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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
Bottom Fisher An investor who looks for bargains among stocks whose prices have recently dropped dramatically. Boom A period of time during which sales or business activity increases rapidly. 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. The investor believes that the recent price drop is temporary and a recovery is soon to follow. commodity. 7 . Book Value The net asset value of a company.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. index or economic cycle in a given time period. 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. Book value Total shareholder equity from the balance sheet divided by the number of shares outstanding. at which point you get back your principal investment. Bottom The lowest point or price reached by a financial security. calculated by total assets minus intangible assets (patents. When the market expects a company to come out with a Bonus Issue. Following a bonus issue. the price of the shares normally goes up. Bonus Shares Shares allotted to the existing shareholders by capitalizing the reserves into additional capital. the proportional ownership of shareholders does not change. goodwill) and liabilities. 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. though the number of total shares increase. which is followed by a steady increase.
limit their services to trade executions and collect substantially lower fees. Discount brokers are not in the business of giving investment advice they usually work on salary. Bubble A surge in equity prices. Broker An agent who handles the public's orders to buy and sell stocks. usually so structured as to be repaid from proceeds of a public offering. Bridge/Mezzanine Funding Financing for a company expecting to go public within 6-12 months. commodities or other property. often more than warranted by the fundamentals and usually in a particular sector. or to establish a floor price for public offer. which is usually followed by heavy volume and increased volatility. there are 30 diversified stocks traded on the Mumbai Stock Exchange which are thought to be representative of the market in general. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support. thereby generating income on the number of his clients' trades. Broker An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. A full service account representative usually works on a commission basis. 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. followed by a drastic drop in prices as a massive selloff occurs. research and advice. 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 .GLOSSARY OF STOCK MARKET Breakout A price movement through an identified level of support or resistance. Full service brokers are those that provide a wide range of investment services. 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. In this index. which then carries out the transactions on the investor's behalf. Bourse A stock exchange Breakout A technical analysis term meaning a stock price has moved above or below a previous trading range.
it can be executed depending on which type of exchange the stock is listed. or (ii) the outcry method. Bull Market A financial market of a certain group of shares in which prices are rising or are expected to rise. Amateur investors could lose a lot of money in this phase of the market. They hold back money in this phase of the market. Bullion Gold and silver that is officially recognized as high quality (at least 99. The total time is an estimated 20 minutes.5% pure). that is the share prices reverse direction. regardless of fluctuations in the market. Buy and Hold A passive investment strategy in which an investor buys stocks and holds them for a long period of time. Buy A recommendation to purchase a specific security. Rising stock prices (generally occur during boom years). invest a lesser sum. There will come a time when the Bull Run stops. Bull Market A rising market where buyers far outnumber the sellers. A critical decision is when to sell on a bull market. It takes time for a stock order to be sent by the broker to the stock exchange floor. whereas the second can be a little time consuming. 20 percent or wherever) and then sell at that point. 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. 7 . which is executed on the floor of the exchange. and is in the form of bars rather than coins. 15. There are two methods of execution (i) the online exchange which is connected via satellite.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. 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. Sell immediately and rest content that you have been wise enough to book profits at different points of the Bull Run . the best procedure is to decide within yourself that you will satisfied by a specified margin eg profit on your investment (say. Duck if they take a swing at you. The first method is instantaneous. If the Bull Run still continues. too. A person on the stock market floor bids to find a buyer for the stock. decide your margin of profit. You then offer your sympathy to investors who did not disinvest and had to bear heavy loses. and repeat the procedure. 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. that is. Ignore them. sell your shares and put the money in your bank. Book your specified profit. Anything that goes up has to come down is a law of physics that holds well in the stock market. They hold back selling in expectation of still higher gains and sometimes are left high and dry when the market crashes. Buy Transaction When you place an order for stock. Your losses are thus restricted to the period after your last profit taking. 10.
funded by someone else. Try doing this in your personal life and you will probably go to jail. In the corporate world all major deals are leveraged. Capital gains distributions (if any) are usually made annually. Capital Gains Tax A type of tax levied on capital gains incurred by individuals and corporations. or to eliminate any threats by shareholders who may be looking for a controlling stake. that is. CAGR The year-over-year growth rate of an investment over a specified period of time. Buyout Funding Funds provided to enable a corporation to acquire another enterprise or product line or business. Capital Turnover Annual total Revenue as a percentage of total assets. equipment and other items with a useful lifetime exceeding one year are categorized as assets to be depreciated over a number of years. 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. Companies will buyback shares either to increase the value of shares still available (reducing supply). Capitalization The value of a company as measured by the market price of its common shares. 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 Gain An increase in the value of a capital asset (investment or real estate) that gives it a higher worth 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. Capital Gains Distribution Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. 7 . Capital Employed Total liabilities and equity less non-interest bearing liabilities. multiplied by the total number of shares that have been issued Capitalize When costs of items such as buildings. The gain is not realized until the asset is sold. rather than being expensed in the year of purchase.
and is now selling for 11. Closely Held Shares The shares held by individuals closely related to a company. temporarily or permanently. Banks are reluctant to authorize loans against assets which have encumbrances and prefer a clear title. This represents an encumbrance on the title. The +1. as well as all cash outflows that pay for business activities and investments during a given quarter. That asset be mortgaged.50 is the change in stock price. Cash Flow per Share Cash flow from operating activities divided by average number of shares. Cash Settlement Payment for transactions done in one settlement on the due date. 7 . if stock XYZ opened at 10.GLOSSARY OF STOCK MARKET Carry Forward Settlement where positions are carried forward from one settlement to another settlement. Circuit Breaker A mechanism used to restrain the market when it gets overheated. 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. The netted purchase and sale positions of the trading.50 it would be up +1. sold. Change in Stock Price The change in stock price is recorded in points. The Exchange may relax the limit after a cooling off period of about half an hour.50. Cash Flow Statement This document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources. rented or otherwise transferred. The fraction amount depends on the security being traded. 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. Clearing House It is a legal counter party to both legs of every trade. For example.
