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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 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 The net asset value of a company. at which point you get back your principal investment. index or economic cycle in a given time period. When the market expects a company to come out with a Bonus Issue. commodity. Bottom Fisher An investor who looks for bargains among stocks whose prices have recently dropped dramatically. Bottom The lowest point or price reached by a financial security. The investor believes that the recent price drop is temporary and a recovery is soon to follow. goodwill) and liabilities. the price of the shares normally goes up. Bond Rating A grade evaluating the quality of a bond Book Closure A company's announcement of a dividend or bonus to investors. Following a bonus issue. Bonus Shares Shares allotted to the existing shareholders by capitalizing the reserves into additional capital. calculated by total assets minus intangible assets (patents. which is followed by a steady increase. Boom A period of time during which sales or business activity increases rapidly.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. Book value Total shareholder equity from the balance sheet divided by the number of shares outstanding. Book closure is the period during which this process is done and deliveries are not affected in the clearing house. 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. the proportional ownership of shareholders does not change. Bottom Line Refers to a company's net earnings. though the number of total shares increase. 7 .
Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support. which is usually followed by heavy volume and increased volatility. often more than warranted by the fundamentals and usually in a particular sector. followed by a drastic drop in prices as a massive selloff occurs. 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. research and advice. or to establish a floor price for public offer. In this index. limit their services to trade executions and collect substantially lower fees. 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.GLOSSARY OF STOCK MARKET Breakout A price movement through an identified level of support or resistance. Bourse A stock exchange Breakout A technical analysis term meaning a stock price has moved above or below a previous trading range. commodities or other property. usually so structured as to be repaid from proceeds of a public offering. Discount brokers are not in the business of giving investment advice they usually work on salary. thereby generating income on the number of his clients' trades. Broker An agent who handles the public's orders to buy and sell stocks. Full service brokers are those that provide a wide range of investment services. Bubble A surge in equity prices. Broker An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. 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 . 7 . 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. A full service account representative usually works on a commission basis.
Bull Market A financial market of a certain group of shares in which prices are rising or are expected to rise. 20 percent or wherever) and then sell at that point. Book your specified profit. sell your shares and put the money in your bank. You then offer your sympathy to investors who did not disinvest and had to bear heavy loses. regardless of every one predicting that share prices are sure to go up still further and you would be a fool to sell at this point. There will come a time when the Bull Run stops. which is executed on the floor of the exchange. regardless of fluctuations in the market. 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. If the Bull Run still continues. Bull Market A rising market where buyers far outnumber the sellers. the best procedure is to decide within yourself that you will satisfied by a specified margin eg profit on your investment (say. 7 . 15. They hold back money in this phase of the market. and is in the form of bars rather than coins.5% pure). Buy Transaction When you place an order for stock. The first method is instantaneous. Your losses are thus restricted to the period after your last profit taking. whereas the second can be a little time consuming. 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. that is. 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. A critical decision is when to sell on a bull market. They hold back selling in expectation of still higher gains and sometimes are left high and dry when the market crashes.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. Buy and Hold A passive investment strategy in which an investor buys stocks and holds them for a long period of time. A person on the stock market floor bids to find a buyer for the stock. Buy A recommendation to purchase a specific security. Amateur investors could lose a lot of money in this phase of the market. too. Duck if they take a swing at you. The total time is an estimated 20 minutes. decide your margin of profit. that is the share prices reverse direction. 10. and repeat the procedure. Sell immediately and rest content that you have been wise enough to book profits at different points of the Bull Run . Rising stock prices (generally occur during boom years). Ignore them. or (ii) the outcry method. 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. invest a lesser sum. it can be executed depending on which type of exchange the stock is listed.
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. The gain is not realized until the asset is sold. equipment and other items with a useful lifetime exceeding one year are categorized as assets to be depreciated over a number of years. 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. 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. 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. 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. CAGR The year-over-year growth rate of an investment over a specified period of time. funded by someone else. Capital Gains Distribution Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. or to eliminate any threats by shareholders who may be looking for a controlling stake. Capital Turnover Annual total Revenue as a percentage of total assets. In the corporate world all major deals are leveraged. rather than being expensed in the year of purchase. Try doing this in your personal life and you will probably go to jail. 7 . 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. Buyout Funding Funds provided to enable a corporation to acquire another enterprise or product line or business. Capital Gains Tax A type of tax levied on capital gains incurred by individuals and corporations. Capital gains distributions (if any) are usually made annually. that is.
The +1. Cash Settlement Payment for transactions done in one settlement on the due date. Circuit Breaker A mechanism used to restrain the market when it gets overheated. Cash Flow per Share Cash flow from operating activities divided by average number of shares. and is now selling for 11. sold. 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.50. The Exchange may relax the limit after a cooling off period of about half an hour. Banks are reluctant to authorize loans against assets which have encumbrances and prefer a clear title. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. Change in Stock Price The change in stock price is recorded in points. Closely Held Shares The shares held by individuals closely related to a company. For example. if stock XYZ opened at 10. temporarily or permanently. to another person. This represents an encumbrance on the title. 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.50 it would be up +1. Clear Title A title to an asset proves your legal ownerships of that asset. That asset be mortgaged. 7 . as well as all cash outflows that pay for business activities and investments during a given quarter. Clearing House It is a legal counter party to both legs of every trade. The fraction amount depends on the security being traded.50 is the change in stock price. The netted purchase and sale positions of the trading.GLOSSARY OF STOCK MARKET Carry Forward Settlement where positions are carried forward from one settlement to another settlement.
the bank will encase your collateral so fast you'll never know what hit you till it is too late. If you feel that your bank works at a snail's pace.GLOSSARY OF STOCK MARKET Closing Price The final price at which a security is traded on a given trading day. giving the holder an ownership stake in the company. Can be encased by the bank if you default in any way on repayment of interest or principle of your loan or other obligations. 7 . Generally. analysts give a consensus for a company's earnings per share and revenue. Consensus Estimate A figure based on the combined estimates of the analysts covering a public company. It includes negotiable instruments. Commodity A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. Closed-End Fund Investors of such a fund buy shares from other share holders and sell shares to other investors. Common Stock Equity or ownership in a corporation. Commodity Index An index that tracks a basket of commodities to measure their performance. Share price is determined by supply and demand for fund Collateral It is used to provide a guarantee for a loan. This will also give the holder the right to vote on corporate issues such as board elections and corporate policy. fiscal year and next fiscal year. Stockholders participate in a company's profits or losses through dividends and changes in the stock's market value. 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. these figures are most often made for the quarter. along with the right to any common dividend payments. shares or goods and titles to immovable assets. try defaulting on a loan . Common Shareholder An individual. The previous close is the price a stock closed on the previous day. business or institution that holds common shares in a company.
