Aa
A Group Shares: Classification The BSE classifies its listed shares as Group A,
B1 or B2 shares. The classification of Group A shares is made on the basis of the
following attributes. The attributes are taken as guiding factors and their totality
is taken into account. No single factor is considered in isolation. The BSE continuously
reviews the scrips for reclassification. Therefore, the number of stocks in each
group is subject to change.
A GROUP SHARES:
• Scrips having very high liquidity.
• Company having large equity base and large public holding
• Company having consistently good performance over the years.
Group A scrips are eligible for badla transaction.
Accounting Year:According to COMPANIES ACT 1988,
the accounting year of all public limited companies will be 1 April to 31 march,
with effect from 1989-90.
Account Statement: With an account with a broker
is active, he periodically issues a statement to his client, featuring all transactions,
including long and short positions.
Active Shares: Shares in which there are frequent
and day-to-day dealings, as distinguished from partly active shares in which dealings
are not so frequent. Most shares of leading companies would be active, particularly
those, which are sensitive to economic and political events and are, therefore,
subject to sudden, price movements. Some market analysts would define active shares
as those, which are bought and sold at least three times a week. Easy to buy or
sell.
ADR:American Depositary Receipt is a negotiable
certificate issued by an American bank stating that a number of shares in a foreign
company have been deposited with them. The receipt can be traded in US markets.
Instead of having to buy shares of foreign companies in foreign markets. American
can buy them in US in the form of ADRS, which are traded in New York Stock Exchange.
AGM or Annual General Meeting: Meeting held once
a year where the directors of the company report to the shareholders on the year’s
performance and any vacancies in the boars of directors are filled by shareholder’s
consent. The chief of the company comments on the future outlook of the company
sent to every shareholder. Notice of the meeting, along with a copy of the ANNUAL
REPORT has to be compulsorily sent to every shareholder, who may send a PROXY to
attend on his behalf. Shareholders can insist that the equity shareholders of the
company vote upon all resolutions on the company policy. This meeting also receives
the auditor’s report, appoints auditors, and fixes their remuneration.
Allotment Advice:Letter sent to a successful applicant
for shares and debentures of a company informing him that he has been allotted so
many. This is not saleable.
Allotment Letter: Letter sent to a successful applicant
for shares and debentures conferring ownership of a number of shares and debentures.
This can be sold in the market. For partly paid up shares and debentures, the buyer
has to pay the subsequent call or calls for the rest of the money.
Annualized Basis:Statistical computation whereby
company figures covering periods of less than a year are extended to cover a full
year. The computation takes into account seasonal variations, if any.
Annualized Yield: The calculation is:
NAV-Face Value + Dividend paid
-------------------------------------------------------
Face Value X Period
Asset: Anything owned by a company, which has a
market value. These are: CAPITAL ASSETS, which are long-term assets not usually
bought or sold; land, buildings, equipment, furniture and fixtures, etc..; CURRENT
ASSETS like cash, accounts receivable; manufactured goods ready to be sold, and
other assets which are likely to be sold within a year; deferred charge, i.e. expenditure
made now for a future date, such as advance rent or insurance premia; and INTANGIBLE
ASSETS, like goodwill, copyright, trademark, patents, import and export permits,
leases, and distribution rights.
ASSOCHAM: Associated Chambers of Commerce and Industry
of India.
At a Premium: a price higher than that printed on
the share certificate, i.e. above par. When a well-established company issues new
shares, either as rights or to public, it may ask for a higher price. The difference
between the face value and the price at which a share is now being issued is called
the premium.
At Par: A price equal to the face value of a share,
i.e. if the face value of a share is Rs. 10 or Rs. 100 it is being issued or selling
at Rs. 10 or Rs. 100.
Auction Market: The stock market is an auction market,
in as much as buying and selling are done through open bid and offer, as distinguished
from the OTC or over-the-counter market, where the prices are negotiated.
Authorized Assistants: Member of the stock exchange
may be authorize persons to buy and sell in the market on their behalf, making it
possible for them to enter the floor of the exchange. All that the assistants do,
are the responsibility of the member.
Average: Properly weighted and adjusted arithmetic
mean of certain significant shares to represent general market behavior, or a particular
class of shares.
Bb
B1, B2 Group Shares: Classification The BSE classifies its listed shares as Group
A, B1 or B2 shares. The classification of Group shares is made on the basis of their
attributes. The attributes are taken as guiding factors and their totality is taken
into account. No single factor is considered in isolation. The BSE continuously
reviews the scrips for reclassification. Therefore, the number of stocks in each
group is subject to change.
B1 GROUP SHARES:
• Scrips having high liquidity.