try defaulting on a loan . This will also give the holder the right to vote on corporate issues such as board elections and corporate policy. giving the holder an ownership stake in the company.GLOSSARY OF STOCK MARKET Closing Price The final price at which a security is traded on a given trading day. 7 . It includes negotiable instruments. Commodity A basic good used in commerce that is interchangeable with other commodities of the same type. fiscal year and next fiscal year. Common Stock Equity or ownership in a corporation. Common Shareholder An individual.the bank will encase your collateral so fast you'll never know what hit you till it is too late. business or institution that holds common shares in a company. The previous close is the price a stock closed on the previous day. along with the right to any common dividend payments. shares or goods and titles to immovable assets. Commission A fee charged by brokers for their service in facilitating investment has to be handled through brokers registered on that exchange. Share price is determined by supply and demand for fund Collateral It is used to provide a guarantee for a loan. Commodity Index An index that tracks a basket of commodities to measure their performance. Generally. Close The closing price is the last traded price for the stock on a particular day. If you feel that your bank works at a snail's pace. Commodities are most often used as inputs in the production of other goods or services. Stockholders participate in a company's profits or losses through dividends and changes in the stock's market value. these figures are most often made for the quarter. Can be encased by the bank if you default in any way on repayment of interest or principle of your loan or other obligations. Consensus Estimate A figure based on the combined estimates of the analysts covering a public company. Closed-End Fund Investors of such a fund buy shares from other share holders and sell shares to other investors. analysts give a consensus for a company's earnings per share and revenue.
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 .GLOSSARY OF STOCK MARKET Correction Corrections are generally temporary price declines. Debt An amount of money borrowed and owed by one party to another. Dalal Street A term that refers to the Bombay Stock Exchange. the major stock exchange in India. Crash A major decline in a financial market. Day Trader A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions.Dematerialization The move from physical certificates to electronic book keeping. Day Order The quantity that remains untraded is not cancelled until the end of the day. Default Failure to pay back a debt. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. 7 . Most trades are entered and closed out within the same day. interrupting an uptrend in the market or asset. De-merger A corporate strategy to sell off subsidiaries or divisions of a company. Debt to Equity (Total) Total (short and long term) debt divided by total shareholder equity. Debenture A type of debt instrument that is not secured by physical asset or collateral.
In other words. Depositories An organization which holds securities of investors. Depository Participant (DP) A DP is a representative of the depository in the system. Debt Fund An investment pool. the shares are 'dematerialized'. Deferred revenue When a share is bought or sold for the purpose of receiving or effecting deliveries. often caused by a reduction in the supply of money or credit. The derivative is a contract between two or more parties. The DP maintains the client's securities account balances and keeps him informed about the status of holdings. facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. can become DPs. a high ratio may indicate high risk. According to SEBI regulations. 100 crore. custodians. 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. 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). banks. It is comparable with a branch of 7 . showing the relationship between long-term funds provided by creditors and funds provided by shareholder. etc. low ratio may indicate low risk. than equity funds because the overall management costs are lower. Deflation A general decline in prices. in which core holdings are fixed income investments. transfers securities between accounts on the instruction of the account holder. bonds. financial institutions (FI's). It can be compared with a bank. Minimum net worth stipulation required by SEBI for registering a DP is Rs. Derivative A security whose price is dependent upon or derived from one or more underlying assets. Its value is determined by fluctuations in the underlying asset like commodities. It is the opposite of inflation. Delisting The removal of a listed security from the exchange on which it trades. on average. stocks. such as a mutual fund or ETF.GLOSSARY OF STOCK MARKET Debt to Equity Ratio Long-term debt divided by shareholders' equity.The fee ratios on debt funds are lower. stockbrokers.
GLOSSARY OF STOCK MARKET a bank if a Depository is likened to a bank. commodities. an investor would not want to combine large investment positions in airlines. etc. yield higher returns and pose a lower risk than any individual investment found within the portfolio. bullion. and vice versa. don't allow them to accumulate too long. A DP is offered depository services only after it gets proper registration from SEBI. Any increase over your purchase price is a gain. Depreciation A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period. For example. decided by the board of directors. Never forget. on average. Derivatives A financial contract between two or more parties based on the future value of an underlying asset. A precept common to all businesses: buy low sell high. Discount The difference between a bond's face value and when to trade a security. Proper investment diversification is intended to reduce the risk inherent in particular securities. trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. Options and similar other instruments are examples. The rationale behind this technique contends that a portfolio of different kinds of investments will. future. etc. currency. to a class of its shareholders. 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). The value is totally 'derived' from the value of the underlying asset such as securities. diversification is essentially for investors not traders. Dividend Distribution of a portion of a company's earnings. Book your profits (or cut your losses) as you go. live stock. option. A lot of thought goes into deciding on 7 . Diversification The acquisition of a group of assets in which returns on the assets are not directly related over time. 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. it is any hybrid contract of a pre-determined fixed duration such as forward. Of course. 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. For instance. 'highs' and 'lows' are relative not absolute. the value of a call option on reliance (derivative) fluctuates with the price of reliance stock. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables.
Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. if a company is stingy on its dividend policy. But remember. Dow Jones & Company. the end of a financial year. Just a few of the 30 companies in the DJIA are: American Express. Coca-Cola. where the corporation keeps its entire earnings. 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. Chevron.GLOSSARY OF STOCK MARKET investment avenues because you are not looking so much at the present status of the industry but at its short. 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. in turn. Bethlehem Steel. Dividend Per Share The amount of dividend paid out per share. At the same time. Of course. This calls for clear thinking and common sense. also calculates averages for utility stocks. Generally. you also have to keep in touch with global trends. the percentage of corporate earnings paid out runs from 40 to 80 per cent. You can do it! Dividend Cash payment made to the shareholders out of the profits of the company. The price used is usually the market price at the end of the period under review. 7 . General Motors and IBM. You will not be directly concerned at what happens on the Dow. In this index. It is not mandatory for accompany to distribute dividends. A stock dividend gives the shareholders additional shares of stock or a fraction thereof. the Dow average is global leader and is usually reflected by exchange around the world. (Dividend rate x nominal value of share)/100. a financial and investment publisher based in New York . Disney. Documentation The papers that are needed to process your loan application. 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 . rather than cash. This. there are 30 industrial stocks thought to be representative of industrial stocks in general. Boeing. even zero.or mid-term future. but you should also learn to recognize factors that may impact a particular industry. Dividend Yield Total of 12-months' dividend paid (historical or forecast) divided by the latest share price. requires that you take into an account innumerable factors that could affect the health of the industry. you can always take an analyst's help. The limit fluctuates in line with the market price of the shares. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices. but many times it is less. AT&T. It is like an overdraft limit. for instance. transportation stocks and bonds.
employee benefit plan designed to invest primarily in the stock of the sponsoring employer. Also known as operating income. They lose interest. If the market price is greater than the equity per share. 7 . Effective Interest Rates The compounded interest rate calculated on the actual inflows and outflows of cash. you see. 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. the market believes that the company will generate extra value. Emerging Markets Developing countries. Equity per Share Shows how much of a company's equity one share represents. Usually when a merger. EPS . sale or acquisition of a company is intended Downgrade A negative change in the rating of a security. Equity divided by number of shares at the close of the period. Due Diligence .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. EMI Equated monthly installments to be paid by the borrower in repayment of the loan taken (includes principal and interest).DD An investigation or audit of a potential investment. Equities Another name for shares. In the bizarre world of loan finance.Earnings Before Interest. Taxes.Employee Stock Ownership Plan A qualified. lenders prefer that you do not repay your loan before the agreed term.Earnings Per Share EPS is the earning on each share of a company ESOP .
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'. The seller remains the beneficiary. Exposure Limit The limit allowed to the broker by his exchange or to the customer by broker. well-diversified group of stocks. Expiry Date The date and time after which a writer of an option cannot exercise his rights. Exponential Moving Average . Equity Fund A mutual fund that invests in a broad. The day after dividends is paid! Ex Rights A share is described as ex rights when the buyer is not entitled for the Rights.Foreign Currency Convertible Bond A type of convertible bond issued in a currency different than the issuer's domestic currency. Extended Hours Trading Trades executed before or beyond normal market hours. 7 . that is. 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. Ex rights shares are cheaper than Cum Rights and offer a good 'buy' opportunity for investment oriented players. Exposure When the value of your asset/product pledged with a bank against loan is reduced by market price fluctuation or for other reasons. Ex-Dividend The trading of shares when a declared dividend belongs to the seller rather than the buyer. FCCB .EMA A type of moving average that is similar to a simple moving average. Earnings Estimate An analyst's estimate for a company's future quarterly or annual earnings. except that more weight is given to the latest data. And when a bank feels insecure. the bank feels insecure about the return of the loan. 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.
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. Face Value The nominal value of a security stated by the issuer. Fund Of Funds A mutual fund that invests in other mutual funds. For shares. Flat Rate of Interest Percentage representation of the amount of annual interest on the total loan amount. Float The number of shares outstanding minus what is owned by insiders and what the company is holding back (treasury stock. usually where the company being invested in is controlled by the foreign corporation. 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. The delivery period. FII . 7 .Foreign Direct Investment An investment abroad. Fiscal Year Any 12-month period that a company uses for accounting purposes. Futures Contract An agreement between parties for specified asses for performance on a fixed day in future. 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. it is the original cost of the share shown on the certificate.GLOSSARY OF STOCK MARKET FDI . 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. 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.) 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.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.
7 . and/or research and development. 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. Growth Fund A diversified portfolio of stocks that has capital appreciation as its primary goal. GDP The forfeited output of a country's economy.Global Depositary Receipt A bank certificate issued in more than one country for shares in a foreign company. 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. Gross Margin Gross profit divided by sales. Going Public The process of selling shares that were formerly privately held to new investors for the first time. 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. Also known as Initial public offering (IPO). and thereby invests in companies that reinvest their earnings into expansion. The shares are held by a foreign branch of an international bank. GDR .Generally Accepted Accounting Principles The common set of accounting principles. Guidance Information that a company provides as an indication or estimate of their future earnings. Goodwill The amount by which a company's shareholder equity exceeds the value of its hard assets. GAAP . standards and procedures that companies use to compile their financial statements.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. acquisitions.
Like when you may like to cover possible loss by also backing the horse for a place. 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. This can be expressed daily. Gross profit is sales minus cost of sales. weekly. the high for the day can be 20. In securities trading. Hot Stock A stock whose price rises quickly the day it goes public. Hedging A practice of taking one market position to offset potential losses in another. since there is no win or place. What would you do if. He's like money in a bank. Growth Stocks Stocks that pay low dividends.which does not mean that you will not lose your collateral if you default on repayment. Haircut The difference between prices at which a market maker can buy and sell a security. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market. and monthly or for a 52-week period. Hammering The rapid and concentrated sale of a stock thought to be overvalued by the market. on the first day of listing on the exchange it is quoted at Rs.25? Sell. 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.10. Guarantor A person who promises to pay your debts if you are unable to pay them yourself. or wait for a further increase. Never let him down. but not transferring legal ownership to the lender .GLOSSARY OF STOCK MARKET Gross Profit Profit a company makes on goods and services before considering overhead expenses. hand on to him. but the high for the year can be 50. 7 . If you find a good guarantor. you have to look for another investment avenue where the return is less but the risk is also correspondingly less. Strictly for long term investors who have a vision for the future and are not interested in maximizing short term profits. but are expected to grow. the lender can sell your collateral to realize his payments. With a little paper work. For example. High The highest price that was paid for a security during a certain time period. For example using a futures a contract to reduce the impact of price fluctuations in a cash or physical market. Let's say you buy a new offering at Rs.
