Market Terms

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Agent
A securities firm is classified as an agent when it acts on behalf of its clients as buyer or seller of a security. The agent does not own the security at any time during the transaction.

Annual Report
A publication, including financial statements and a report on operations, issued by a company to its shareholders at the company's fiscal year-end.

Arbitrage
The simultaneous purchase of a security on one stock market and the sale of the same security on another stock market at prices which yield a profit.

Ask or Offer
The lowest price at which someone is willing to sell the security. When combined with the bid price information, it forms the basis of a stock quote.

Assets
Everything a company or person owns, including money, securities, equipment and real estate. Assets include everything that is owed to the company or person. Assets are listed on a company's balance sheet or an individual's net worth statement.

Averaging Down
Buying more of a security at a price that is lower than the price paid for the initial investment, the aim of averaging down is to reduce the average cost per unit of the investment.

Basis Point
One-hundredth of a percentage point. For example, the difference between 5.25% and 5.50% is 25 basis points.

Bear Market
A market in which stock prices are falling.

Beta
It measures the systematic risk of the stock, Beta in nothing but a measurement of the relationship between the price of a stock and the movement of the whole market.

Bid
The highest price a buyer is willing to pay for a stock. When combined with the ask price information, it forms the basis of a stock quote.

Blue Chip Stocks
Stocks of leading and nationally known companies that offer a record of continuous dividend payments, financially strong, high brand image, highly liquid  and other strong investment qualities.

Bonds
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.

Broker or Brokerage Firm
A securities firm or a registered investment advisor affiliated with a firm. Brokers are the link between investors and the stock market. When acting as a broker for the purchase or sale of listed stock, the investment advisor does not own the securities but acts as an agent for the buyer and seller and charges a commission for these services.

Bull Market
A market in which stock prices are rising.

Capital
To an economist, capital means machinery, factories and inventory required to produce other products. To investors, capital means their cash plus the financial assets they have invested in securities, their home and other fixed assets.

Capital Gain or Loss
Profit or loss resulting from the sale of certain assets classified under the income tax legislation as capital assets. This includes stocks and other investments such as investment property.

Capital Stock
All shares representing ownership of a company, including preferred and common shares.

Capitalization Change
Any change in the issued and outstanding listed securities of an issuer. This change may involve the issuance, repurchase, or cancellation of listed securities or listed securities that are issuable upon conversion or exchange of other securities of an issuer.

Capital Structure of a company
Total amount of money invested in a company, such as debt, preferred and common stock contributed surplus and retained earnings of a company.

Cash Dividend / Distribution
A dividend/distribution that is paid in cash.

Certificate
The physical document that shows ownership of a bond, stock or other security.

Clearing Day
Any business day on which the clearing corporation is open to effect trade clearing and settlement.

Close Price
The price of the last board lot trade executed at the close of trading.

Closed-End Investment Fund
It is one type of Mutual Fund that issues a fixed number of securities that trade on a stock exchange or in the over-the-counter market. Assets of a closed-end fund are professionally managed in accordance with the fund's investment objective and policies and may be invested in a wide range of financial instruments/assets. Like other publicly traded securities, the market price of closed-end fund securities fluctuates and is determined by supply and demand in the marketplace.

Commission
The fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client.

Commodities
Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.

Common Shares or Common Stock
Securities that represent part ownership in a company and generally carry voting privileges. Common shareholders may be paid dividends, but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation.

Convertible Security
A security of an issuer (for example - bonds, debentures, or preferred shares) that may be converted into other securities of that issuer, in accordance with the terms of the conversion feature. The conversion usually occurs at the option of the holder of the securities, but it may occur at the option of the issuer.

Cum Dividend
With dividend. The owner of shares purchased cum dividend is entitled to an upcoming already-declared dividend. The opposite of this is ex dividend.

Cyclical Stock
A stock of a company in an industry sector that is particularly sensitive to swings in economic conditions.

Day Order
An order that is valid only for the day it is entered. If the order is still outstanding when the market closes, it will be purged overnight.

Debenture
A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.

Defensive Stock
A stock purchased from a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn.

Delist
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.

Delisted Issue
The status of a security that is no longer listed on the Exchange, The security could trade on another market.

Demand
The combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, which are, in part, determined by supply.

Discretionary Account
A securities account created when a client gives a partner, director or qualified portfolio manager of a Participating Organization specific written authorization to select securities and execute trades on the client's behalf.

Diversification
Limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.

Dividend
The portion of the issuer's equity paid directly to shareholders. It is generally paid on common or preferred shares. The issuer or its representative provides the amount, frequency (monthly, quarterly, semi-annually, or annually), payable date, and record date. An issuer is under no legal obligation to pay either preferred or common dividends.

Dividend Reinvestment Plan
A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company.

Dividend Yield
Equal to the indicated annual dividend rate per share divided by the security's price. For example, if the indicated dividend rate is Rs.1.00 and the closing price is RS.50.00, Rs.1 divided by Rs. 50.00 equals 2% Dividend yield.

Equities
Common and preferred stocks, which represent a share in the ownership of a company.

Equity Price
The price per share traded.

Equity Volume
The total number of shares traded on one side of the transaction.

Escrowed Securities
The outstanding securities of an issuer that are not freely tradable, because they are subject to an escrow agreement that restricts the ability of certain security holders of that issuer from trading or otherwise dealing in those securities until certain conditions are satisfied.

