage can involve debt. keeping the current entities untouched to start a business. The market value of the company rises and so do its shares. For corporations. During these initial days of trading. warrants.GLOSSARY OF STOCK MARKET IPO (Initial Public Offering) Equity or other issue which is presented to the market for the first time.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. Lead Underwriter Brokerage house in charge of IPO. and finished goods that have not been shipped to customers. he repays the broker the loan amount and keeps the profit himself. as when an investor borrows money from his broker ?on margin' and so is able to buy more stock than he otherwise could. or the act of distributing such securities. Leverage Any means of increasing value and return by borrowing funds or committing less of one's own money. Because of this effect. 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. Interim Dividend A dividend payment made before a company's AGM and final financial statements. IRR (Internal Rate of Returns) Internal Rate of Return is the rate at which the lender accounts for interest. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself. work in process. 7 . the greater the financial leverage. Issue Any securities of a company. usually between 90 to 180 days. Rights. Inventory Raw materials. 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. company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. futures and option contracts also provide leverage. The more long-term debt there is. Key Performance Indicators .
A U. or commodity.S. 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. etc. Leveraged Buy Out Take over of a public corporation using borrowed funds. can make more money on an investment on the BSE than the U. The day-even minute . Depth of market to absorb buy and sell activity of even large orders at prices appropriate to supply and demand. contact. 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. which is a percentage of the market value of the stocks pledged. So is taxation based on those classifications? This is one of the reasons investors buy and sell stocks around the world. Mutual funds and other institutional buyers prefer high liquidity stocks so they can easily move in and out of positions. This decision-making is necessary to cut losses due to lower prices or sudden reverses in rising share prices. or money value of shares traded daily. Now suppose the market value of the pledged stocks goes down to Rs.the FII sees a better opportunity elsewhere in the world.50 (50 per cent). The market must also adapt quickly to new information and incorporate that information into the stock's price. security. Load A sales commission paid when you buy (front-end) or sell (back-end) a mutual fund.75. Limit Order A market order that specifies the highest or lowest price at which the customer is willing to trade securities. 7 . today. The legal definition of short term and long term capital gains varies from country. Say you have pledged stocks worth Rs. Liquidity A measure of the number of shares.S.100 on the market against which you are given a loan of Rs. It is the opposite of a short position. Liability A financial obligation or debt. Multiply this instance by thousands and you can imagine the margin pressure that is exerted on the market. An order to a broker to buy a certain stock (future. bourse. 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. To buy or hold a long position is the state of actually owning a stock. Long Position A bull position in a security. That's where the money will go. Liquidity is one of the most important characteristics.) only if the price rises to a specified level. investor (FII). Load Funds Mutual funds that carry a sales commission.
This can be expressed daily. Lot A fixed minimum number in which shares are bought and sold. M&A . 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. For example. this expression is used to describe a very bad investment that causes an investor to lose everything he or she has invested. anything less makes odd lots.Mergers And Acquisitions A merger is a combination of two companies to form a new company. Trading lots can comprise 5.200. Long Term Holding an asset for an extended period of time. but the low for the year can be 5. or for a 52 week period. 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 physical shares is 50 percent (that is you can borrow only up to 50 percent of the values of your pledged shares. a long-term asset can be held for as little as one year or for as long as 15 years or more. Depending on the type of security. the low for the day can be 10. 50 or 100 shares depending on the face value of shares. monthly. etc. His exposure limit is fixed based on the margin money brought in by him. The margin for demat shares is35 percent. weekly. Helps you understand whether today's price is an aberration or a logical extensive of a trend. then it will have to pledge shares worth Rs. An upfront payment made by the customer to take a position in the market. while an acquisition is the purchase of one company by another with no new company being formed.GLOSSARY OF STOCK MARKET Long-term Investments Balance sheet item reflecting investments in other companies. Margin Borrowed money that is used to purchase securities. Limit Order An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Margins are at the sole discretion of the bank and may even vary from scrip to scrip.100. The difference in the value of shares pledged and the loan amount sanctioned. Such number makes round lots. 10. 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. Losing Your Shirt In the investment world. 7 . If one wants to borrow Rs.