long. but in terms of value of trade and market capitalization. banking. Normally the index components are the highly traded stocks of that exchange. in number. they represent anything up to 85 per cent. Holding Period In a long position. an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. a hedge consists of taking an offsetting position in a related security. are a miniscule percent of the total listed shares. Industry Group Companies in related businesses. 7 . Sectored indices like Industrial. usually by the use of an automated program. Hedge Fund An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage. Utilities. These 30 stocks. Iceberg Order A large single order that has been divided into smaller lots. Normally. 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 on the same day. The BSE Sensex is based on 30 stocks as is New York 's Dow average. such as a futures contract. etc is made up of the highly traded stocks in that particular sector. Index A statistical measure of change in an economy or a securities market. In a short sale. holding period refers to the time between an asset's purchase and its sale. In the case of financial markets. In And Out The purchase and sale of a security within a short period of time. for the purpose of hiding the actual order quantity. 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. 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.GLOSSARY OF STOCK MARKET Hedge Making an investment to reduce the risk of adverse price movements in an asset.IPO The first sale of stock by a private company to the public. the length of time for which the short position is held.
But remember you have to keep an eye on the fundamentals of the company. Inorganic Growth A growth in the operations of a business that arises from mergers or takeovers.GLOSSARY OF STOCK MARKET Inflation Increase in the prices for goods and services. Inflation The rate at which the general level of prices for goods and services is rising. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks. but the system is so widespread and disparate and the judicial system. The rate at which prices are rising. If you can't leave it your analyst. SEBI is trying to improve its monitoring system. rather than an increase in the companies own business activity. when the inflation rate is 2 percent. Index Fund A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance. each of them having a different impact on the fundamentals of the cement industry. is it because there is a shortage in output. so time consuming and cumbersome that most insider trades are seldom reported or detected. that would be insider trading. Contrary to what you might think after some time on the stock exchange. Insider Information Any knowledge about a company. But the system is being tightened up so think twice before you place that buy order for XYZ shares. Income Stocks Stocks that have consistently paid high dividends. buy more or sell? Try and figure it out. there really are such stocks. If cement prices are going up. which it's numerous levels of appeals. 7 . In India . subsequently. purchasing power is falling. For the stock market player. 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. It does not mean that anything you buy will now cost you 2 percent more than it did last time. its products. 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. Consistent does not mean ?for ever?. For the common man. a surge in construction activities or higher government taxes? There could be a number of reasons. If you are holding cement shares. this means he pays more for what he uses. So. you can afford to speculate in higher risk stocks. and. or securities not generally available to the public gained from a source inside the company. it means it is rising at the rate of 2 percent per year based on current prices. should you hold on to them. Inflation Rate An important economic indicator. it could be both good and bad news.
bonds. etc. 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. Insider Trading The buying or selling of a security by someone who has access to material. Payment made at periodic investments on an investment. Investments may also include artwork. mutual fund.GLOSSARY OF STOCK MARKET Insider Information Material information about a company's activities that has not been disclosed to the public. usually a stock brokerage firm. as opposed to the current value based on the stock price. money market funds and collectibles (not lottery tickets. Also. antiques and real estate. An intermediary between an issuer of securities and the investing public. that would be speculation not investment). Intraday Stock trading tracked in periods shorter than one day. Insider trading can be illegal or legal depending on when the insider makes the trade. Usually calculated by adding the current value of estimated future earning to the book value. and act as finders in private placement of securities. Interest Money charged by a lender to a borrower for the use of his or her money. Intrinsic Value A term favored by value oriented fundamental analysts to express the actual value of a corporation. Investment Bank An organization. so spend lavishly on her. banks. maintain markets for securities already distributed. certificates of deposit. your wife's jeweler is an investment. Intangibles Soft assets such as patents. etc. nonpublic information about the security. For instance the trades during the first two hours or last two hours of the trading day. Investment Anything of value purchased to provide capital appreciation and /or income. financial institutions. consulting on mergers and acquisitions. involved in taking a new company public IPO. either through secondary offering or through negotiations. trademarks. Institutional Ownership Shares of a company owned by pension funds. mutual funds. They handle the distribution of blocks of previously issued securities. handling corporate borrowing.Examples include stocks. It is illegal when the material information is still nonpublic. 7 . unit investment trusts.
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. Interim Dividend A dividend payment made before a company's AGM and final financial statements. Lead Underwriter Brokerage house in charge of IPO. warrants. IPO Lock-Up A contractual caveat referring to a period of time after a company has initially gone public. 7 . The market value of the company rises and so do its shares. IRR (Internal Rate of Returns) Internal Rate of Return is the rate at which the lender accounts for interest. 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.GLOSSARY OF STOCK MARKET IPO (Initial Public Offering) Equity or other issue which is presented to the market for the first time. For corporations. futures and option contracts also provide leverage. Issue Any securities of a company. the greater the financial leverage. leverage can involve debt. If the stock goes up.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. keeping the current entities untouched to start a business. and finished goods that have not been shipped to customers. he repays the broker the loan amount and keeps the profit himself. Joint Venture Two companies joining together to start a new entity. Key Performance Indicators . During these initial days of trading. not through debt but by offering the prospect of a high return for little or no investment. financial leverage is popularly called ?trading on the equity'. work in process. Because of this effect. Rights. The more long-term debt there is. Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it. Inventory Raw materials. company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself. usually between 90 to 180 days. as when an investor borrows money from his broker ?on margin' and so is able to buy more stock than he otherwise could. For individuals.