Exchange-Traded Fund (ETF)
A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock. Also known as an index participation unit (IPU)

Face Value
The cash denomination of the individual debt instrument. It is the amount of money that the holder of a debt instrument receives back from the issuer on the debt instrument's maturity date. Face value is also referred to as par value or principal.

Filing Statement
A disclosure document submitted by a listed company to outline material changes in its affairs. Filing statements are not used for the purposes of a financing.

Growth Stock
The shares of companies that have enjoyed better-than-average growth over recent years and are expected to continue their climb.

Hedge
A strategy used to limit investment loss by making a transaction that offsets an existing position.

Income Stock
A security with a solid record of dividend payments and which offers a dividend yield higher than the average common stock.

Inflation
A general rise in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.

Initial Public Offering (IPO)
A company's first issue of shares to the general public.

Inside Information
Non-public information pertaining to the business affairs of a corporation that could affect the company's share price should the information be made public.

Insider
All directors and senior officers of a company, and those who are presumed to have access to inside information concerning the company. An insider is also anyone owning more than 10% of the voting shares of a company.

Insider Trading
There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.

Intrinsic Value
The difference between the current market value of the underlying interest and the strike price of an option. In-the-money is a term used when the intrinsic value is positive.

Investment
The purchase or ownership of a security in order to earn income, capital or both. Investments may also include artwork, antiques and real estate.

Investment Advisor
A person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products.

Investment Counsellor
A specialist in the investment industry paid by fee to provide advice and research to investors with large accounts.

Junior Corporation
A young company in the early stages of operations and growth.

Liabilities
The debts and obligations of a company or an individual. Current liabilities are debts due and payable within one year. Long-term liabilities are those payable after one year. Liabilities are found on a company's balance sheet or an individual's net worth statement.

Liquidity
This refers to how easily securities can be bought or sold in the market. A security is liquid when there are enough units outstanding for large transactions to occur without a substantial change in price.

Listed Stock
Shares of an issuer that are traded on a stock exchange, Issuers pay fees to the exchange to be listed and must abide by the rules and regulations set out by the exchange to maintain listing privileges.

Long
A term that refers to ownership of securities. For example, if you are long 100 shares of XYZ, this means that you own 100 shares of XYZ Company.

Market
The place where buyers and sellers meet to exchange goods and services. It also represents the actual or potential demand for a product or service.

Market Capitalization
The number of issued and outstanding securities listed for trading multiplied by the market price per stock of the company.

Money Market
Part of the capital market established to buy and sell short-term financial obligations. These include government treasury bills, short-term Government bonds, commercial paper, bankers' acceptances and guaranteed investment certificates.

Mutual Fund
A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.

Net Change
The difference between the previous day's closing price and the last traded price.

Net Worth
The difference between a company's or individuals total assets and its total liabilities, also known as shareholders' equity for a company.

One-Sided Market
A market that has only buy orders or only sell orders booked for a particular security.

Open-End Investment Fund
An investment fund that continuously offers its securities to investors and stands ready to redeem its securities at all times. Transactions in shares/units of mutual funds are based on their net asset value (NAV), determined at the close of each business day. Examples of an open-end fund are traditional mutual funds and exchange-traded funds (ETFs).

Par Value
A security's nominal face value.

Penny Stock
Low-priced speculative issues of stock selling at less than Rs 10.00 a share.

Portfolio
Holdings of securities by an individual or institution. A portfolio may include various types of securities representing different companies and industry sectors.

Pre-Opening Session
A session from 7:00 a.m. to 9:30 a.m. (ET) when orders can be entered into the Stock Exchange's systems, Tradable orders will be queued until after 9:30 a.m. when the market opens

Price-Earnings (P/E) Ratio
A common stock's last closing market price per share divided by the latest reported 12-month earnings per share. This ratio shows you how many times the actual or anticipated annual earnings a stock is trading at.

Rally
A rise in the general price level of the market or price of a stock.

Risk
The future chance or probability of loss.

SEBI
(Securities and Exchange Board of India) SEBI is the regulator of Indian equity market.

Seed Stock
The shares or stock sold by a company to provide start-up capital before carrying out an initial public offering (IPO).

Share Certificate
A paper certificate that represents the number of shares an investor owns.

Short Selling
The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short).

Speculator
Someone prepared to accept calculated risks in the marketplace for attractive potential returns.

Spread
The difference between the bid and the ask prices of a stock.

Stock Split
A corporate action that increases the number of securities issued and outstanding, without the issuer receiving any consideration for the issue. Approval by security holders is required in many jurisdictions. Each security holder gets more securities, in direct proportion to the amount of securities they own on the record date.

Thin Market
A market that occurs when there are comparatively few bids to buy or offers to sell, or both.

Tick
Slang used for minimum spread in ask and bid price of stock, Depending on the stock price.

Trading Day
A day when stock market open and trade

Trading Session
The period during which the Exchange is open for trading

Transferable Security
A security that can be transferred from one party holder to another without restrictions provided that all proper documentation is included.

Uptick
A stock is said to be on an uptick when the last trade occurred at a higher price than the one before it.

Venture Capital
Money raised by companies to finance new ventures.

Volatility
A statistical measure of changes in price over a period of time.

Warrant
A security giving the holder the right to purchase securities at a stipulated price within a specified time limit.

Yield
This is the measure of the return on an investment and is shown as a percentage. A stock yield is calculated by dividing the annual dividend by the stock's current market price.