The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions. Most trades are entered and closed out within the same day.Dematerialization The move from physical certificates to electronic book keeping. Dalal Street A term that refers to the Bombay Stock Exchange. Cum Rights A share is described as cum rights when the purchaser is entitled for current rights Demat . 7 . Debt to Equity (Total) Total (short and long term) debt divided by total shareholder equity. 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.GLOSSARY OF STOCK MARKET Correction Corrections are generally temporary price declines. the major stock exchange in India. Debenture A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Debt to Equity (long term) Total long term debt divided by total shareholder equity. Both corporations and governments frequently issue this type of bond in order to secure capital. De-merger A corporate strategy to sell off subsidiaries or divisions of a company. Day Order The quantity that remains untraded is not cancelled until the end of the day. Debt An amount of money borrowed and owed by one party to another. Default Failure to pay back a debt. interrupting an uptrend in the market or asset.
custodians. stocks. can become DPs. Deferred revenue When a share is bought or sold for the purpose of receiving or effecting deliveries. than equity funds because the overall management costs are lower. in which core holdings are fixed income investments. often caused by a reduction in the supply of money or credit. etc. Delisting The removal of a listed security from the exchange on which it trades. It is the opposite of inflation. banks. Depository Participant (DP) A DP is a representative of the depository in the system. In other words. such as a mutual fund or ETF. According to SEBI regulations. 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).GLOSSARY OF STOCK MARKET Debt to Equity Ratio Long-term debt divided by shareholders' equity. Its value is determined by fluctuations in the underlying asset like commodities.The fee ratios on debt funds are lower. Deferred Expense Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid. showing the relationship between long-term funds provided by creditors and funds provided by shareholder. bonds. on average. Deflation A general decline in prices. financial institutions (FI's). facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. stockbrokers. It holds securities in an account. transfers securities between accounts on the instruction of the account holder. Derivative A security whose price is dependent upon or derived from one or more underlying assets. It can be compared with a bank. Debt Fund An investment pool. Minimum net worth stipulation required by SEBI for registering a DP is Rs. Depositories An organization which holds securities of investors. 100 crore. on request in electronic from through a registered Depository Participant (DP). 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. a high ratio may indicate high risk. It is comparable with a branch of 7 . the shares are 'dematerialized'. low ratio may indicate low risk.
bullion. Discount The difference between a bond's face value and when to trade a security. The rationale behind this technique contends that a portfolio of different kinds of investments will. live stock. Diversification The acquisition of a group of assets in which returns on the assets are not directly related over time. Any increase over your purchase price is a gain. trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. Book your profits (or cut your losses) as you go. etc. For example. currency. an investor would not want to combine large investment positions in airlines. it is any hybrid contract of a pre-determined fixed duration such as forward. Dip A drop in the price of a stock that is temporary making it the ideal time to buy the stock. diversification is essentially for investors not traders. Dividend Distribution of a portion of a company's earnings. For instance. future. option. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables. The value is totally 'derived' from the value of the underlying asset such as securities. A precept common to all businesses: buy low sell high. 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. on average. Depreciation A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period. and vice versa. A DP is offered depository services only after it gets proper registration from SEBI. Derivatives A financial contract between two or more parties based on the future value of an underlying asset. Proper investment diversification is intended to reduce the risk inherent in particular securities. One usually gets into trouble when giving in to the thoroughly human instinct for the gap to increase (in case of gains) or decrease (in case of losses). don't allow them to accumulate too long. decided by the board of directors. etc. Never forget. Diversification A risk-management technique that mixes a wide variety of investments within a portfolio. A lot of thought goes into deciding on 7 . commodities. the value of a call option on reliance (derivative) fluctuates with the price of reliance stock. yield higher returns and pose a lower risk than any individual investment found within the portfolio. Of course.GLOSSARY OF STOCK MARKET a bank if a Depository is likened to a bank. 'highs' and 'lows' are relative not absolute. to a class of its shareholders. Options and similar other instruments are examples.
Dividend Yield Total of 12-months' dividend paid (historical or forecast) divided by the latest share price. Generally. rather than cash.GLOSSARY OF STOCK MARKET investment avenues because you are not looking so much at the present status of the industry but at its short. a financial and investment publisher based in New York . The limit fluctuates in line with the market price of the shares. This calls for clear thinking and common sense. It is not mandatory for accompany to distribute dividends. but many times it is less. 7 . transportation stocks and bonds. You can do it! Dividend Cash payment made to the shareholders out of the profits of the company. Dividend Per Share The amount of dividend paid out per share. The price used is usually the market price at the end of the period under review. Boeing. General Motors and IBM.or mid-term future. But in this case it is based on the market values of shares put up as collateral against a loan. where the corporation keeps its entire earnings. but you should also learn to recognize factors that may impact a particular industry. requires that you take into an account innumerable factors that could affect the health of the industry. In this index. Just a few of the 30 companies in the DJIA are: American Express. even zero. Documentation The papers that are needed to process your loan application. it is not going to find many investors. Dow Jones & Company. the Dow average is global leader and is usually reflected by exchange around the world. 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. Disney. It is like an overdraft limit. You will not be directly concerned at what happens on the Dow. Coca-Cola. Bethlehem Steel. there are 30 industrial stocks thought to be representative of industrial stocks in general. Chevron. if a company is stingy on its dividend policy. Of course. At the same time. the end of a financial year. in turn. (Dividend rate x nominal value of share)/100. But remember. A stock dividend gives the shareholders additional shares of stock or a fraction thereof. This. also calculates averages for utility stocks. 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 . for instance. the percentage of corporate earnings paid out runs from 40 to 80 per cent. AT&T. you can always take an analyst's help. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices. you also have to keep in touch with global trends. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation.