On compulsorily dematerialized shares for all classes of investors. Mark to Market A notional profit or loss of a long or short position as compared to the current market price. Conversely. Market Open/Close Price. Market Perform Market perform is a neutral assessment of a stock and is neither strongly positive or negative.GLOSSARY OF STOCK MARKET Market Capitalization Total market value of the company on the stock exchange. the market lot is just one share. Market Order An order where no price specification is mentioned at the time of placement and market prices apply. Also known as "market price". however mergers increase market liquidity. Market Timing The act of attempting to predict the future direction of the market. It is the last sale price of a particular stock on the previous day. Market Value The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. IPO's reduce market liquidity. draft. Market Price It is the price a particular stock is currently selling for during the operating hours of the stock market. 7 . Additionally. Market lots The minimum trading lot on a stock exchange. Market Liquidity Use to track money flow into and out of the markets. negative case flow may indicate that fund managers may need to liquidate some holdings to meet redemption requirements. Total number of shares multiplied by the official price quoted on the stock exchange. Positive cash flow can serve as an indicator that fund managers have cash to put into the markets at the next buying opportunity. Maturity Date The date on which the principal amount of a note. Authorization for a broker to buy or sell securities at the best price that can be negotiated at the moment. Medium Term An intermediate period of time to hold an asset. typically through the use of technical indicators or economic data.
if the value of some shares drop in the market they may be offset by the other shares which have risen in price. The Reserve Bank of India attempts to control the growth of the economy by regulating the increase or decrease in money supply. bonds and other securities. and increasing earnings forecasts.000 crore Monetary Policy The actions of a reserve bank of india. Mutual Fund A security that gives small investors access to a well-diversified portfolio of equities. The linger the averaging period. Money Market The securities market dealing in short-term debt and monetary instruments. Moving Average A rolling set of averages calculated over a time series of values. 7 . In today's market. Municipal Bonds Debt instrument issued by a state or local agency. It is in your interest to pledge the shares of an number of companies when you take a loan. Stocks are said to be in an uptrend when above their MA and in a downtrend when below. Not for amateur investors. The most widely followed MAs are 50 days and 200 days. it's best to avoid stocks trading below both their 50 -and 200-day MAs. in case of IDBI Bank the shares to be offered as security should be of at least of two companies. Minimum Number of Companies Accepted The minimum number of companies. As a general rule. 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. For example. Momentum Analysis Usually involves looking for stocks in a strong uptrend (high relative strength). strong earnings growth. Each shareholder participates in the gain or loss of the fund. which in turn affects interest rates. Money Supply The amount of money in circulation. Banks also profitability of a number of companies. whose shares have to be offered as security for obtaining loans. Moving averages are one way to view historical price levels. The 10-day Moving Average (MA) is the average closing price for the past 10 days. Many investors look at both. the more lag you will see between the average and the most recent prices.GLOSSARY OF STOCK MARKET Mid Cap Companies having a market capitalization between Rs 500 crore and Rs 1. 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. may include relative strength only. that determine the size and rate of growth of the money supply. Units are issued and can be redeemed as needed. A moving average represents data in a manner that smoothens fluctuations and highlights possible trends. It is possible to weight more recent prices by linearly or exponentially smoothing the average lines.
is calculated throughout the trading day. Non-operating Expense Expenses not due to the basic business of company. or shareholders. like other stock.GLOSSARY OF STOCK MARKET Mutual Fund A portfolio of stocks. are readily transferable in the open market and are bought and sold. These funds do not accept new contributions from investors. Net Asset Value per Share Equity excluding minority interests. some of which are listed on stock Exchanges. they issue more units as people want them. Open-end funds are so called because their capitalization is not fixed. but only reinvest the return on the existing portfolio. 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. Net Profit Ratio Profit from operations as a percentage of revenue. This means that each company's security affects the Index in proportion to its market by total shares outstanding. stand ready to buy back their old shares and are not normally listed in exchanges. Units in closed -end funds.S. NASDAQ Composite Index The NASDAQ Composite Index measures all NASDAQ domestic and non-U. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. There are two types of mutual funds. divided by number of shares. The mutual funds which are insurance linked.The Index is market value weighted. NAV .To simplify. the NAV is the value today of your unit. The return on the funds holdings is distributed back to its contributors. also there are several open ended mutual funds which are insurance linked. and is related to the total value of the Index. 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. Non-operating Income Income not derived from basic business of company 7 . open and closed ended. Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund. Open -end funds sells their own shares to investors. They also have the benefit of professional managers overseeing their money who have the time and expertise to analyze and pick securities. based common stocks listed on the NASDAQ stock Market.NAV varies on a day-to-day basis since the market value of securities changes regularly. if you hold a unit in a mutual fund. minus various fees and commissions.Net Asset Value The total value of the fund's portfolio less liabilities. Many open-ended funds allow contributors extra perks. No-load Fund0073 Mutual funds that do not carry a sales commission. The total market value divided by the total number of units of the scheme on a specific date is the NAV. Its basically marketing with for an investor with limited funds and/or limited knowledge of the market. such as the ability to write cheques against their units.
