Margin collected by the Stock Exchange from the members having unduly large outstanding position.
American Depository Receipts (ADR) (U.S.)
A certificate issued in the United States in lieu of a foreign security. The original securities are lodged in Bank/Custodian abroad, and the American depository receipts (ADRs) are traded in the US for all intents and purposes as if they were a domestic stock. An ADR dividend is paid in US dollars, so it provides a way for American investors to buy foreign securities without having to go abroad, and without having to switch in and out of foreign currencies.
An option that can be exercised at any time prior to expiry date.
Asset Management Company
Company which handles the day to day operations and investment decisions of a mutual fund.
An instruction from the client to the broker authorising him to use his discretion and try to execute an order at the best possible market price.
When the price of the underlying security equals the strike price of the option.
When a seller is not in a position to deliver the securities he has sold, the buyer sends in his applications for buying-in, so that the securities can be bought from the market and delivered to him. This process by which the securities are procured in the Stock Exchange, on behalf of the defaulter is known as Auction.
A weak and falling market characterised by the dominance of sellers.
Bearer Securities/Bearer Bonds
Securities which do not require registration of the name of the owner in the books of the company. Both the interest and the principal whenever they become due are paid to anyone who has possession of the securities. No endorsement is required for changing the ownership of such securities.
A measure of the volatility of a stock relative to the market index in which the stock is included. A low beta indicates relatively low risk and a high beta indicates a high risk.
An offer price to buy. Business on the Stock Exchange is done through bids. Bid also refers to the price one is willing to pay for a security.
The difference between the bid price and the ask price.
A negotiable certificate evidencing indebtedness for e.g. debt security issued by a company, government agency etc. A bond investor lends money to the issuer and, in exchange, the issuer promises to repay the loan amount on a specified maturity date. The issuer usually pays the bondholder periodic interest payments over the life of the loan.
Shares issued by companies to their shareholders free of cost by captialisation of accumulated reserves from the profits earned in the earlier years.
The periodic closure of the Register of Members and Transfer Books of the company, to take a record of the shareholders to determine their entitlement to dividends or to bonus or right shares or any other related corporate benefits.
Book value of shares is calculated by adding up Share Capital, reserves and surplus of a company which is then divided by the number of equity shares issued by the company.
Broker is a member of a Stock Exchange who acts as an agent for clients and buys and sells shares on their behalf in the market. Though strictly a stock broker is an agent, yet for the performance of his part of the contract both in the market and with the client, he is deemed as a principal, a peculiar position of dual responsibility.
Commission payable to the broker for arranging sale or purchase of securities is called brokerage. Scale of brokerage is fixed by the Stock Exchange.
A rising trend in prices.
A day on which the Stock Exchange is open for business.
The unpaid installment of the share capital of a company, which a shareholder is called upon to pay.
Clearing house is in the Stock Exchange acting as a central agency for effecting delivery and settlement of the contacts between all the members, of that Exchange. Clearing corporation does the same activities but it is independent of the Exchange.
Price of securities is permitted to vary in line with the market forces, in absence of official intervention, this is termed as clean float.
The rate at which the last transaction in a security is struck before the close of the trading hours.
A note issued by a broker to his client with regard to his order, stating the number of securities bought or sold in the market along with the rate, time and date of contract.
The month in which futures contracts may be settled by making or accepting delivery.
Convertible Preference Shares
These preference shares may be converted into equity shares after a specified time period as mentioned in the offer document.
Tokens for payment of interest attached to bearer securities.
The interest rate stated on the face of coupon.
Coercive Tender Offer
A tender offer that exerts pressure on target shareholders to tender early. This could be in form of preferential compensation for shareholders tendering early, etc. Changes in securities laws have limited the effectiveness of such tender offers.
Means ‘with’ or ‘including’. A cum price includes the right to any declared dividend or bonus.
Cumulative Convertible Preference Shares
A type of preference shares where the dividend payable on the same accumulates, if not paid. After a specified date, these shares will be converted into equity capital of the company.
Cumulative Preference Shares
A type of preference shares on which dividend accumulates, if not paid. All arrears of preference dividend have to be paid out before paying dividend on equity shares.
The amount that has to be deposited at the Stock Exchange on a daily basis for the purchase or sale of a security. This amount is specified by the Stock Exchange.
An order that is placed for execution if possible, during only one trading session. If the order cannot be executed in that trading session then it is automatically cancelled.
Bonds issued by a company bearing a fixed rate of interest usually payable half yearly on specific dates and principal amount repayable on a particular date on redemption of the debentures.
Data given to each member of the Stock Exchange at the end of a settlement period containing particulars such as number of shares, value of shares, names of the receiving members etc. to enable him to deliver such shares in time.
A floating security whose value is not solely determined by free market supply and demand pressures but also by interventions of the concerned authorities.
A price for a bond which includes the amount of interest that has accrued on the bond since the date of the last interest payment.
Bonds issued outside the borders of a national market. If may or may not be denominated in the issuers national currency.
Equities underwritten and distributed to investors outside the country of origin of the issuer.
A put or call that can be exercised only on its expiration date, and not before it.
Means ‘without’ or ‘not inclusive of’. A price so quoted excludes recently declared dividends, rights, or bonus share.
Regulated market place where products are bought and sold through intermediaries, for e.g. a Stock Exchange for securities market products.
The return an investor might expect on an investment if the same investment were made many times over an extended period. The return is found through the use of mathematical analysis.
The amount by which the market price of an option exceeds the amount that could be realised if the option were exercised and the underlying commodity liquidated.