Taxes. the market believes that the company will generate extra value. lenders prefer that you do not repay your loan before the agreed term.GLOSSARY OF STOCK MARKET Due Diligence The process whereby an in-depth examination of a company's business prospects is conducted. EPS . In the bizarre world of loan finance.Employee Stock Ownership Plan A qualified. EBITDA . defined contribution.DD An investigation or audit of a potential investment. you see.Earnings Before Interest. Effective Interest Rates The compounded interest rate calculated on the actual inflows and outflows of cash. 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. They lose interest. EMI Equated monthly installments to be paid by the borrower in repayment of the loan taken (includes principal and interest). Due Diligence . If the market price is greater than the equity per share. Also known as operating income.Earnings Per Share EPS is the earning on each share of a company ESOP . sale or acquisition of a company is intended Downgrade A negative change in the rating of a security. Usually when a merger. Equities Another name for shares. employee benefit plan designed to invest primarily in the stock of the sponsoring employer. Equity divided by number of shares at the close of the period. Emerging Markets Developing countries. Depreciation and Amortization EBITDA is a good metric to evaluate profitability EBIT Effective before interest and taxes. Equity per Share Shows how much of a company's equity one share represents. 7 .
well-diversified group of stocks. Earnings Estimate An analyst's estimate for a company's future quarterly or annual earnings. 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. except that more weight is given to the latest data. that is.Foreign Currency Convertible Bond A type of convertible bond issued in a currency different than the issuer's domestic currency. It is the total value up to which one is allowed to hold open positions at any point of time. And when a bank feels insecure. Expiry Date The date and time after which a writer of an option cannot exercise his rights.EMA A type of moving average that is similar to a simple moving average. Earnings Surprise When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates. Exponential Moving Average .GLOSSARY OF STOCK MARKET Ex Bonus A Share is described as ex dividend when the buyer is not entitled for the dividend. 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 rights shares are cheaper than Cum Rights and offer a good 'buy' opportunity for investment oriented players. Exposure Limit The limit allowed to the broker by his exchange or to the customer by broker. the bank feels insecure about the return of the loan. Extended Hours Trading Trades executed before or beyond normal market hours. Equity Fund A mutual fund that invests in a broad. 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. FCCB . The seller remains the beneficiary. 7 . Ex-Dividend The trading of shares when a declared dividend belongs to the seller rather than the buyer.
Fiscal Year Any 12-month period that a company uses for accounting purposes. 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. 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. 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. The delivery period.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.) 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. 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. 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.Foreign Direct Investment An investment abroad. Face Value The nominal value of a security stated by the issuer. FII . 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. Flat Rate of Interest Percentage representation of the amount of annual interest on the total loan amount. Futures Contract An agreement between parties for specified asses for performance on a fixed day in future. it is the original cost of the share shown on the certificate.GLOSSARY OF STOCK MARKET FDI . 7 . For shares. Fund Of Funds A mutual fund that invests in other mutual funds.
GDR . and thereby invests in companies that reinvest their earnings into expansion. acquisitions. 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. and/or research and development. GAAP . Goodwill The amount by which a company's shareholder equity exceeds the value of its hard assets.GLOSSARY OF STOCK MARKET Futures A financial contract obligating the buyer to purchase an asset (or a seller to sell an asset) at a predetermined date and price. 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. Gross Margin Gross profit divided by sales. Also known as Initial public offering (IPO). GDP The forfeited output of a country's economy. Guidance Information that a company provides as an indication or estimate of their future earnings. 7 . The shares are held by a foreign branch of an international bank. Going Public The process of selling shares that were formerly privately held to new investors for the first time. Growth Fund A diversified portfolio of stocks that has capital appreciation as its primary goal. Greenshoe Option A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. standards and procedures that companies use to compile their financial statements.Generally Accepted Accounting Principles The common set of accounting principles.Global Depositary Receipt A bank certificate issued in more than one country for shares in a foreign company.
7 . For example. This can be expressed daily. the lender can sell your collateral to realize his payments. but not transferring legal ownership to the lender . It helps to know the price history of a security over a period of time as an additional support for current buy or sell decision. but the high for the year can be 50. Like when you may like to cover possible loss by also backing the horse for a place.10. Growth Stocks Stocks that pay low dividends. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market. since there is no win or place. Haircut The difference between prices at which a market maker can buy and sell a security. you have to look for another investment avenue where the return is less but the risk is also correspondingly less. Guarantor A person who promises to pay your debts if you are unable to pay them yourself. and monthly or for a 52-week period.which does not mean that you will not lose your collateral if you default on repayment. Let's say you buy a new offering at Rs. or wait for a further increase. Hedging A practice of taking one market position to offset potential losses in another. High The highest price that was paid for a security during a certain time period. 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. In securities trading.25? Sell. hand on to him. Hot Stock A stock whose price rises quickly the day it goes public. He's like money in a bank. the high for the day can be 20. With a little paper work. Strictly for long term investors who have a vision for the future and are not interested in maximizing short term profits. Never let him down. weekly. Gross profit is sales minus cost of sales.GLOSSARY OF STOCK MARKET Gross Profit Profit a company makes on goods and services before considering overhead expenses. If you find a good guarantor. on the first day of listing on the exchange it is quoted at Rs. Hammering The rapid and concentrated sale of a stock thought to be overvalued by the market. 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. but are expected to grow.
such as a futures contract. long. an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. Industry Group Companies in related businesses. Index A statistical measure of change in an economy or a securities market. Normally the index components are the highly traded stocks of that exchange. banking. Usually they represent about 80 to 85 percent of the market capitalization and trading. Income Fund A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends. they represent anything up to 85 per cent. but in terms of value of trade and market capitalization. in number. It is representative of the market sentiment. 7 . usually on the same day. for the purpose of hiding the actual order quantity. Iceberg Order A large single order that has been divided into smaller lots. the length of time for which the short position is held.GLOSSARY OF STOCK MARKET Hedge Making an investment to reduce the risk of adverse price movements in an asset. In And Out The purchase and sale of a security within a short period of time. Utilities. 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. short and derivative positions in both domestic and international markets with the goal of generating high returns. a hedge consists of taking an offsetting position in a related security. Holding Period In a long position. In the case of financial markets. In a short sale. Initial Public Offering . usually by the use of an automated program. Sectored indices like Industrial. The BSE Sensex is based on 30 stocks as is New York 's Dow average. etc is made up of the highly traded stocks in that particular sector. Normally.IPO The first sale of stock by a private company to the public. are a miniscule percent of the total listed shares. Hedge Fund An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage. holding period refers to the time between an asset's purchase and its sale.
