Glossary of Stock Market Terms

 Glossary of Stock Market Terms

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.

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.

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.

Final Dividend: This is the dividend which is declared according to the company’s annual results.

Financial Ratio: Various ratios that indicate the health of a business and value in the stock.

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.

Initial Public Offering: The issue of new shares by a previously private company as it becomes a public company.

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.

Value Stocks: Stocks that appear to be trading at a discount to their intrinsic worth, as measured by various different valuation metrics.

Yearlings: Bonds issued for twelve-month term, mainly by local authorities.

Yield: The gross dividend presented as the percentage of the share price.

Glossary of Stock Market Terms