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Analyst
A person with expertise in evaluating financial investments; he or she performs investment research and makes recommendations to institutional and retail investors to buy, sell, or hold; most analysts specialize in a single industry or business sector.
Assets
Any possession that has value in an exchange.
Average Daily Share Volume
The number of shares traded per day, averaged over a period of time, usually one year.
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.
Appreciate
An increase in any investment's value. For example, if shares of stock in a company you own have risen from five to ten, it has "appreciated."
 Bull market
Term describing a long run, upward-moving securities market.
Bear Market
Term describing a long run, downward-moving securities market.
Blue-Chip Stock
Well-established and financially strong corporations, with little investment risk and good records of earnings and dividend payments.
Bond
A bond is a debt instrument issued by an entity for the purpose of raising capital. A bond can be issued by a corporation or other entities 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.
Bottom line
The last line of a company's profit and loss ledger sheet. The bottom line usually refers to the net profit or loss of a company at any given time.
Broker
An agent who handles the public's orders to buy and sell stocks, commodities or other property. Full service brokers are those that provide a wide range of investment services, research and advice. A full service account representative usually works on a commission basis, thereby generating income on the number of their clients' trades. Discount brokers are not in the business of giving investment advice. They usually work on salary, limit their services to trade executions and collect substantially lower fees.
BSE Sensex
A stock index (one of many) commonly used as an indicator of changes in the general level of the stock market or stock prices in India. In this index, there are 30 diversified stocks thought to be representative of the market in general.
Buy Transaction
When you place an order for stock, it can be executed depending on which type of exchange the stock is listed. There are two methods of execution, (i) the online exchange which is connected via satellite or (ii) the outcry method, which is executed on the floor of the exchange. The first method is instantaneous, 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. A person on the stock market floor bids to find a buyer for the stock. 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. The total time is estimated at 20 minutes.
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 Change in Stock Price
The change in stock price is recorded in points. The fraction amount depends on the security being traded. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. For example, if stock XYZ opened at 10, and was now selling for 11.50 it would be up +1.50. The +1.50 is the change in stock price.
Close
The closing price is the last traded price for the stock. The previous close is the price a stock closed at the previous day.
Commission
A fee charged by a broker for their service in facilitating an investment transaction.
Common stock
Equity, or ownership in a corporation. Stockholders participate in a company's profits or losses through dividends and changes in the stock's "market value."
Corporation
A business organization that, for tax purposes, is a legal entity. A corporation has limited liability (owners can lose only what they invest), easy transfer of stock, and continuity of existence.
Capital Gains Distribution
Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. Capital gains distributions (if any) are usually made annually.
Consensus Rating
This method is prevalent in the USA. It is the average of analyst's recommendations for a single entity. As many brokers have different ratings systems, their recommendations are standardized so that a consensus can be calculated. The I/B/E/S ratings are calculated using a standard set of recommendations, maintained by I/B/E/S, each with an assigned numeric value:
1. Strong Buy
2. Buy
3. Hold
4. Under perform
5. Sell Each recommendation received from the analysts is mapped to one of the I/B/E/S standard ratings. Assigning a numeric value to the broker text enables I/B/E/S to calculate a consensus recommendation. This consensus recommendation appears as the mean (average) of the assigned values.
Commodities
Articles of commerce or products that can be used for commerce. In a narrow sense, products traded on an authorized commodity exchange. Types of commodities include agricultural products, metals, petroleum, foreign currencies, financial instruments and indexes to name a few.
 Dalal Street
A street in Mumbai, India, where the Bombay Stock Exchange Building is located.
Debt to Equity Ratio
Long-term debt divided by shareholders' equity, showing relationship between long-term funds provided by creditors and funds provided by shareholders; high ratio may indicate high risk, low ratio may indicate low risk.
Diversification
The acquisition of a group of assets in which returns on the assets are not directly related over time. Proper investment diversification is intended to reduce the risk inherent in particular securities. An investor seeking diversification for a securities portfolio would purchase securities of firms that are not similarly affected by the same variables. For example, an investor would not want to combine large investment positions in airlines, trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates.
Dip
A drop in the price of a stock that is temporary, making it the ideal time to buy the stock
Dividend
Payment made to the owners of common or preferred stock shares in a corporation. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. Generally, the percentage of corporate earnings paid out runs from 40 to 80 percent, but many times is zero, where the corporation keeps its entire earnings. A stock dividend pays the shareholders additional shares of stock or a fraction thereof, rather than cash. It is not mandatory for a company to distribute dividends.