The value that appears on the face of the scrip, same as nominal or par value of share/debentures.
The number of shares issued and outstanding of a company’s stock.
The fraction of the paid up equity capital of a company which normally participates in day to day trading.
An agreement for the future delivery of the underlying commodity or security at a specified price at the end of a designated period of time. Unlike a future contract, a forward contract is traded over the counter and its terms are negotiated individually. There is no clearing house for forward contracts, and the secondary market may be non-existent or thin.
An exchange traded contract generally calling for delivery of a specified amount of a particular financial instrument at a fixed date in the future. Contracts are highly standardized and traders need only agree on the price and number of contracts traded.
A share with special voting rights that give it peculiar power vis-à-vis other share. The term applies particularly to share retained by a government after privatisation. If a government wishes to sell off a company in a sensitive industry (e.g. defense) and yet retain control, it can hold on to a golden share. This might give it the right to veto any takeover bid.
Guaranteed Coupon (GTD)
Bonds issued by a subsidiary corporation and guaranteed as to principal and/or interest by the parent corporation.
A call option is said to be in the money when it has a strike price below the current price of the underlying commodity or security on which the option has been written. Likewise when a put option has a strike price above the current price it is said to be in the money.
Internal Rate of Return (IRR)
The rate at which future cash flows must be discounted in order to equal the cost of the investment.
Initial Public Offering (IPO)
The first offering to the public of common stock, e.g. of a former privately-held form or a portion of the common stock of the hitherto wholly-owned subsidiary.
International Securities Identification Number is a unique identification number for a security.
Libor – London Interbank Offer Rate
Often used as a basis for pricing Euroloans. Libor represents the interest rate at which first class banks in London are prepared to offer dollar deposits to other first class banks. There are a number of similar rates like HIBOR (Hongkong Interbank Offer Rate); SIBOR (Singapore Interbank Offer Rate); TIBOR (Toronto Interbank Offer Rate).
The risk that a solvent institution is temporarily unable to meet its monetary obligations.
An advance payment of a portion of the value of a stock transaction. The amount of credit a broker or lender extends to a customer for stock purchase.
The last reported sale price for an exchange traded security. For over the counter securities it is a consensus among market makers.
The price that would be paid for a security or other asset.
A check is carried out on the computer to find out whether purchases and sales are reported by the member match. The transactions thus compared are called matched transactions.
The date on which a loan, bond, or debenture becomes due for payment.
A financial institution that specialises in securities market activities such as underwriting etc. and in advisory activities such as mergers and acquisitions. Merchant Banking also typically refers to acquisition of equity stakes in companies either for strategic or temporary investment purpose.
The non-hostile and voluntary union of two companies.
The average of security or commodity prices over a period of few days or upto several years showing the trends upto the last interval. Each time the average is taken, the oldest price is dropped and the latest price is added. Thus the average is moving one.
An order to buy and sell a security that remains in effect until it is either cancelled by the customer or executed.
The price at which the first transaction in a security is struck after the opening of the market.
Net Sales less cost of sales, selling expenses, administrative expenses and depreciation is operating income. The pre-tax income from normal operations.
Paid in Capital
The difference between par or book-keeping value of a security and the amount realised from the sale or distribution of those shares by the company.
Paid up Capital
The amount of capital, both equity and preference, paid up by the shareholders against the capital subscribed to by them.
A term used to describe new issue of securities which have same rights as similar issues already in existence.
Pay In/Pay Out
The days on which the members of a Stock Exchange pay or receive the amounts due to them are called pay in or pay out days respectively.
Preferred Stock/Preference shares
Owners of this kind of stock are entitled to a fixed dividend to be paid regularly before dividend can be paid on common stock. They also exercise claims to assets, in the event of liquidation, senior to holders of common stock but junior to bondholders. Holders of preferred stock normally do not have a voice in management.
Price Earning Ratio
The ratio of the market price of the share divided by earnings per share. This measure is used by investment experts to compare the relative merits of a number of securities.
Random Walk Theory
Claims that a stock’s past price action is no guide to future prices because prices move randomly, not in a pattern. Random walk theoreticians are averse to the idea that because a stock has been moving up during the last few weeks it is likely to continue moving up.
A date on which the records of a company are closed for the purpose of determining the stockholders to whom dividends, proxies, rights etc., are to be sent.
The date specified for delivery of securities between securities firms.
For administrative convenience, a Stock Exchange divides the year into a number of settlement periods so as to enable members to settle their trades. All transactions executed during the settlement period are settled at the end of the settlement period.
The risk that operational difficulties may prevent the settlement of a transaction even when the counter party is able to perform.
The standard price of a security is generally worked out as a weighted average price of all recorded transactions for that security adjusted to the nearest rupee.
Stop Loss Order (or) Stop Order
An order to sell a security when it declines to a specified price.
Any individual or group who has an interest in a firm, in addition to shareholders and bondholders also labour, consumers, suppliers etc.
Also called the diversifiable risk, residual risk, or company-specific risk, the risk that is unique to a company such as a strike, the outcome of unfavourable litigation etc.
Yankee Bond (U.S.)
A bond offering in the U.S. domestic market by a non-U.S. entity registered with the Securities Exchange Commission.
Zero Coupon Bond
A bond that pays no interest while the investor holds it. It is sold originally at a substantial discount from its maturity value, paying the investor its full face value when it comes due, with the difference between what he paid initially and what he finally collected representing the interest he would have received over the time period it was held.