For the common man. subsequently. SEBI is trying to improve its monitoring system. Inflation Rate An important economic indicator. It does not mean that anything you buy will now cost you 2 percent more than it did last time. Inorganic Growth A growth in the operations of a business that arises from mergers or takeovers. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks. Contrary to what you might think after some time on the stock exchange. should you hold on to them. 7 . and. which it's numerous levels of appeals. buy more or sell? Try and figure it out. is it because there is a shortage in output.GLOSSARY OF STOCK MARKET Inflation Increase in the prices for goods and services. it could be both good and bad news. there really are such stocks. Inflation The rate at which the general level of prices for goods and services is rising. Insider Information Any knowledge about a company. 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. Index Fund A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance. If you are holding cement shares. If you can't leave it your analyst. 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. it means it is rising at the rate of 2 percent per year based on current prices. purchasing power is falling. each of them having a different impact on the fundamentals of the cement industry. The rate at which prices are rising. that would be insider trading. Income Stocks Stocks that have consistently paid high dividends. so time consuming and cumbersome that most insider trades are seldom reported or detected. this means he pays more for what he uses. you can afford to speculate in higher risk stocks. But the system is being tightened up so think twice before you place that buy order for XYZ shares. when the inflation rate is 2 percent. So. rather than an increase in the companies own business activity. In India . But remember you have to keep an eye on the fundamentals of the company. If cement prices are going up. Consistent does not mean ?for ever?. or securities not generally available to the public gained from a source inside the company. a surge in construction activities or higher government taxes? There could be a number of reasons. its products. but the system is so widespread and disparate and the judicial system. For the stock market player.
Intraday Stock trading tracked in periods shorter than one day. so spend lavishly on her. Also. money market funds and collectibles (not lottery tickets. usually a stock brokerage firm. mutual fund. An intermediary between an issuer of securities and the investing public. unit investment trusts. Payment made at periodic investments on an investment. Investments may also include artwork. It is illegal when the material information is still nonpublic. as opposed to the current value based on the stock price. banks. certificates of deposit. mutual funds. your wife's jeweler is an investment. Intrinsic Value A term favored by value oriented fundamental analysts to express the actual value of a corporation. trademarks. They handle the distribution of blocks of previously issued securities. 7 . nonpublic information about the security. etc. consulting on mergers and acquisitions. handling corporate borrowing. 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. etc.GLOSSARY OF STOCK MARKET Insider Information Material information about a company's activities that has not been disclosed to the public. Interest Money charged by a lender to a borrower for the use of his or her money. involved in taking a new company public IPO. Insider Trading The buying or selling of a security by someone who has access to material. maintain markets for securities already distributed. Investment Bank An organization. and act as finders in private placement of securities. either through secondary offering or through negotiations. bonds. financial institutions. antiques and real estate. Investment Anything of value purchased to provide capital appreciation and /or income. For instance the trades during the first two hours or last two hours of the trading day. that would be speculation not investment).Examples include stocks. Intangibles Soft assets such as patents. Insider trading can be illegal or legal depending on when the insider makes the trade. Institutional Ownership Shares of a company owned by pension funds. Usually calculated by adding the current value of estimated future earning to the book value.
GLOSSARY OF STOCK MARKET IPO (Initial Public Offering) Equity or other issue which is presented to the market for the first time. and finished goods that have not been shipped to customers. 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. he repays the broker the loan amount and keeps the profit himself. Leverage Any means of increasing value and return by borrowing funds or committing less of one's own money. usually between 90 to 180 days. Issue Any securities of a company. Joint Venture Two companies joining together to start a new entity. company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. IPO Lock-Up A contractual caveat referring to a period of time after a company has initially gone public. 7 . For corporations. Inventory Raw materials. as when an investor borrows money from his broker ?on margin' and so is able to buy more stock than he otherwise could. keeping the current entities untouched to start a business. or the act of distributing such securities. Interim Dividend A dividend payment made before a company's AGM and final financial statements. The more long-term debt there is. Because of this effect. Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it. Rights. Key Performance Indicators . IRR (Internal Rate of Returns) Internal Rate of Return is the rate at which the lender accounts for interest. The market value of the company rises and so do its shares. work in process. During these initial days of trading. financial leverage is popularly called ?trading on the equity'. futures and option contracts also provide leverage. leverage can involve debt. warrants. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself.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. If the stock goes up. the greater the financial leverage. Lead Underwriter Brokerage house in charge of IPO. not through debt but by offering the prospect of a high return for little or no investment. For individuals.