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. it costs less to trade in round lots. Most exchange has limits of how high or low the stock can trade on the following day. but subsequently panicking and selling it the following day. is the stock 7 . If demand is high enough. Open-end funds also buy back shares when investors wish to sell. For example. Offering Price The price at which publicly issued securities are made available for purchase. Generally. the fund will continue to issue shares no matter how many investors there are. Opening Price Opening price is normally determined by the price at which a stock finished selling on the previous day. One Night Stand Investment Buying a security with the intention of holding it for the long term. Open End Fund A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. Offer The price at which a share is available in the market. 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. Open Order A limit order that does not expire at the end of the trading day. It is like a limit or circuit. and is based on a percentage of the last traded of the previous day.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. customer bankruptcies and the like. NSE National Stock Exchange Odd Lots Stocks sold in quantities of less than a specified minimum number.
A single security or a market which. Order Cancellation A facility available in the trading system where one is allowed to cancel the order placed earlier. SEBI starts a probe. accounts receivable and accounts payable also affect cash flow.00 the previous day then the maximum or minimum opening price the following day will be 22. Usually. or just about anything else the company feels like excluding to make its earnings look better. ongoing earnings.GLOSSARY OF STOCK MARKET exchange has a upper or lower limit of 10. This excludes any profits or growth acquired from takeovers. Operating Earnings Earnings without considering certain expenses such as inventory write downs. has left prices "too high". Oversubscribed A situation in which the demand for an initial public offering of securities exceeds the number of shares issued. Also known as core earnings. Order Modification A facility available in the trading system where one is allowed to modify an earlier order. severance pay.00 and 18. Also applies sometimes to overbought situations. it is believed has declined to an unreasonable level. Also see Free Cash Flow. Organic Growth The growth rate that a company can achieve by increasing output and enhancing sales. it is sometimes said. Oversold The reverse of over-bought. 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. earnings excluding special items or operating earnings. acquisitions or mergers. This reduces the scope of overnight off-market deals which are illegal. Operating Margin Operating income divided by sales. Changes in levels of inventories.00. and if XYZ stock finished selling ay 20. if they shriek loud enough. 7 . depreciation and amortization charges. Operating Cash Flow Surplus cash generated from a company's basic operations without regard to income tax entries such as depreciation and amortization. Operating Income Sales minus all expenses except income taxes and other items not relaxed to basic business. this is where everybody starts screaming "scam" and.
such as stocks. Pledge To deposit securities with a lender as security for money borrowed.held by an investor. For instance. Pay In The designated day on which the members pay securities and fund to the clearing house. 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. When a bull market is raging. It is not unusual. Par Value The face value of a bond. Payout Ratio Percentage of earnings paid out in dividends. Penny Stocks This term is typical to the USA stock markets. Portfolio The group of assets . Par Value The face value or the price of a share. A small group of informed people attempt to push down a stock by spreading false information and rumors. Poison Pill Steps taken by a corporation to thwart a hostile takeover attempt. Low-priced issues. often highly speculative. These stocks offer larger returns but at higher risk. a company could issue rights to purchase shares at a substantial discount after a merger. In India they are called low-Capped stocks and BSE has a separate index for them.GLOSSARY OF STOCK MARKET P/E Ratio . to find the index for these stocks outpacing the Sensex. It is not the market price. Frequently used as a term of disparagement although some penny stocks have developed into investment-caliber issues. or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger. If they are successful. bonds and mutuals . debenture. Poop And Scoop A highly illegal practice occurring mainly on the Internet. 7 . selling at less than $1 a share. or bond that is written on the certificate. they can purchase the stock at bargain prices.Price-Earnings Ratio PE ratio or PE multiples is the ratio arrived by dividing Current market Price by Earnings per share of that stock.