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 or stock prices in the United States. In this index, there are 30 industrial stocks thought to be representative of industrial stocks in general. Dow Jones & Company, a financial and investment publisher based in New York, also calculates averages for utility stocks, transportation stocks and bonds. Just a few of the 30 companies in the DJIA are: American Express, AT&T, Bethlehem Steel, Boeing, Chevron, Disney, Coca-Cola, General Motors and IBM.
 Equities
Another name for shares.
 Forex
An abbreviated name for foreign currency. See also FX
Futures Contract (Futures)
A futures contract is a legally binding agreement to buy or sell commodities or financial securities at a fixed time in the future at a price agreed upon today. The delivery period, 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. Futures are traded either electronically or via open outcry on a trading floor on the Exchange offering the particular contract
Fundamental analysis - A method of stock analysis based on the management of the company, past and projected financials and profitability.
Fiscal Year
Any consecutive 12-month period of financial accountability for a corporation or government. For example, in many English speaking countries, because of the Christmas rush many department stores find it easier to wind up their yearly accounting on January 31 instead of December 31. Fiscal year is often abbreviated FY with a date. For example, FY May 31 means that the company's fiscal year goes from June 1 to May 31 of the following year. In India, the Fiscal Year of the Government is 1 st April to the 31 st March of the next year.
 Growth stocks
Stocks that pay low dividends, but are expected to grow.
 High
The highest price that was paid for a security during a certain time period. This can be expressed daily, weekly, monthly, or for a 52-week period. For example, the high for the day can be 20, but the high for the year can be 50.
Hedging
A practice of taking one market position to offset potential loses in another. For example using a futures contract to reduce the impact of price fluctuations in a cash or physical market.
Hot stock
A stock whose price rises quickly the day it goes public.
Income stocks
Stocks that have consistently paid high dividends.
Inflation
Increase in the prices for goods and services.
Index/Indices
An index is managed and published either by a stock exchange or a professional financial and investment body. It is representative of the market sentiment. Normally the index components are the highly traded stocks of that exchange. Usually they represent about 80 to 85% of the market capitalisation and trading. Sectored indices like Industrial, Banking, Utilities etc are made up of the highly traded stocks in that particular sector.
Inflation Rate
An important economic indicator. The rate at which prices are rising
Issue
Any of a company's securities, or the act of distributing such securities.
Inside information
Any knowledge about a company, its products, or securities not generally available to the public gained from a source inside the company. It is illegal in most countries for anyone to makes a securities trade based on what they believe to be inside information.
Interest
- Money charged by a lender to a borrower for the use of his or her money.
- Payment on an investment made at periodic intervals.
Investment
Anything of value purchased to provide capital appreciation and/or income. Examples include stocks, bonds, mutual funds, unit investment trusts, certificates of deposit, money market funds and collectibles. Investments may also include artwork, antiques and real estate.
IPO
Initial Public Offering. An equity or other issue which is presented to the market for the first time.
 Japanese CandleSticks
Japanese Candlestick patterns or charts are so called because the lines look like candles. The Candlestick graphically represents where the market opened and closed. The body represents that area of price range, between open and close where buying and selling support was forthcoming.
 Load Fund
Mutual Fund that is sold for a sales charge by a brokerage firm or other sales representative. Such funds may be stock, bond or commodity funds, with conservative or aggressive objectives.
Long Term Gain
A gain on the sale of a capital asset where the holding period was twelve months or more and the profit was subject to the long-term capital gains tax. The legal definition of short term and long term capital gains vary from country to country. So are taxation based on those classifications.
Liquidity
Depth of market to absorb buy and sell interest of even large orders at prices appropriate to supply and demand. The market must also adapt quickly to new information and incorporate that information into the stock's price. Liquidity is one of the most important characteristics of a good market.
Liability
A financial obligation or debt.
Limit order
An order to a broker to buy a certain stock (future, etc.) only if its price falls to a specified level or to sell a stock only if the price rises to a specified level.
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. This can be expressed daily, weekly, monthly, or for a 52 week period. For example, the low for the day can be 10, but the low for the year can be 5.
Leverage
Any means of increasing value and return by borrowing funds or committing less of one's own. For corporations, 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. The more long-term debt there is, the greater the financial leverage. Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it. The market value of the company rises and so do its shares. Because of this effect, financial leverage is popularly called "trading on the equity." For individuals, leverage can involve debt, as when an investor borrows money from his broker "on margin" and so is able to buy more stock than he otherwise could. If the stock goes up, he repays the broker the loan amount and keeps the profit himself. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself. Rights, warrants, futures and option contracts also provide leverage, not through debt but by offering the prospect of a high return for little or no investment.