Liquidity is one of the most important characteristics. A U. The day-even minute . which is a percentage of the market value of the stocks pledged. contact. So is taxation based on those classifications? This is one of the reasons investors buy and sell stocks around the world. or commodity. To buy or hold a long position is the state of actually owning a stock. Leveraged Buy Out Take over of a public corporation using borrowed funds. It is the opposite of a short position. Limit Order A market order that specifies the highest or lowest price at which the customer is willing to trade securities. can make more money on an investment on the BSE than the U. This is when the market falls and we have what is known as a ?bear' market. today. The market must also adapt quickly to new information and incorporate that information into the stock's price. etc.75. Depth of market to absorb buy and sell activity of even large orders at prices appropriate to supply and demand. Long Position A bull position in a security. Mutual funds and other institutional buyers prefer high liquidity stocks so they can easily move in and out of positions.GLOSSARY OF STOCK MARKET The downside: most individuals pledge existing stocks with their bankers or brokers for the loan. security. Load Funds Mutual funds that carry a sales commission. investor (FII).) only if the price rises to a specified level.50 (50 per cent). or money value of shares traded daily. Say you have pledged stocks worth Rs. bourse. Load A sales commission paid when you buy (front-end) or sell (back-end) a mutual fund. The legal definition of short term and long term capital gains varies from country. An order to a broker to buy a certain stock (future. Liability A financial obligation or debt.100 on the market against which you are given a loan of Rs. Multiply this instance by thousands and you can imagine the margin pressure that is exerted on the market. Now suppose the market value of the pledged stocks goes down to Rs.the FII sees a better opportunity elsewhere in the world. 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. The lender is immediately going to ask you to pledge more stocks (or pay cash) to bring the level up to 200 per cent of the loan. 7 . Liquidity A measure of the number of shares.S. This decision-making is necessary to cut losses due to lower prices or sudden reverses in rising share prices. That's where the money will go.S.
Lot A fixed minimum number in which shares are bought and sold. 50 or 100 shares depending on the face value of shares. Losing Your Shirt In the investment world. Long Term Holding an asset for an extended period of time. This can be expressed daily. His exposure limit is fixed based on the margin money brought in by him. For example. M&A . Depending on the type of security. 10. The difference in the value of shares pledged and the loan amount sanctioned.GLOSSARY OF STOCK MARKET Long-term Investments Balance sheet item reflecting investments in other companies. monthly. The margin for demat shares is35 percent. 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. Margin Borrowed money that is used to purchase securities.Mergers And Acquisitions A merger is a combination of two companies to form a new company. then it will have to pledge shares worth Rs. the low for the day can be 10. Such number makes round lots. If one wants to borrow Rs. Trading lots can comprise 5. but the low for the year can be 5. 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. 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. Margins are at the sole discretion of the bank and may even vary from scrip to scrip. this expression is used to describe a very bad investment that causes an investor to lose everything he or she has invested.200. etc. An upfront payment made by the customer to take a position in the market. 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. while an acquisition is the purchase of one company by another with no new company being formed. Limit Order An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. 7 .100. a long-term asset can be held for as little as one year or for as long as 15 years or more. anything less makes odd lots. Helps you understand whether today's price is an aberration or a logical extensive of a trend.
however mergers increase market liquidity. Authorization for a broker to buy or sell securities at the best price that can be negotiated at the moment. Market Order An order where no price specification is mentioned at the time of placement and market prices apply. Maturity Date The date on which the principal amount of a note. Mark to Market A notional profit or loss of a long or short position as compared to the current market price. negative case flow may indicate that fund managers may need to liquidate some holdings to meet redemption requirements. Medium Term An intermediate period of time to hold an asset. Market Timing The act of attempting to predict the future direction of the market. 7 . Positive cash flow can serve as an indicator that fund managers have cash to put into the markets at the next buying opportunity. Also known as "market price". Market Price It is the price a particular stock is currently selling for during the operating hours of the stock market. Market lots The minimum trading lot on a stock exchange. Total number of shares multiplied by the official price quoted on the stock exchange. typically through the use of technical indicators or economic data. Market Perform Market perform is a neutral assessment of a stock and is neither strongly positive or negative. Conversely. On compulsorily dematerialized shares for all classes of investors. draft. Market Liquidity Use to track money flow into and out of the markets. IPO's reduce market liquidity.GLOSSARY OF STOCK MARKET Market Capitalization Total market value of the company on the stock exchange. It is the last sale price of a particular stock on the previous day. Market Open/Close Price. acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. Additionally. the market lot is just one share. Market Value The current quoted price at which investors buy or sell a share of common stock or a bond at a given time.
Minimum Number of Companies Accepted The minimum number of companies. strong earnings growth. In today's market. The 10-day Moving Average (MA) is the average closing price for the past 10 days. Mutual Fund A security that gives small investors access to a well-diversified portfolio of equities. and increasing earnings forecasts. it's best to avoid stocks trading below both their 50 -and 200-day MAs. Money Market The securities market dealing in short-term debt and monetary instruments.GLOSSARY OF STOCK MARKET Mid Cap Companies having a market capitalization between Rs 500 crore and Rs 1. if the value of some shares drop in the market they may be offset by the other shares which have risen in price. For example. 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. may include relative strength only.000 crore Monetary Policy The actions of a reserve bank of india. that determine the size and rate of growth of the money supply. the more lag you will see between the average and the most recent prices. Money Supply The amount of money in circulation. The most widely followed MAs are 50 days and 200 days. in case of IDBI Bank the shares to be offered as security should be of at least of two companies. Moving averages are one way to view historical price levels. Banks also profitability of a number of companies. 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. 7 . It is possible to weight more recent prices by linearly or exponentially smoothing the average lines. Stocks are said to be in an uptrend when above their MA and in a downtrend when below. Units are issued and can be redeemed as needed. whose shares have to be offered as security for obtaining loans. Many investors look at both. which in turn affects interest rates. Not for amateur investors. The linger the averaging period. bonds and other securities. 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. Moving Average A rolling set of averages calculated over a time series of values. The Reserve Bank of India attempts to control the growth of the economy by regulating the increase or decrease in money supply. As a general rule. A moving average represents data in a manner that smoothens fluctuations and highlights possible trends. Each shareholder participates in the gain or loss of the fund. Momentum Analysis Usually involves looking for stocks in a strong uptrend (high relative strength).
