STOCK MARKET GLOSSARY A group

The A group consists of 150 scrips in which carry forward (badla) facility is provided.

Accrual bond
See zero coupon bond. Acid test ratio It is the ratio indicated by dividing a company's current assets to current liabilities. It reflects the financial strength of a company and hence called Acid test ratio. Also known as quick ratio. Active market Heavy volume for a specific share or the entire exchange. Annual report Audited document sent to the share holders at the end of each fiscal year reporting the financial results of the company. Ask The lowest price at which someone is willing to sell a security. Also known as Offer. Asking price Same as Ask. Assumed bond Bond which is issued by one company but whose liability is taken over by another company.

B1 group
This is also called as non-specified group and consists of good quality, high volume scrips. B2 group This is also called as non-specified group and these are low market captialisation, thinly traded stocks. Badla Same as Carry Forward Trading. Bear A dealer (or an investor) who believes that market will fall. Bear market A bear market refers to a continuous phase of declining share prices. Bear markets are characterised by overall pessimism as market participants expect prices to decline in the future. Bid The highest price at which someone is willing to buy a security. Blue-chip The term 'Blue-chip' refers to stock of well-known companies with stable businesses. These shares are actively traded, as the company's growth prospects are considered good.

STOCK MARKET GLOSSARY

Bonds They are loan instruments. A bond holder is the creditor of the company. Bonds are normally issued for a minimum period of three-years for a specific interest rate. Bonus shares Bonus shares are the shares given to share holders free of cost. Book building The process of securing the optimum price for a company's share. The issuing company decides the price of the security by asking investors how many shares and at what price they would be interested in. Book runner Institution that arranges and manages the book building process for the new public issue. Book value It is the value at which an asset is carried on a balance sheet. The book value of a share is obtained by dividing the equity reserves of the company by the number of shares issued. Bourse Same as Stock exchange. Brokerage Brokerage is the commission charged by a broker. The maximum brokerage chargeable, as stipulated by SEBI is at present 2.5% of the trade value. BSE Bombay Stock Exchange Bull A dealer or an investor who believes that market will rise. Bull market A bull market refers to a continuous phase of rising share prices. Bull markets are characterised by optimism about the upward movement of prices in the future. Buy-back The repurchase by a company of its own stock or bonds.

Capital market
Markets where the capital funds-debt and equity are traded. Included are private placement sources of debt and equity as well as organized markets and exchanges. Carry forward trading The process of postponement of the payment by an investor for the purchase of securities from one Settlement to another by paying a charge (See Contango) is called Carry Forward trading. Circuit breaker Same as Circuit filter. Circuit filter

STOCK MARKET GLOSSARY

The limit imposed by the stock exchange to control fluctuations in share prices in one session. The circuit filter for A group stocks is 8% and that of B1 group is 25%. Closing price The trade price of a security at the end of a trading day. Based on the closing price of the security, the base price at the beginning of the next trading day is calculated. Common stock A stock with a fixed dividend that is paid before preferred stock dividends. Generally, the preferred dividend is higher than the common stock dividend.

Contango
This is one of the special conditions where a minimum quantity is specified for an order. In carry forward transactions when the buyer pays interest on borrowed funds it is known as Contango charges ( Vyaj Badla). When the seller pays a charge for borrowing securities it is undha badla. Cum dividend The shares that are traded on dividend containing basis are called Cum dividend shares. The Ex dividend shares become Cum dividend, immediately after the company declares dividend. Convertible bonds Bonds that can be exchanged at the option of the holder for preference shares or equity shares at a predecided price. Current yield Dividend or interest received calculated as a percentage of a share's or debenture's current market price.

Debenture
Same as Bond. Deferred equity A common term for convertible debentures/ bonds referring to their equity component which will ultimately get converted into equity shares.

Demat trading
Demat trading is trading of shares that are in the electronic form or dematerialised shares. Dematerialisation is the process by which shares in the electronic form are cancelled and credit in the form of electronic balances are maintained on highly secure systems at the depository. Dividend Dividend is the amount of money or stock that a company distributes to its shareholders, in the ratio that they hold shares in the company. Equity Same as Stock. Ex dividend shares Ex dividend is the price of the share which does not contain dividend declared by the company. The buyer is not entitled to the dividend amount. Face value

STOCK MARKET GLOSSARY

The nominal value printed on the face of the share, debenture or bond. Also known as Par Value. Forward trading Forward trading refers to trading where contracts traded today are settled at some future date at prices decided today.

