Here’s a glossary of stock market terms, suitable for beginners.
Stock :Ownership of a corporation indicated by shares, which represent a piece of the corporation’s assets and earnings.
Current assets : Value of cash, accounts receivable, inventories, marketable securities and other assets that could be converted to cash in less than 1 year.
Asset :Any possession that has value in an exchange.
Debenture: The stock that a company issues which are backed by assets.
Depreciation: The amount of money set aside for replacement of the assets.
Dividend: The part of the company’s profits which is usually distributed to company’s shareholders, normally on regular basis.
Equities: These are the ordinary shares. They are different from debenture and also from loan stock.
Ex-dividend: The share which is bought without any right for receiving the next dividend. This is usually retained by sellers.
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After-hours Deal: The stock market usually closes at 4:00pm. After this scheduled time, deals can also be made but the transaction is dated the next day, known as an after-hours deal.
Annual Report: An audit report to shareholders produced yearly. This report is produced by all publicly quoted companies.
Balance Sheet: The financial statement which shows the liabilities and assets of a company.
Bargain: Regarding sale or purchase in the stock market, bargain is a common word.
Bearer Stocks: This is the stock that is unregistered with the owner’s name.
Bed and Breakfast Deal: This refers to the sale of share and repurchase on another day. It’s done to set up profit or loss for the purpose of tax.
Bid Price: This term indicates the sale price of stocks or shares.
Blue Button: Refers to the stockbroker’s clerk. Only a blue button is allowed on the trading floor.
Blue Chip: These are shares of big and reputed companies.
Book Value: The net worth of the company as listed on the balance sheet.
Bull: A person who considers the share price of the stock exchange to be on the rise.
Call: An extra installment due on shares.
Capital: The amount of money used for setting up a new business.
Final Dividend: This is the dividend which is declared according to the company’s annual results.
Futures: Contracts that allow any holder the legal right to buy or sell Indexes and Commodities in the future at a price set today.
Gross: The interest paid without deducting of tax.
Hedge: This means to insure the risk.
Cash Settlement: In the stock exchange, there are certain deals like Gilts which are rendered for cash and not for account settlement. They are settled the next day of the deal.
Contract Note: This is a printed confirmation letter from any broker indicating a bargain which is carried out.
Coupon: Refers to interest amount payable only for fixed interest stock.
Cum Dividend: These are shares that are sold, allowing the buyer to receive the following dividend.
Dawn Raid: Refers to the buying of a huge amount of shares in the morning at the opening of stock market.
Dealing: This means the purchase and sale of shares.
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Limit Order: This is an order to any stockbroker specifying any fixed price limit.
Liquidation: Converting the prevailing assets to cash.
Loan Stock: The stock that bears a fixed interest rate. It’s different from debenture stock because it’s not required to be secured by any asset.
Nominee: The term refers to a person acting on the behalf of another in the stock market in documentary as well as financial affairs.
Offer Price: Refers to the specific price at which one can buy stocks and shares.
Options: The term means the right to purchase (call option) and sell (put option) a particular share at a particular price within a particular period.
Ordinary Share: This is a share where the dividends usually vary in the amount.
Over the Counter Market (OTC): Refers to a marketplace outside the main stock market.
PLC: This means Public Limited Company (formerly Ltd). In the stock market, some public limited companies are not always quoted.
Portfolio: A selection of shares usually held by a person or fund.
Proxy: Anybody who votes on another person’s behalf if the person is unable to attend a shareholders’ meeting.
Stock: Also referred to share or equity, stock is the basic ownership unit of a company.
Stock Warrants: An instrument that conveys the right to buy additional stock within a fixed time period at a set price. Warrants differ from stock options in the way they are exercised.
Yearlings: Bonds issued for twelve-month term, mainly by local authorities.
Yield: The gross dividend presented as the percentage of the share price.
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