This is when the market falls and we have what is known as a ?bear' market.) only if the price rises to a specified level. Limit Order A market order that specifies the highest or lowest price at which the customer is willing to trade securities. An order to a broker to buy a certain stock (future. The market must also adapt quickly to new information and incorporate that information into the stock's price. 7 . investor (FII). Liquidity is one of the most important characteristics. 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. The legal definition of short term and long term capital gains varies from country. The day-even minute .75.S. So is taxation based on those classifications? This is one of the reasons investors buy and sell stocks around the world. It is the opposite of a short position. Leveraged Buy Out Take over of a public corporation using borrowed funds. 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. Liability A financial obligation or debt. security.the FII sees a better opportunity elsewhere in the world. To buy or hold a long position is the state of actually owning a stock. Liquidity A measure of the number of shares.S. today. Multiply this instance by thousands and you can imagine the margin pressure that is exerted on the market.50 (50 per cent). That's where the money will go. Load A sales commission paid when you buy (front-end) or sell (back-end) a mutual fund. or commodity. Say you have pledged stocks worth Rs. can make more money on an investment on the BSE than the U. Now suppose the market value of the pledged stocks goes down to Rs.GLOSSARY OF STOCK MARKET The downside: most individuals pledge existing stocks with their bankers or brokers for the loan. bourse. etc. 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. Long Position A bull position in a security. Load Funds Mutual funds that carry a sales commission. contact. or money value of shares traded daily. which is a percentage of the market value of the stocks pledged.100 on the market against which you are given a loan of Rs. A U. Depth of market to absorb buy and sell activity of even large orders at prices appropriate to supply and demand.
but the low for the year can be 5.100. then it will have to pledge shares worth Rs. while an acquisition is the purchase of one company by another with no new company being formed. Such number makes round lots. Margins are at the sole discretion of the bank and may even vary from scrip to scrip. Lot A fixed minimum number in which shares are bought and sold. or for a 52 week period. this expression is used to describe a very bad investment that causes an investor to lose everything he or she has invested. Limit Order An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. etc. For example. If one wants to borrow Rs. The margin for demat shares is35 percent. M&A . 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. weekly.Mergers And Acquisitions A merger is a combination of two companies to form a new company. Helps you understand whether today's price is an aberration or a logical extensive of a trend. The difference in the value of shares pledged and the loan amount sanctioned. This can be expressed daily. 7 . 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.200. Depending on the type of security. His exposure limit is fixed based on the margin money brought in by him. Long Term Holding an asset for an extended period of time. 10. An upfront payment made by the customer to take a position in the market. the low for the day can be 10. monthly. 50 or 100 shares depending on the face value of shares.GLOSSARY OF STOCK MARKET Long-term Investments Balance sheet item reflecting investments in other companies. Losing Your Shirt In the investment world. Margin Borrowed money that is used to purchase securities. Liquidity The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. 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. anything less makes odd lots.
IPO's reduce market liquidity. Positive cash flow can serve as an indicator that fund managers have cash to put into the markets at the next buying opportunity. 7 . Market lots The minimum trading lot on a stock exchange. Market Price It is the price a particular stock is currently selling for during the operating hours of the stock market. Medium Term An intermediate period of time to hold an asset. Mark to Market A notional profit or loss of a long or short position as compared to the current market price. Market Order An order where no price specification is mentioned at the time of placement and market prices apply. Market Value The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. Maturity Date The date on which the principal amount of a note. Market Open/Close Price. draft. typically through the use of technical indicators or economic data. Authorization for a broker to buy or sell securities at the best price that can be negotiated at the moment. acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. It is the last sale price of a particular stock on the previous day. Additionally. Also known as "market price". the market lot is just one share.GLOSSARY OF STOCK MARKET Market Capitalization Total market value of the company on the stock exchange. Market Liquidity Use to track money flow into and out of the markets. Conversely. Market Timing The act of attempting to predict the future direction of the market. Total number of shares multiplied by the official price quoted on the stock exchange. On compulsorily dematerialized shares for all classes of investors. Market Perform Market perform is a neutral assessment of a stock and is neither strongly positive or negative. negative case flow may indicate that fund managers may need to liquidate some holdings to meet redemption requirements. however mergers increase market liquidity.
For example. in case of IDBI Bank the shares to be offered as security should be of at least of two companies. may include relative strength only. Minimum Number of Companies Accepted The minimum number of companies. Many investors look at both. 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). Mutual Fund A security that gives small investors access to a well-diversified portfolio of equities. that determine the size and rate of growth of the money supply. Stocks are said to be in an uptrend when above their MA and in a downtrend when below. Moving Average A rolling set of averages calculated over a time series of values. whose shares have to be offered as security for obtaining loans.GLOSSARY OF STOCK MARKET Mid Cap Companies having a market capitalization between Rs 500 crore and Rs 1. 7 . Money Market The securities market dealing in short-term debt and monetary instruments. which in turn affects interest rates. Moving averages are one way to view historical price levels. Each shareholder participates in the gain or loss of the fund. The most widely followed MAs are 50 days and 200 days. Money Supply The amount of money in circulation. and increasing earnings forecasts. 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. Not for amateur investors. It is in your interest to pledge the shares of an number of companies when you take a loan.000 crore Monetary Policy The actions of a reserve bank of india. As a general rule. bonds and other securities. Banks also profitability of a number of companies. the more lag you will see between the average and the most recent prices. if the value of some shares drop in the market they may be offset by the other shares which have risen in price. 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. In today's market. strong earnings growth. The linger the averaging period. 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. The Reserve Bank of India attempts to control the growth of the economy by regulating the increase or decrease in money supply. it's best to avoid stocks trading below both their 50 -and 200-day MAs. Municipal Bonds Debt instrument issued by a state or local agency.