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 Mutual Fund
A portfolio of stocks, 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. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. The return on the fund's holdings is distributed back to its contributors, or shareholders, minus various fees and commissions. This system allows small investors to participate in the reduced risk of a large and diverse portfolio that they could not otherwise build themselves. They also have the benefit of professional managers overseeing their money who have the time and expertise to analyse and pick securities.
There are two types of mutual funds, open and closed-ended. Units in closed-end funds, some of which are listed on Stock Exchanges, are readily transferable in the open market and are bought and sold, like other stock. These funds do not accept new contributions from investors, but only reinvest the return on the existing portfolio.
Open-end funds sell their own new shares to investors, stand ready to buy back their old shares, and are not normally listed on exchanges. Open-end funds are so called because their capitalization is not fixed; they issue more units as people want them. Many open-ended funds allow contributors extra perks, such as the ability to write cheques against their units. Also there are several open ended mutual funds which are insurance linked. Its basically marketing with added benefits.
Market Open/Close Price
It is the last price a particular stock sold for the previous day.
Market Price
It is the price a particular stock is currently selling for during the operating hours of the stock market.
Moving Average
A rolling set of averages calculated over a time series of values. A Moving Average represents data in a manner that smoothens fluctuations and highlights possible trends.
 New York Stock Exchange (NYSE)
The NYSE marketplace blends public pricing with assigned dealer responsibilities. Aided by advanced technology, public orders meet and interact on the trading floor with a minimum of dealer interference. The result is competitive price discovery at the point of sale. Liquidity in the NYSE market is provided by individual and institutional investors, member firms trading for their own accounts, and assigned specialists. The NYSE is linked with other markets trading listed securities through the Intermarket Trading System (ITS).
Nasdaq Composite Index
The Nasdaq Composite Index measures all Nasdaq domestic and non-U.S. based common stocks listed on The Nasdaq Stock Market. The Index is market value weighted. This means that each company's security affects the Index in proportion to it's market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
Today the Nasdaq Composite includes over 5,000 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes.
New York Stock Exchange
The New York Stock Exchange is located on Wall Street in New York City. It is the largest securities exchange in the United States.
 Opening Price
Opening price is normally determined by the price a stock finished selling at the previous day. Most exchanges have limits of how high or low the stock can trade on the following day. It is like a limit or circuit, and is based on a percentage of the last traded price of the previous day.
For example, if the stock exchange has a upper or lower limit of 10%, and if XYZ stock finished selling at 20.00 the previous day then the maximum or minimum opening price the following day will be 22.00 and 18.00.
Overbought
Refers to a stock that has risen sharply in price or to the market as a whole after a period of vigorous buying which, it is sometimes said, has left prices "too high".
Oversold
The reverse of over-brought. A single security or a market which, it is believed, has declined to an unreasonable level.
 Portfolio
A collection of stocks that is owned by an investor.
Publicly held corporation
A corporation that allows anyone in the public to purchase their stock.
Penny Stocks
Term is typical to the USA stock markets. Low-priced issues, often highly speculative, selling at less than $1 a share. Frequently used as a term of disparagement, although some penny stocks have developed into investment-calibre issues.
Preferred/Preferential stock
Stock that receives preferential treatment over common stock with respect both to dividends and claims on assets in the event that the corporation goes out of business.
Mostly this type of stock that pays a fixed dividend regardless of corporate earnings, and which has priority over common stock in the payment of dividends. However, it carries no voting rights, and should earnings rise significantly the preferred holder is stuck with the same fixed dividend while common holders collect more. The fixed income stream of preferred stock makes it similar in many ways to bonds.
Price change for stocks
The change in stock price is recorded in points. Each full point is measured by the price unit. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. For example, if stock XYZ opened at 10 even and is now selling for 11.50 it would be up +1.50 (1 and a half). The +1.50 is the change in stock price.
Premium
For bonds and preferred stock, the premium is the amount by which the price exceeds the face, or par, value. For options markets, the premium is synonymous with the option's price.
 Quote
The highest bid to buy and the lowest offer to sell any stock at a given time.
Quantity
The quantity of a person's order is the number of shares a person is buying. If the quantity is 50 then the person is buying 50 shares of that stock.