stand ready to buy back their old shares and are not normally listed in exchanges. some of which are listed on stock Exchanges. like other stock. Non-operating Expense Expenses not due to the basic business of company. There are two types of mutual funds. or shareholders.Net Asset Value The total value of the fund's portfolio less liabilities. The return on the funds holdings is distributed back to its contributors. The total market value divided by the total number of units of the scheme on a specific date is the NAV. such as the ability to write cheques against their units.The Index is market value weighted. Its basically marketing with for an investor with limited funds and/or limited knowledge of the market. Units in closed -end funds. based common stocks listed on the NASDAQ stock Market. Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund.S. Open -end funds sells their own shares to investors. NASDAQ Composite Index The NASDAQ Composite Index measures all NASDAQ domestic and non-U. Non-operating Income Income not derived from basic business of company 7 . and is related to the total value of the Index. are readily transferable in the open market and are bought and sold.NAV varies on a day-to-day basis since the market value of securities changes regularly. minus various fees and commissions. They also have the benefit of professional managers overseeing their money who have the time and expertise to analyze and pick securities. Open-end funds are so called because their capitalization is not fixed. Many open-ended funds allow contributors extra perks. is calculated throughout the trading day. These funds do not accept new contributions from investors. they issue more units as people want them. NAV . bonds or other securities administered by a team of one or more managers from an investment company who make buy and sell decisions on component securities. also there are several open ended mutual funds which are insurance linked. if you hold a unit in a mutual fund. but only reinvest the return on the existing portfolio. Net Asset Value per Share Equity excluding minority interests. The mutual funds which are insurance linked. divided by number of shares. Net Profit Ratio Profit from operations as a percentage of revenue.GLOSSARY OF STOCK MARKET Mutual Fund A portfolio of stocks. No-load Fund0073 Mutual funds that do not carry a sales commission. the NAV is the value today of your unit. 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. This means that each company's security affects the Index in proportion to its market by total shares outstanding.To simplify. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. open and closed ended.
NSE National Stock Exchange Odd Lots Stocks sold in quantities of less than a specified minimum number. Open End Fund A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. It is like a limit or circuit. customer bankruptcies and the like.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. For example. If demand is high enough. it costs less to trade in round lots. but subsequently panicking and selling it the following 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. Offering Price The price at which publicly issued securities are made available for purchase. One Night Stand Investment Buying a security with the intention of holding it for the long term. Offer The price at which a share is available in the market. the fund will continue to issue shares no matter how many investors there are. is the stock 7 . The Clearing Corporation of the National Stock Exchange. Open Order A limit order that does not expire at the end of the trading day. Generally. NSCCL National Securities Clearing Corporation Limited. Opening Price Opening price is normally determined by the price at which a stock finished selling on the previous day. 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-end funds also buy back shares when investors wish to sell. Most exchange has limits of how high or low the stock can trade on the following day. and is based on a percentage of the last traded of the previous day.
Changes in levels of inventories. severance pay. Operating Margin Operating income divided by sales.00 the previous day then the maximum or minimum opening price the following day will be 22. accounts receivable and accounts payable also affect cash flow. A single security or a market which. acquisitions or mergers. Also see Free Cash Flow. ongoing earnings. Operating Income Sales minus all expenses except income taxes and other items not relaxed to basic business. Usually. Organic Growth The growth rate that a company can achieve by increasing output and enhancing sales. 7 . SEBI starts a probe. it is sometimes said. has left prices "too high". this is where everybody starts screaming "scam" and. Order Cancellation A facility available in the trading system where one is allowed to cancel the order placed earlier. Operating Earnings Earnings without considering certain expenses such as inventory write downs. it is believed has declined to an unreasonable level. earnings excluding special items or operating earnings.GLOSSARY OF STOCK MARKET exchange has a upper or lower limit of 10. 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. Oversold The reverse of over-bought. 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. Operating Cash Flow Surplus cash generated from a company's basic operations without regard to income tax entries such as depreciation and amortization. This excludes any profits or growth acquired from takeovers. and if XYZ stock finished selling ay 20. Order Modification A facility available in the trading system where one is allowed to modify an earlier order. This reduces the scope of overnight off-market deals which are illegal.00 and 18. Also applies sometimes to overbought situations.00. depreciation and amortization charges. or just about anything else the company feels like excluding to make its earnings look better. if they shriek loud enough.
Payout Ratio Percentage of earnings paid out in dividends. In India they are called low-Capped stocks and BSE has a separate index for them. Frequently used as a term of disparagement although some penny stocks have developed into investment-caliber issues. bonds and mutuals . If they are successful. debenture.GLOSSARY OF STOCK MARKET P/E Ratio . It is not unusual. For instance. Pay In The designated day on which the members pay securities and fund to the clearing house. to find the index for these stocks outpacing the Sensex. When a bull market is raging. Par Value The face value or the price of a share.Price-Earnings Ratio PE ratio or PE multiples is the ratio arrived by dividing Current market Price by Earnings per share of that stock. they can purchase the stock at bargain prices. or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger. 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. It is not the market price. Penny Stocks This term is typical to the USA stock markets. often highly speculative. Par Value The face value of a bond. Poop And Scoop A highly illegal practice occurring mainly on the Internet. Pledge To deposit securities with a lender as security for money borrowed.such as stocks. Portfolio The group of assets . These stocks offer larger returns but at higher risk. A small group of informed people attempt to push down a stock by spreading false information and rumors.held by an investor. 7 . or bond that is written on the certificate. Poison Pill Steps taken by a corporation to thwart a hostile takeover attempt. selling at less than $1 a share. a company could issue rights to purchase shares at a substantial discount after a merger. Low-priced issues.