For bonds and preferred stock. The fixed income stream of preferred stock makes it similar in may ways to bonds. you can congratulate yourself on a wise decision. and should earnings rise significantly the preferred holder is stuck with the same fixed dividend while common holders collect more. It is like a fixed deposit in a bank. This action pushes prices down temporarily. Public Company A company that has issued securities through an initial public offering and which are traded on at least one stock exchange. If interest rates fall. Debt instruments. Private Company A company whose ownership is private. the premium is the amount by which the price exceeds the face. Pro-Rata Used to describe a proportionate allocation. 7 . misleading. Profit Taking The action of selling stock to cash in on a sharp rise. However. You are stuck with a fixed return regardless of how high interest rates climb. Premium The difference between the higher price paid for a fixed-income security and the security's face amount at issue. Convertible preferred shares can be converted into common stock according to predetermined conditions. it carries no voting rights. 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. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings and have priority over common stock in the payment of dividends.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. you have to pay a little extra upfront if you want to be shielded from the fluctuations of enquiry stock. Pump And Dump A scheme attempting to boost the price of a stock through recommendations based on false. Price Target A projected price level as stated by an investment analyst or advisor. or greatly exaggerated statements. For options markets. On the other hand. In other words. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. the premium is synonymous with the options price. or par value.
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. Included in earnings reports are items such as net income. Resistance The price at which a stock or market can trade. if you have not held the fund for the prescribed minimum time. Quote Prices at which a share can be bought or sold. rights or bonus. or mutual fund. earnings per share. 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. 7 . such as a stock. Research and Development (R&D) Costs of developing new products and services. earnings from continuing operations and net sales.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. The highest bid to buy and the lowest offer to sell any stock at a given time. for a certain period of time. Rally A period of sustained increases in the prices of stocks or indexes. but which it cannot exceed. Rematerialisation Process of converting the shares from electronic form to physical form. which compares the quarter of one year (Q1 2007) to the same quarter of the previous year (Q1 2006). Quick Ratio Cash and cash equivalents plus accounts receivables divided by current liabilities.GLOSSARY OF STOCK MARKET QOQ . Quarterly Earnings Report A quarterly filing made by public companies to report their performance. bond. This is similar to the year over year measure. Redemption The return of an investor's principal in a security. Redemption Fee Fee charged when you sell a mutual fund.
GLOSSARY OF STOCK MARKET Resistance Historical price level at which rising prices have stopped rising and either moved sideways or reversed direction. Return on Assets After tax income divided by total assets. usually seen as a price chart pattern.Profit after tax and minority interests as a percentage of average equity excluding minority interests.Securities And Exchange Board Of India The regulatory body for the investment market in India. plus other long term liabilities. SEBI . Round Lots Stocks sold in specified share quantities. Saturday Night Special A slang term used to refer to a surprise takeover attempt. Profit from operations plus financial income as a percentage of average capital employed. or risen to resistance. Rollover A point where a stock price has fallen to support. Road Show Presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offering. it is issued in a fixed ratio to those shares which are already held. Return on investments After tax income (latest 12 months) divided by total of shareholders equity plus long term debt. 7 . 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. Risk The potential to lose money (principal and any earnings) or not to make on an investment. Revenue A company's sales. Return on Equity After tax income (latest 12 months) divided by shareholders equity (from balance sheet). and then reverses the up or down trend convincingly.
A stoplimit order will be executed at a specified price (or better) after a given stop price has been reached. Spinoff The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. Shareholder Any person. company. Shares A unit of ownership interest in a corporation or financial asset. That is. the date by which a buyer must pay for the securities delivered by the seller. or arithmetic. 7 . It is a company with a market capitalization less than Rs 500 crore. Share Capital Funds raised by issuing shares in return for cash or other considerations. Settlement Date The date by which an executed security trade must be settled. or other institution that owns at least 1 share in a company.SMA A simple.the benchmark index of the Bombay Stock Exchange (BSE).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. 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. Stop-Limit Order An order placed with a broker that combines the features of stop order with those of a limit order. It is composed of 30 of the largest and most actively-traded stocks on the BSE. Simple Moving Average . Short Term Holding an asset for short period of time. Small Cap Refers to stocks with a relatively small market capitalization. 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. The two main types of shares are common shares and preferred shares. Sensex An abbreviation of the Bombay Exchange Sensitive Index (Sensex) .