S & P 500 ( Standard & Poor's 500 Stock Index)
An index of 500 stocks widely traded on the New York Stock This index is used as a measure of performance of the overall market. Considered by many to be a much more accurate picture of the market in general.
Secondary Market
When stocks or bonds are traded or resold, they are said to be sold on a secondary market. The majority of all securities transactions take place on a secondary market. They are normally conducted through the relevant exchange.
Shareholder
A person who buys stock in a corporation, and therefore becomes a part owner of the corporation.
Short Covering
Buying stock to return stock previously borrowed to make delivery on a short sale.
Short Position
Stock options, or futures contracts sold short and not covered as of a particular date. On the NYSE, a tabulation is issued once a month listing all issues on the Exchange in which there was a short position of 5,000 or more shares and issues in which the short position had changed by 2,000 or more shares in the preceding month. Short position also means the total amount of stock an individual has sold short and has not covered, as of a particular date. Most stock exchanges have rigid rules regarding short selling. The reader should ascertain these rules from a registered broker of the exchange.
Stag
An investor, who buys and sells stocks rapidly, usually to make profits quickly. Stock certificate
The actual piece of paper that is evidence of stock ownership, usually watermarked and patterned to make itself hard to forge.
Short Term Gain
The profit realized from the sale of securities or other capital assets held twelve months or less.
Sales charge
A transaction fee or commission paid for an investment instrument. Commonly referred to as the "load" in a mutual fund.
Selling short
The reverse of the usual stock market technique, short selling is based on the anticipation that a particular security price will go down. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. Then, as the price of that security declines, you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker, and make a profit. For instance, if you sell short 100 shares of XYZ Corporation at 50.00 a share and the price of the stock drops to 35.00, your profit is 15.00 a share, or 1500.00. Short sellers lose when the price of the stock ascends rather than descends. Theoretically, there is more risk involved with short selling because a stock price could continue to rise forever. A stock purchased at 10.00 a share can only fall to zero. A stock sold short at 10.00 could go to 20.00, 30.00, 40.00, etc.
Share
A unit representing a measure of ownership in a corporation.
Stock Exchange
An organized marketplace for securities featured by the centralization of supply and demand for the transaction of orders by member brokers for institutional and individual investors.
Stock Split
An increase in the number of outstanding shares in a corporation. This is usually brought about by the division of existing shares. For example, a two-for-one split means that shareholders will receive two new shares for each old share, making a total of three. Alternately, a reverse stock split brings about the decrease in the numbers of shares in a corporation.
Stock symbol
A unique lettering system assigned to a particular stock or mutual fund. For U.S. securities, one, two and three letter symbols indicate that the security is listed and trades on an exchange. NASDAQ traded securities have a four or five letters assigned to them. If a fifth letter appears on a NASDAQ security, it identifies the issue as other than a single issue of common stock or capital stock. Stock symbols are used so people can easily and quickly identify stocks without having to look or write sometimes long or similar company names. The Bombay Stock Exchange has numeric stock codes whereas the National Stock Exchange has only alphabetical codes.
Stop Order
An order to buy or sell a security conditioned on a specific price. This order is very often referred to as a "stop loss" order, because it prevents the security from falling below a certain price.
Scrip
A holding in securities
 Technical analysis
An analysis of a stocks or future based strictly on numbers. The method includes analysis of price patterns.
Tick
The tick is the direction in which the price of a stock moved on its last sale. An up-tick means the last trade was at a higher price than the 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, but still higher than the nearest preceding different price. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market
Ticker
A ticker is a trading screen information display showing the current price, volume, etc. of a particular stock, option, future, etc.
Ticker symbol
A ticker symbol represents a particular security (company, option, etc.) on the exchange it is trading on and is used to retrieve information about that security from that exchange. For example: the symbol "f" on the New York Stock Exchange (USA) will bring you information about Ford Motor Company. "ONGC" 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. Today, ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly.
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.
 Volume
The total number of shares, bonds, or other units of a security traded in a certain time period.
Value Traded
This is the total monetary value of all trading in a security for the market day. It is calculated by multiplying the volume traded by the average sale price.
 Warrant
A warrant is a financial instrument issued by a bank or other financial institutions, which is traded on a Stock Exchange's equity market. Warrants may be issued over securities such as shares in a company, a currency, an index or a commodity
Wall Street
A street in the city of Manhattan, New York where several major brokerage firms and stock exchanges are located.
 Yield
In stocks and bonds, the amount of money returned to investors on their investments. Also known as rate of return.
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