For bonds and preferred stock. you can congratulate yourself on a wise decision. This action pushes prices down temporarily. misleading. Price Target A projected price level as stated by an investment analyst or advisor. Pro-Rata Used to describe a proportionate allocation. or par value. Public Offering The sale of equity shares or other financial instruments by an organization to the public in order to raise funds for business expansion and investment.GLOSSARY OF STOCK MARKET Preferred Stock A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Private Company A company whose ownership is private. On the other hand. The fixed income stream of preferred stock makes it similar in may ways to bonds. Debt instruments. it carries no voting rights. However. It is like a fixed deposit in a bank. the premium is synonymous with the options price. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings and have priority over common stock in the payment of dividends. You are stuck with a fixed return regardless of how high interest rates climb. For options markets. or greatly exaggerated statements. Profit Taking The action of selling stock to cash in on a sharp rise. and should earnings rise significantly the preferred holder is stuck with the same fixed dividend while common holders collect more. Public Company A company that has issued securities through an initial public offering and which are traded on at least one stock exchange. Convertible preferred shares can be converted into common stock according to predetermined conditions. the premium is the amount by which the price exceeds the face. Pump And Dump A scheme attempting to boost the price of a stock through recommendations based on false. In other words. you have to pay a little extra upfront if you want to be shielded from the fluctuations of enquiry stock. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. If interest rates fall. Premium The difference between the higher price paid for a fixed-income security and the security's face amount at issue. 7 .
or mutual fund. Redemption Fee Fee charged when you sell a mutual fund. Resistance The price at which a stock or market can trade. 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. 7 .GLOSSARY OF STOCK MARKET QOQ . This is similar to the year over year measure. Quote Prices at which a share can be bought or sold. Research and Development (R&D) Costs of developing new products and services. rights or bonus. Registrar An institution or organization that is responsible for keeping records of bondholders and shareholders. 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. Quick Ratio Cash and cash equivalents plus accounts receivables divided by current liabilities. The highest bid to buy and the lowest offer to sell any stock at a given time. if you have not held the fund for the prescribed minimum time. Included in earnings reports are items such as net income. such as a stock. 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. which compares the quarter of one year (Q1 2007) to the same quarter of the previous year (Q1 2006). earnings from continuing operations and net sales. bond. Redemption The return of an investor's principal in a security. earnings per share.Quarter on Quarter A measuring technique that calculates the change between one financial quarter and the previous financial quarter. Rally A period of sustained increases in the prices of stocks or indexes. but which it cannot exceed. for a certain period of time.
Return on Assets After tax income divided by total assets. 7 . usually seen as a price chart pattern. Profit from operations plus financial income as a percentage of average capital employed. 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. Round Lots Stocks sold in specified share quantities. Risk The potential to lose money (principal and any earnings) or not to make on an investment. Road Show Presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offering.Securities And Exchange Board Of India The regulatory body for the investment market in India. plus other long term liabilities. Return on investments After tax income (latest 12 months) divided by total of shareholders equity plus long term debt. Return on Equity After tax income (latest 12 months) divided by shareholders equity (from balance sheet).Profit after tax and minority interests as a percentage of average equity excluding minority interests.GLOSSARY OF STOCK MARKET Resistance Historical price level at which rising prices have stopped rising and either moved sideways or reversed direction. Saturday Night Special A slang term used to refer to a surprise takeover attempt. Revenue A company's sales. Rollover A point where a stock price has fallen to support. SEBI . it is issued in a fixed ratio to those shares which are already held. or risen to resistance. and then reverses the up or down trend convincingly.
Settlement Date The date by which an executed security trade must be settled. 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. Short Term Holding an asset for short period of time.the benchmark index of the Bombay Stock Exchange (BSE). Simple Moving Average . or arithmetic. 7 . Small Cap Refers to stocks with a relatively small market capitalization.SMA A simple. A stoplimit order will be executed at a specified price (or better) after a given stop price has been reached. or other institution that owns at least 1 share in a company. Shares A unit of ownership interest in a corporation or financial asset. company. It is composed of 30 of the largest and most actively-traded stocks on the BSE. the date by which a buyer must pay for the securities delivered by the seller. It is a company with a market capitalization less than Rs 500 crore. Spinoff The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. Sensex An abbreviation of the Bombay Exchange Sensitive Index (Sensex) . Stop-Limit Order An order placed with a broker that combines the features of stop order with those of a limit order. Share Capital Funds raised by issuing shares in return for cash or other considerations. The two main types of shares are common shares and preferred shares. 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.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. Shareholder Any person.
Shares A unit representing a measure of ownership in a corporation. short selling is based on the anticipation that a particular security price will go down. Shareholders Equity The difference between the totals of assets and liabilities shown on a company's balance sheet. and make a profit. commercial production or marketing. Short Covering Buying stock to return stock previously borrowed to make delivery on a short sale. beta stage development. Seed Capital A small amount of capital provided to an entrepreneur. Carefully check all tips on short sales before deciding to act on them. Then as the price of that security declines. or receiving credit from your broker for the stocks you sell. For instance.00. A stock purchased at 10. your profit is 15.Book value is the shareholders equity divided by the number of outstanding shares. etc. and therefore becomes a part owner of the corporation. Settlement The process of paying for stocks you purchase. however.00 a share and the price of the stock drops to 35. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. but it will be accompanied by some odd looks. You will get the water as a matter of courtesy.00 a share. or 1500. Support The price level which. It is designed to limit an investor's loss on a security position. Theoretically. typically provided by angel (venture) investors. 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. 7 . historically. Short sellers lose when the price of the stock ascends rather than descends. you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker.00 a share can. pilot projects. a stock has had difficulty falling below. unless you are very sure of yourself.00. 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. Selling Short The reverse of the usual stock market technique. Not for the common investor. not covering launch expenses. usually for product development. This does not mean you should walk into a Reliance office and ask for a glass of water. only fall to zero and that is the maximum loss that would be incurred. Shareholder A person who buys stock in a corporation. if you sell short 100 shares of XYZ Corporation at 50.
(Also called cash trading) Spread The spread is the difference between the bid price and the offer price. the price of the stock is currently 60 a share. 7 . Short Sale To sell a stock you do not currently own. a company declares a "3 for 1 " stock split. Spot Trading Trading in commodities that will be delivered immediately. as of a particular date. Short-term Gain The profit realized from the sale of securities or other capital assets held twelve months or less. a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share. This increase in the number of shares result in the proportionate decrease of share price. Standard Deviation A measure of a mutual fund or stock's historical volatility. or future contracts sold and not covered as of particular date. Most stock exchange have a rigid rules regarding short selling. As in a split the total stock holders equity remains the same. The shareholders equity does not change. then sell the stock. For example. A reverse split is where the total number of shares is decreased and the stock price increases proportionally. A short sale can only take place on an "up tick"" or 'zero-plus tick'. Short-term Investments Stocks and other liquid securities. with the intent to buy the stock back at a lower price than you had initially sold it for. Short-term Debt Borrowing that must be repaid within one year. Short position also means the total amount of stock an individual has sold short and has not covered. The player should ascertain these rules from a registered broker of the exchange. Split An increase in the number of shares outstanding. Speculators Investors who seek large capital gains through relatively risky investments. To go short you "borrow" stock from the broker/dealer.GLOSSARY OF STOCK MARKET Short Position Stock options. Solvency Ratio Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end.