Units in closed -end funds. NASDAQ Composite Index The NASDAQ Composite Index measures all NASDAQ domestic and non-U. Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund. also there are several open ended mutual funds which are insurance linked. Non-operating Income Income not derived from basic business of company 7 . They also have the benefit of professional managers overseeing their money who have the time and expertise to analyze and pick securities. Many open-ended funds allow contributors extra perks.To simplify. These funds do not accept new contributions from investors. are readily transferable in the open market and are bought and sold. if you hold a unit in a mutual fund. but only reinvest the return on the existing portfolio. There are two types of mutual funds. 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. they issue more units as people want them. like other stock. Open -end funds sells their own shares to investors. Net Profit Ratio Profit from operations as a percentage of revenue. minus various fees and commissions. This means that each company's security affects the Index in proportion to its market by total shares outstanding. The return on the funds holdings is distributed back to its contributors. The mutual funds which are insurance linked. Open-end funds are so called because their capitalization is not fixed. such as the ability to write cheques against their units. divided by number of shares. Net Asset Value per Share Equity excluding minority interests.S.The Index is market value weighted. 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. stand ready to buy back their old shares and are not normally listed in exchanges.GLOSSARY OF STOCK MARKET Mutual Fund A portfolio of stocks. Its basically marketing with for an investor with limited funds and/or limited knowledge of the market. open and closed ended. the NAV is the value today of your unit. Non-operating Expense Expenses not due to the basic business of company. and is related to the total value of the Index. or shareholders. based common stocks listed on the NASDAQ stock Market. some of which are listed on stock Exchanges.NAV varies on a day-to-day basis since the market value of securities changes regularly. is calculated throughout the trading day. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. 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.Net Asset Value The total value of the fund's portfolio less liabilities. NAV .
Generally. Opening Price Opening price is normally determined by the price at which a stock finished selling on the previous day. 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. but subsequently panicking and selling it the following day. and is based on a percentage of the last traded of the previous day. is the stock 7 . For example. Open Order A limit order that does not expire at the end of the trading day. Offer The price at which a share is available in the market. The Clearing Corporation of the National Stock Exchange. Offering Price The price at which publicly issued securities are made available for purchase. Open-end funds also buy back shares when investors wish to sell. customer bankruptcies and the like. One Night Stand Investment Buying a security with the intention of holding it for the long term. Most exchange has limits of how high or low the stock can trade on the following day. Open End Fund A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. it costs less to trade in round lots. 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.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. NSCCL National Securities Clearing Corporation Limited. It is like a limit or circuit. the fund will continue to issue shares no matter how many investors there are. NSE National Stock Exchange Odd Lots Stocks sold in quantities of less than a specified minimum number. If demand is high enough.
this is where everybody starts screaming "scam" and. Operating Earnings Earnings without considering certain expenses such as inventory write downs. This reduces the scope of overnight off-market deals which are illegal.00. 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. acquisitions or mergers. Also see Free Cash Flow. SEBI starts a probe. Oversold The reverse of over-bought. it is sometimes said. 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. Changes in levels of inventories. if they shriek loud enough. and if XYZ stock finished selling ay 20. Order Cancellation A facility available in the trading system where one is allowed to cancel the order placed earlier. ongoing earnings. Organic Growth The growth rate that a company can achieve by increasing output and enhancing sales. has left prices "too high". This excludes any profits or growth acquired from takeovers.00 and 18. earnings excluding special items or operating earnings. severance pay. Oversubscribed A situation in which the demand for an initial public offering of securities exceeds the number of shares issued. Order Modification A facility available in the trading system where one is allowed to modify an earlier order. Usually. 7 . or just about anything else the company feels like excluding to make its earnings look better. Also applies sometimes to overbought situations. it is believed has declined to an unreasonable level. accounts receivable and accounts payable also affect cash flow. A single security or a market which.00 the previous day then the maximum or minimum opening price the following day will be 22. Also known as core earnings.GLOSSARY OF STOCK MARKET exchange has a upper or lower limit of 10. Operating Margin Operating income divided by sales. depreciation and amortization charges.
For instance. 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.held by an investor. debenture. It is not the market price. to find the index for these stocks outpacing the Sensex. In India they are called low-Capped stocks and BSE has a separate index for them. Poison Pill Steps taken by a corporation to thwart a hostile takeover attempt. If they are successful. or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger. Pledge To deposit securities with a lender as security for money borrowed. It is not unusual.GLOSSARY OF STOCK MARKET P/E Ratio . bonds and mutuals . Payout Ratio Percentage of earnings paid out in dividends.Price-Earnings Ratio PE ratio or PE multiples is the ratio arrived by dividing Current market Price by Earnings per share of that stock. These stocks offer larger returns but at higher risk. they can purchase the stock at bargain prices. Pay In The designated day on which the members pay securities and fund to the clearing house. Par Value The face value of a bond. Low-priced issues. or bond that is written on the certificate. When a bull market is raging. Penny Stocks This term is typical to the USA stock markets.such as stocks. selling at less than $1 a share. Frequently used as a term of disparagement although some penny stocks have developed into investment-caliber issues. 7 . a company could issue rights to purchase shares at a substantial discount after a merger. Poop And Scoop A highly illegal practice occurring mainly on the Internet. often highly speculative. Portfolio The group of assets . A small group of informed people attempt to push down a stock by spreading false information and rumors. Par Value The face value or the price of a share.
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. Price Target A projected price level as stated by an investment analyst or advisor. or par value. you can congratulate yourself on a wise decision. Profit Taking The action of selling stock to cash in on a sharp rise. If interest rates fall. the premium is synonymous with the options price. Pump And Dump A scheme attempting to boost the price of a stock through recommendations based on false. Premium The difference between the higher price paid for a fixed-income security and the security's face amount at issue. the premium is the amount by which the price exceeds the face. In other words. misleading. Private Company A company whose ownership is private. You are stuck with a fixed return regardless of how high interest rates climb. 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. 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. However. On the other hand. For options markets.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. Convertible preferred shares can be converted into common stock according to predetermined conditions. 7 . or greatly exaggerated statements. it carries no voting rights. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. It is like a fixed deposit in a bank. Pro-Rata Used to describe a proportionate allocation. This action pushes prices down temporarily. The fixed income stream of preferred stock makes it similar in may ways to bonds. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings and have priority over common stock in the payment of dividends.