Support The price level which. and therefore becomes a part owner of the corporation. 7 . typically provided by angel (venture) investors. Settlement The process of paying for stocks you purchase. Short Covering Buying stock to return stock previously borrowed to make delivery on a short sale. unless you are very sure of yourself. or receiving credit from your broker for the stocks you sell. For instance. You will get the water as a matter of courtesy. Not for the common investor. This does not mean you should walk into a Reliance office and ask for a glass of water. your profit is 15. etc. pilot projects. Short sellers lose when the price of the stock ascends rather than descends.00 a share. or 1500. Seed Capital A small amount of capital provided to an entrepreneur.00.00 a share and the price of the stock drops to 35. short selling is based on the anticipation that a particular security price will go down. a stock has had difficulty falling below.00. Theoretically. A stock purchased at 10. commercial production or marketing. historically. Shareholders Equity The difference between the totals of assets and liabilities shown on a company's balance sheet.00 a share can. not covering launch expenses.Book value is the shareholders equity divided by the number of outstanding shares. usually for product development. beta stage development. only fall to zero and that is the maximum loss that would be incurred. Shares A unit representing a measure of ownership in a corporation. however. 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. Most stock transactions must be settled within three business days.GLOSSARY OF STOCK MARKET Stop-Loss Order An order placed with a broker to sell a security when it reaches a certain price. if you sell short 100 shares of XYZ Corporation at 50. and make a profit. you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker. Selling Short The reverse of the usual stock market technique. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. Carefully check all tips on short sales before deciding to act on them. Then as the price of that security declines. It is designed to limit an investor's loss on a security position. Shareholder A person who buys stock in a corporation. but it will be accompanied by some odd looks.
a company declares a "3 for 1 " stock split. as of a particular date. A short sale can only take place on an "up tick"" or 'zero-plus tick'. A reverse split is where the total number of shares is decreased and the stock price increases proportionally. The player should ascertain these rules from a registered broker of the exchange. As in a split the total stock holders equity remains the same.GLOSSARY OF STOCK MARKET Short Position Stock options. (Also called cash trading) Spread The spread is the difference between the bid price and the offer price. 7 . Speculators Investors who seek large capital gains through relatively risky investments. Standard Deviation A measure of a mutual fund or stock's historical volatility. Short-term Investments Stocks and other liquid securities. Short position also means the total amount of stock an individual has sold short and has not covered. Spot Trading Trading in commodities that will be delivered immediately. This increase in the number of shares result in the proportionate decrease of share price. Split An increase in the number of shares outstanding. a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share. To go short you "borrow" stock from the broker/dealer. with the intent to buy the stock back at a lower price than you had initially sold it for. then sell the stock. Short-term Gain The profit realized from the sale of securities or other capital assets held twelve months or less. The shareholders equity does not change. the price of the stock is currently 60 a share. Most stock exchange have a rigid rules regarding short selling. Short Sale To sell a stock you do not currently own. or future contracts sold and not covered as of particular date. Short-term Debt Borrowing that must be repaid within one year. Solvency Ratio Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end. For example.
For examples. This order is very often referred to as a "stop loss" order. usually seen as a price chart pattern Takeover A corporate action where an acquiring company makes a bid for an acquiree. Stops Can be either a buy or a sell stop. a two-for-one split means that shareholders will receive two new shares for each old share. usually watermarked and patterned to make it hard to forge. Stop Loss Order An order placed with a "trigger price". A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices.GLOSSARY OF STOCK MARKET Stock Certificate The actual document that is evidence of stock ownership. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts. because it prevents the security from falling below a certain price. 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.These order types instruct the broker to execute at market once a specific price level is reached and traded at. This is usually n\brought about by the division of existing shares. a reverse stock split brings about the decrease in the number of shares in a corporation. making a total of three. Sub-accounts A sub-account includes institutions (established or incorporated outside India ) and those funds. It is placed to minimize the losses and the order cab be either for a purchase or a sale. Stock Split An increase in the number of outstanding shares in a corporation. If the target company is publicly traded. the acquiring company will make an offer for the outstanding shares. Alternately. and (2) Foreign corporate and foreign individuals who are not allowed to exceed 5 percent of the issued capital. 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. 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. Stop Order An order to buy or sell a security conditioned on a specific price. 7 . Support Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction.