A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices. Sub-accounts A sub-account includes institutions (established or incorporated outside India ) and those funds. This order is very often referred to as a "stop loss" order. If the target company is publicly traded. usually watermarked and patterned to make it hard to forge. This is usually n\brought about by the division of existing shares. 7 . Stock Split An increase in the number of outstanding shares in a corporation. because it prevents the security from falling below a certain price. 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. It is placed to minimize the losses and the order cab be either for a purchase or a sale. the acquiring company will make an offer for the outstanding shares. Stop Order An order to buy or sell a security conditioned on a specific price. making a total of three. usually seen as a price chart pattern Takeover A corporate action where an acquiring company makes a bid for an acquiree. Stop Loss Order An order placed with a "trigger price".These order types instruct the broker to execute at market once a specific price level is reached and traded at. For examples. a two-for-one split means that shareholders will receive two new shares for each old share. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts. Stops Can be either a buy or a sell stop. 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.GLOSSARY OF STOCK MARKET Stock Certificate The actual document that is evidence of stock ownership. 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. a reverse stock split brings about the decrease in the number of shares in a corporation. Support Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction.
typically for market expansion. Technical Rally An upward movement in a security's price following a declining trend. the symbol ?f? on the New York Stock Exchange (U. Ticker A ticker is a trading screen information display showing the current price. but instead use charts and other tools to identify patterns that can suggest future activity. future.GLOSSARY OF STOCK MARKET Technical Analysis A method of evaluating securities by analyzing statistics generated by market activity. etc.A) will bring you information about Ford Motor Company. For example. Tangible Book Value Book value minus goodwill and intangible assets. option etc. acquisitions. product development etc. Tick The minimum upward or downward movement in the price of a security. Trailing EPS The sum of a company's earnings per share for the previous four quarters. etc of a particular stock. ?ONGC? 7 . Top Line A reference to the gross sales or revenues of a company. but still higher than the nearest preceding price. Technical analysts do not attempt to measure a security's intrinsic value. 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. A zero-plus tick means the transaction was at the same price as the one before.) on the exchange it is trading on and is used to retrieve information about that security from that exchange. option. The movement is caused by technical as opposed to fundamental factors affecting sentiment. Don't try to understand it unless you are a maths gold medalist. volume. Tick The tick is the direction in which the price of stock moved on its last sale.S. Ticker Symbol A ticker symbol represents a particular security (company. such as past prices and volume. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market. The method includes analysis of price patterns. Technical Analysis An analysis of a stock or future based strictly on numbers. Third Stage Capital Capital provided to an enterprise that has an established commercial production and basic marketing setup.
GLOSSARY OF STOCK MARKET will show you the information of the Oil and Natural Gas Commission on the National Stock Exchange of India. 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. 100 per cent turnover means a fund. 7 . 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. the more volatile the stock and the greater potential for wider swings in price (both ways). Underperform An analyst recommendation that means a stock is expected to do slightly worse than the market return. changes all the stocks in its portfolio once a year. The best measure of a firm's total debt. Undersubscribed A situation in which the demand for an initial public offering of securities is less than the number of shares issued. The higher the turnover rate. Trailing Twelve Months (TTM) The last four reported quarters. Today. Turnover Ratio How often a mutual fund changes its portfolio holdings. Turnover Rate Turnover is the relationship between the float and the average monthly volume of a stock. including the broker's commission and taxes. ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly. Transaction Costs The costs of trading securities. on average. sold at a discount and redeemed at full face value. Total liabilities All monies owed regardless of how classified on the balance sheet. Treasury Bills Shorts-term debt issued by the central government. Treasury Notes Debt securities issued by the central government that mature over a specified number of years. Top A technical analysis term meaning the stock price is going down from here.
in exchange for an ownership percentage. etc. A venture capitalist not only brings in moneys as ?equity capital' (that is. the venture capitalist will nurse you through. brand-equity. It is calculated by multiplying the volume traded by the average sale price.GLOSSARY OF STOCK MARKET Upgrade A positive change in the rating of a security. His return is high but. Volatility Volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. he's taking all the risks on an untried idea. 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. bonds. failing which the firm would take the securities being offered (that is. 7 . Value Traded This is the total monetary value of all trading in a security for the market day. whom the entrepreneurs approach without the risk of ? takeover'. He is a fixed interval investor. Underwriter An investment banking firm committed to successful distribution of a public issue. buy) into its own books. Venture Capitalist An investor involved in financing a company's operations before going public. strategic advice. then. more risky venture. Some countries also provide for underwriting on best effort basis Valuation The process of determining the current worth of an asset or company. business contacts. Venture Capital Professional moneys co-invested with the entrepreneur usually to fund an early stage. security. without security/charge on assets) but also brings onto the table extremely Valuable domain knowledge. Vested Interest A financial or personal stake one entity has in an asset. Offsetting the high risk the investor takes is the promise of high return on the investment. Volume The total number of shares. or transaction. Undervalued A stock trading below its fair value. or other units of a security traded in a certain time period. 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.
which is traded on a Stock Exchange's equity market. a currency. an index or a commodity. 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.Ex. XD . Working Capital Current assets minus current liabilities.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. New York where several major brokerage firms and stock exchanges are located. Wall Street A street in the city of Manhattan . YOY .Dividend Buying the shares trading in XD will not entitle you for the dividend which is already declared but not yet been issued. Dalal Street is the Indian counterpart in Mumbai.GLOSSARY OF STOCK MARKET Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Warrants may be issued over securities such as shares in a company. on an annualized basis. 7 . Zero Dividend Preferences Zero dividend preference shares are Preference shares which receive no dividends throughout their lives.
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