Registrar An institution or organization that is responsible for keeping records of bondholders and shareholders.Quarter on Quarter A measuring technique that calculates the change between one financial quarter and the previous financial quarter. 7 . which compares the quarter of one year (Q1 2007) to the same quarter of the previous year (Q1 2006). if you have not held the fund for the prescribed minimum time. rights or bonus. Quote Prices at which a share can be bought or sold. Resistance The price at which a stock or market can trade. Research and Development (R&D) Costs of developing new products and services. Rally A period of sustained increases in the prices of stocks or indexes. Quick Ratio Cash and cash equivalents plus accounts receivables divided by current liabilities. earnings from continuing operations and net sales. such as a stock. for a certain period of time. Rematerialisation Process of converting the shares from electronic form to physical form. Quarterly Earnings Report A quarterly filing made by public companies to report their performance. 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. but which it cannot exceed. The highest bid to buy and the lowest offer to sell any stock at a given time. bond. or mutual fund. Included in earnings reports are items such as net income. Redemption The return of an investor's principal in a security. 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. This is similar to the year over year measure. Redemption Fee Fee charged when you sell a mutual fund.GLOSSARY OF STOCK MARKET QOQ . earnings per share.
usually seen as a price chart pattern. Risk The potential to lose money (principal and any earnings) or not to make on an investment. or risen to resistance. 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. Round Lots Stocks sold in specified share quantities. Return on Assets After tax income divided by total assets. Revenue A company's sales. 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.GLOSSARY OF STOCK MARKET Resistance Historical price level at which rising prices have stopped rising and either moved sideways or reversed direction. 7 . Profit from operations plus financial income as a percentage of average capital employed. plus other long term liabilities. Rollover A point where a stock price has fallen to support. SEBI .Securities And Exchange Board Of India The regulatory body for the investment market in India. and then reverses the up or down trend convincingly. Road Show Presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offering.Profit after tax and minority interests as a percentage of average equity excluding minority interests. Return on Equity After tax income (latest 12 months) divided by shareholders equity (from balance sheet). Saturday Night Special A slang term used to refer to a surprise takeover attempt.
the date by which a buyer must pay for the securities delivered by the seller. Shares A unit of ownership interest in a corporation or financial asset. Share Capital Funds raised by issuing shares in return for cash or other considerations. It is composed of 30 of the largest and most actively-traded stocks on the BSE. Small Cap Refers to stocks with a relatively small market capitalization. A stoplimit order will be executed at a specified price (or better) after a given stop price has been reached. Simple Moving Average .SMA A simple. That is. 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. 7 . Short Term Holding an asset for short period of time. or arithmetic. Settlement Date The date by which an executed security trade must be settled. Shareholder Any person.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. Stop-Limit Order An order placed with a broker that combines the features of stop order with those of a limit order. It is a company with a market capitalization less than Rs 500 crore. The two main types of shares are common shares and preferred shares. or other institution that owns at least 1 share in a company.the benchmark index of the Bombay Stock Exchange (BSE). company. 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. Sensex An abbreviation of the Bombay Exchange Sensitive Index (Sensex) . Spinoff The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company.
a stock has had difficulty falling below. Then as the price of that security declines. You will get the water as a matter of courtesy. only fall to zero and that is the maximum loss that would be incurred. beta stage development. commercial production or marketing. Seed Capital A small amount of capital provided to an entrepreneur.00. you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker. etc. Theoretically.00 a share. This does not mean you should walk into a Reliance office and ask for a glass of water. Carefully check all tips on short sales before deciding to act on them.GLOSSARY OF STOCK MARKET Stop-Loss Order An order placed with a broker to sell a security when it reaches a certain price.00 a share and the price of the stock drops to 35. A stock purchased at 10. Support The price level which. or receiving credit from your broker for the stocks you sell.00 a share can. Not for the common investor. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. Shareholder A person who buys stock in a corporation. your profit is 15. and make a profit. short selling is based on the anticipation that a particular security price will go down.Book value is the shareholders equity divided by the number of outstanding shares.00. Most stock transactions must be settled within three business days. usually for product development. and therefore becomes a part owner of the corporation. 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. if you sell short 100 shares of XYZ Corporation at 50. historically. or 1500. 7 . however. For instance. typically provided by angel (venture) investors. Shares A unit representing a measure of ownership in a corporation. pilot projects. Short Covering Buying stock to return stock previously borrowed to make delivery on a short sale. Settlement The process of paying for stocks you purchase. Selling Short The reverse of the usual stock market technique. but it will be accompanied by some odd looks. unless you are very sure of yourself. It is designed to limit an investor's loss on a security position. Short sellers lose when the price of the stock ascends rather than descends. Shareholders Equity The difference between the totals of assets and liabilities shown on a company's balance sheet. not covering launch expenses.
the price of the stock is currently 60 a share. Short position also means the total amount of stock an individual has sold short and has not covered. A reverse split is where the total number of shares is decreased and the stock price increases proportionally. To go short you "borrow" stock from the broker/dealer. This increase in the number of shares result in the proportionate decrease of share price. as of a particular date. A short sale can only take place on an "up tick"" or 'zero-plus tick'. Speculators Investors who seek large capital gains through relatively risky investments. As in a split the total stock holders equity remains the same. 7 . Standard Deviation A measure of a mutual fund or stock's historical volatility. Short-term Debt Borrowing that must be repaid within one year. a company declares a "3 for 1 " stock split. with the intent to buy the stock back at a lower price than you had initially sold it for. Spot Trading Trading in commodities that will be delivered immediately. For example. The shareholders equity does not change. (Also called cash trading) Spread The spread is the difference between the bid price and the offer price. Short Sale To sell a stock you do not currently own. then sell the stock. or future contracts sold and not covered as of particular date. Split An increase in the number of shares outstanding. Most stock exchange have a rigid rules regarding short selling. Solvency Ratio Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end. a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share.GLOSSARY OF STOCK MARKET Short Position Stock options. Short-term Gain The profit realized from the sale of securities or other capital assets held twelve months or less. The player should ascertain these rules from a registered broker of the exchange. Short-term Investments Stocks and other liquid securities.