A) will bring you information about Ford Motor Company. Technical analysts do not attempt to measure a security's intrinsic value.S.) on the exchange it is trading on and is used to retrieve information about that security from that exchange. Top Line A reference to the gross sales or revenues of a company. For example. option. Trailing EPS The sum of a company's earnings per share for the previous four quarters. typically for market expansion. Technical Analysis An analysis of a stock or future based strictly on numbers. but instead use charts and other tools to identify patterns that can suggest future activity. the symbol ?f? on the New York Stock Exchange (U. Technical Rally An upward movement in a security's price following a declining trend. Tick The minimum upward or downward movement in the price of a security. Third Stage Capital Capital provided to an enterprise that has an established commercial production and basic marketing setup. but still higher than the nearest preceding price.GLOSSARY OF STOCK MARKET Technical Analysis A method of evaluating securities by analyzing statistics generated by market activity. option etc. Ticker Symbol A ticker symbol represents a particular security (company. Ticker A ticker is a trading screen information display showing the current price. Tick The tick is the direction in which the price of stock moved on its last sale. etc. future. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market. ?ONGC? 7 . product development etc. The method includes analysis of price patterns. 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. volume. A zero-plus tick means the transaction was at the same price as the one before. acquisitions. Tangible Book Value Book value minus goodwill and intangible assets. Don't try to understand it unless you are a maths gold medalist. etc of a particular stock. such as past prices and volume. The movement is caused by technical as opposed to fundamental factors affecting sentiment.
Ticker symbols can be used to retrieve information from a financial publication such as your daily paper's business section. Commission varies with the size of the trade. Undersubscribed A situation in which the demand for an initial public offering of securities is less than the number of shares issued. Trailing Twelve Months (TTM) The last four reported quarters. changes all the stocks in its portfolio once a year. The higher the turnover rate. Treasury Notes Debt securities issued by the central government that mature over a specified number of years. Underperform An analyst recommendation that means a stock is expected to do slightly worse than the market return. sold at a discount and redeemed at full face value. The best measure of a firm's total debt. the more volatile the stock and the greater potential for wider swings in price (both ways).GLOSSARY OF STOCK MARKET will show you the information of the Oil and Natural Gas Commission on the National Stock Exchange of India. Turnover Rate Turnover is the relationship between the float and the average monthly volume of a stock. including the broker's commission and taxes. Total liabilities All monies owed regardless of how classified on the balance sheet. on average. Today. Top A technical analysis term meaning the stock price is going down from here. 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. Transaction Costs The costs of trading securities. 100 per cent turnover means a fund. Turnover Ratio How often a mutual fund changes its portfolio holdings. ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly. 7 . Treasury Bills Shorts-term debt issued by the central government.
Undervalued A stock trading below its fair value. he's taking all the risks on an untried idea. security. 7 . without security/charge on assets) but also brings onto the table extremely Valuable domain knowledge. more risky venture. in exchange for an ownership percentage.GLOSSARY OF STOCK MARKET Upgrade A positive change in the rating of a security. Venture Capital Professional moneys co-invested with the entrepreneur usually to fund an early stage. A venture capitalist not only brings in moneys as ?equity capital' (that is. buy) into its own books. or transaction. His return is high but. It is calculated by multiplying the volume traded by the average sale price. or other units of a security traded in a certain time period. He is a fixed interval investor. Some countries also provide for underwriting on best effort basis Valuation The process of determining the current worth of an asset or company. bonds. then. failing which the firm would take the securities being offered (that is. Venture Capitalist An investor involved in financing a company's operations before going public. Underwriter An investment banking firm committed to successful distribution of a public issue. strategic advice. Volume The total number of shares. etc. Offsetting the high risk the investor takes is the promise of high return on the investment. the venture capitalist will nurse you through. 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. business contacts. Vested Interest A financial or personal stake one entity has in an asset. Value Traded This is the total monetary value of all trading in a security for the market day. 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. Volatility Volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. brand-equity.
which is traded on a Stock Exchange's equity market. Working Capital Current assets minus current liabilities. 7 . Dalal Street is the Indian counterpart in Mumbai. on an annualized basis. Wall Street A street in the city of Manhattan . Warrants may be issued over securities such as shares in a company.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. XD .Dividend Buying the shares trading in XD will not entitle you for the dividend which is already declared but not yet been issued. a currency. an index or a commodity.Ex.GLOSSARY OF STOCK MARKET Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. 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. YOY . Zero Dividend Preferences Zero dividend preference shares are Preference shares which receive no dividends throughout their lives. Yield Yield is the annual rate of return for any investment and is expressed as a percentage.
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