GDR (Global Depository Receipt)

It is an instrument issued abroad, listed and traded on foreign stock markets. A GDR is convertible into shares, which are listed and traded on the domestic exchange, the dividend being paid in the domestic currency. IPO Initial Public Offer. It is the first offering of equity shares made by a company to the general public. Prior to the IPO the company's shares are held by a select group of people and are not available to the public.

Liquidity
Liquidity refers to the amount of transactions in a particular counter, the larger the volume of trading, higher the liquidity. Listed securities Securities listed on a stock exchange, as opposed to 'permitted securities', which are not listed but can be traded on the exchange. Lyon's Range Calcutta Stock Exchange. Market capitalisation Market Capitalisation is the total market value, at the current stock exchange list price multiplied by the total number of equity shares issued by a company.

NASDAQ Short for National Association of Securities Dealer Automated Quotations system, a US-based computerised stock exchange designed to facilitate over-the-counter stock trading. Net worth It is the total of equity share capital and reserves. It is also the value of total assets minus total liabilities. Nifty Fifty selected stocks of National Stock Exchange. Non- convertible bonds Regular bonds are also called non-convertible bonds NSE National Stock Exchange.

STOCK MARKET GLOSSARY Online trading The sale and purchase of securities over the Internet or through a broker's proprietary software. Over the counter trading A market (unlike an exchange) where dispersed dealers trade, using a network of phones and computer screens. The NASDAQ market is an OTC market in USA.
P/E ratio or Price- earnings ratio The P/E ratio is calculated by dividing the stocks market price per share to the firms earnings per share, for the most recent 12-month period. P/E ratio is a measure of the investors idea of a stocks growth and risk prospects. Par value Face value, also referred to as the Par Value, is the nominal value of the share derived from the total capital issued by the company and the number of shares issued to raise that capital. Portfolio A collection of assests of an individual or organization. A portfolio may contain all the financial assets such as shares, debentures, government bonds by the same individual or organization. Preferred stock A stock with voting and dividend rights. In the event of liquidity, the preferred stock holders are given a priority over the common stock holders. Primary market A market for new issues of shares, debentures and bonds, where investors apply directly to the issuer for allotment on a pre-specified basis (price, minimum application amount etc).

Scrip
Same as Stock. Secondary market A market of buyers and sellers who trade in securities that have already been issued in the primary market. Distinguished from the primary market in which the issuer sells shares directly to the investor. SEBI Short for Securities and Exchange Board of India. The regulator for the Indian capital markets. Sensex Measure of the performance of the collection of 30 "blue-chip" stocks traded on the BSE, considered to represent the barometer of market activity and sentiment. Settlement Scrip-wise netting of trades by a broker after a trading period is over. Settlement date

STOCK MARKET GLOSSARY

The date on which the transactions between members of a stock exchange, done during a particular trading period, are settled by the delivery/receipt of shares.

Share Certificate
Share Certificate is a document that certifies a person's ownership of the interest in the share-holding of the company. Share Premium The difference between the share's nominal value and its sale price. It is the amount in excess of the face value of a share charged by a company on its share issue. Stock Stock means representation of ownership in a company. Stock, share, security and equity, scrip mean the same. Stock exchange Stock exchange is an organized marketplace for buying and selling listed securities. Stock exchange is also known as bourse. Stock index Stock index is a measurement of the trend of share prices. The BSE, NSE NASDAQ are the three most widely quoted market indexes. Stock split When a company splits its stock, it means that it will issue additional shares to the existing investors by reducing the face value of a stock. Stock trading Buying and selling of stocks is called as stock trading. Stockbroker A member of the stock exchange who is licensed to buy or sell shares on his own or on his client's behalf. He charges a commission brokerage on the deals. Undervalued shares Shares that are traded below their book value or the price-earning ratio.

Yield
Yield is the return earned by the investor or shareholder on his investment.

Zero coupon bonds

Bonds that earn the principal and interest only at maturity. They are issued at a large discount on its face value.