usually watermarked and patterned to make it hard to forge. 7 . Stops Can be either a buy or a sell stop. Stock Split An increase in the number of outstanding shares in a corporation. and (2) Foreign corporate and foreign individuals who are not allowed to exceed 5 percent of the issued capital. Support Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction. 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. A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices. 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. 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. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts. If the target company is publicly traded.These order types instruct the broker to execute at market once a specific price level is reached and traded at.GLOSSARY OF STOCK MARKET Stock Certificate The actual document that is evidence of stock ownership. making a total of three. Stop Loss Order An order placed with a "trigger price". This is usually n\brought about by the division of existing shares. This order is very often referred to as a "stop loss" order. For examples. usually seen as a price chart pattern Takeover A corporate action where an acquiring company makes a bid for an acquiree. the acquiring company will make an offer for the outstanding shares. a reverse stock split brings about the decrease in the number of shares in a corporation. 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. because it prevents the security from falling below a certain price. Stop Order An order to buy or sell a security conditioned on a specific price. a two-for-one split means that shareholders will receive two new shares for each old share.
option etc. Ticker A ticker is a trading screen information display showing the current price. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market. Technical analysts do not attempt to measure a security's intrinsic value.) on the exchange it is trading on and is used to retrieve information about that security from that exchange.S. Don't try to understand it unless you are a maths gold medalist. The method includes analysis of price patterns. Third Stage Capital Capital provided to an enterprise that has an established commercial production and basic marketing setup. Ticker Symbol A ticker symbol represents a particular security (company. Tick The minimum upward or downward movement in the price of a security. product development etc. Top Line A reference to the gross sales or revenues of a company. A zero-plus tick means the transaction was at the same price as the one before. acquisitions. 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.A) will bring you information about Ford Motor Company. The movement is caused by technical as opposed to fundamental factors affecting sentiment. but instead use charts and other tools to identify patterns that can suggest future activity.GLOSSARY OF STOCK MARKET Technical Analysis A method of evaluating securities by analyzing statistics generated by market activity. etc. 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. future. Tangible Book Value Book value minus goodwill and intangible assets. such as past prices and volume. option. Technical Rally An upward movement in a security's price following a declining trend. etc of a particular stock. ?ONGC? 7 . For example. but still higher than the nearest preceding price. Tick The tick is the direction in which the price of stock moved on its last sale. volume. the symbol ?f? on the New York Stock Exchange (U.
Transaction Costs The costs of trading securities. the more volatile the stock and the greater potential for wider swings in price (both ways). changes all the stocks in its portfolio once a year.GLOSSARY OF STOCK MARKET will show you the information of the Oil and Natural Gas Commission on the National Stock Exchange of India. 100 per cent turnover means a fund. Turnover Rate Turnover is the relationship between the float and the average monthly volume of a stock. Ticker symbols can be used to retrieve information from a financial publication such as your daily paper's business section. ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly. Treasury Notes Debt securities issued by the central government that mature over a specified number of years. Total liabilities All monies owed regardless of how classified on the balance sheet. Undersubscribed A situation in which the demand for an initial public offering of securities is less than the number of shares issued. Today. Trailing Twelve Months (TTM) The last four reported quarters. Treasury Bills Shorts-term debt issued by the central government. sold at a discount and redeemed at full face value. Turnover Ratio How often a mutual fund changes its portfolio holdings. including the broker's commission and taxes. 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. 7 . The best measure of a firm's total debt. on average. The higher the turnover rate. Underperform An analyst recommendation that means a stock is expected to do slightly worse than the market return. Commission varies with the size of the trade. Top A technical analysis term meaning the stock price is going down from here.
His return is high but. without security/charge on assets) but also brings onto the table extremely Valuable domain knowledge. Some countries also provide for underwriting on best effort basis Valuation The process of determining the current worth of an asset or company. or other units of a security traded in a certain time period. in exchange for an ownership percentage. Underwriter An investment banking firm committed to successful distribution of a public issue. He is a fixed interval investor. failing which the firm would take the securities being offered (that is. the venture capitalist will nurse you through. It is calculated by multiplying the volume traded by the average sale price. whom the entrepreneurs approach without the risk of ? takeover'. Value Traded This is the total monetary value of all trading in a security for the market day. buy) into its own books. strategic advice. Venture Capital Professional moneys co-invested with the entrepreneur usually to fund an early stage. Volatility Volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. 7 . business contacts. etc. A venture capitalist not only brings in moneys as ?equity capital' (that is.GLOSSARY OF STOCK MARKET Upgrade A positive change in the rating of a security. Offsetting the high risk the investor takes is the promise of high return on the investment. Volume The total number of shares. 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. or transaction. 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. more risky venture. brand-equity. Undervalued A stock trading below its fair value. bonds. he's taking all the risks on an untried idea. security. Vested Interest A financial or personal stake one entity has in an asset. Venture Capitalist An investor involved in financing a company's operations before going public. then.
New York where several major brokerage firms and stock exchanges are located. Zero Dividend Preferences Zero dividend preference shares are Preference shares which receive no dividends throughout their lives. Dalal Street is the Indian counterpart in Mumbai.Dividend Buying the shares trading in XD will not entitle you for the dividend which is already declared but not yet been issued. which is traded on a Stock Exchange's equity market. XD . Warrants may be issued over securities such as shares in a company. 7 . an index or a commodity.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. YOY .Ex. Wall Street A street in the city of Manhattan .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. Warrant A warrant is a financial instrument issued by a bank or other financial institutions. Yield Yield is the annual rate of return for any investment and is expressed as a percentage. on an annualized basis.
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