• Company having equity above Rs. 30 million.
• Company having fundamentals and financial parameters in the line with the industry.
B2 GROUP SHARES:
• Scrips having low trading volume at the BSE indicating low investor interest.
• Scrips trading below par value at the BSE.
• Company having equity below Rs. 30 million.
• Company’s shares being not widely held.
• Company having surveillance measure initiated against it by the BSE for
suspects price manipulations.
Bad Debt: A loan receivable that has proved uncollectable
and is written off. In companies, this is charged against the reserves, and is tax-deductible.
Bad Delivery: : Delivery of a share certificate,
together with a deed of transfer, considered defective for the following reasons:
share certificate call date expired; correction, erasure, overwriting, or alteration
in the number of shares, in the certificate number or distinctive numbers of shares
or in the last holder’s name, unless these are initilled under the company’s rubber
stamp; certificate badly torn or patched up, mutilating any details; deed of transfer
not in the prescribed form; etc. The buying broker will not accept a bad delivery.
In case your broker has given you a bad delivery, he is obliged to rectify the faults
by getting a replacement of the certificate or the deed of transfer
Balance Sheet: Statement of the financial position
of a company on a particular date, showing the nature and amount of a company’s
assets and liabilities on a particular date, usually the end of the accounting year.
The assets include fixed assets, investments, current assets and loans and advances.
The liabilities include shareholder’s fund, loan funds, and current liabilities
and provisions. The assets and liabilities must balance.
Badla: Backwardation: Also known as undha badla
or ulta badla in Indian stock exchanges. When a bear sells in anticipation of a
fall in prices in the immediate future (so that he can pick up the shares later
for delivery and make a profit), but the fall doesn’t happen within the accounting
period, he has the option to borrow or buy the shares for delivery, or have his
sales carried over to the next accounting.period on payment of undha badla or backwardation
charges to the buyer. He is financed by the BADLIWALA.
Balance Sheet: Statement of the financial position
of a company on a particular date, showing the nature and amount of a company’s
assets and liabilities on a particular date, usually the end of the accounting year.
The assets include fixed assets (GROSS BLOCK less DEPRICIATION), investments, current
assets (which include INVENTORIES, sundry debtors, cash and bank balances), and
loans and advances. The liabilities include shareholder’s fund (equity capital plus
reserves), loans funds (secured and unsecured loans) and current liabilities and
provisions. The assets and liabilities must balance.
Basis Point: .01% of yield of a fixed interest bond.
Thus with the fluctuation of price of a bond, if the yield increases from 14.27%
to 15.31%, there has been increase of 104 basis points.
Bear Market: Prolonged period of falling share prices,
dominated by selling pressure in the marketplace, brought about by BEARS, or adverse
economic or political factors, e.g. a change in the industrial policy of the government,
imposition of price control, drought or flood, free imports, etc., or a change in
the government, income tax raids, etc.
Blank sales: Sale of securities by bears who do
not possess the securities at the moment of selling, but hope to buy them at a lower
price when the market has fallen.
Blank Transfer: Where the name of the transferee
is left blank on a share transfer form, it constitutes a blank transfer. A person
depositing shares with a stockbroker for immediate or eventual sales, signs a blank
transfer form. It is also done shares are mortgaged, so that in the event of non-payment
the mortgagee can fill in his own name in the transferee column and sell the share.
Bonus Issue: When a company’s FREE RESERVES are
high, it may choose to capitalize part of it by issuing bonus shares to existing
shareholders in proportion to their holdings, to convert the reserves into equity.
Bonus shares are issued free of cost, but since the number of shareholders remains
the same and their proportionate holdings do not change, bonus shares do not improve
the shareholder’s ownership of the company. After an issue of bonus shares the price
of a company’s share drops, more or less in proportion to the issue. However, since
the dividend rate is often maintained, the shareholder gets a larger yield on the
increased holding and when the share price APPRECIATES, he makes further gains.
Book Building: Firm allotment of a debt instrument
to a syndicate created by lead managers. This is done to ensure the success of the
issue in a tight liquidity situation in the market.
Book Loss: loss not actually sustained, as the investor
hasn’t sold when the price has fallen. Book loss induces some depression of mind,
but does not actually pinch the investor’s pocket unless, of course, the book loss
keeps mounting and the investor is forced to sell at a considerable loss, if he
can sell at all.
Book Profit: As a noun, unrealized profit, when
shares which an investor holds have appreciated in price, but the shareholder hasn’t
sold any. It induces a sense of well being, without bringing in any tangible profit.
It is only in the verbal use of the term, i.e. to sell shares when they have appreciated
in price, that real profit comes.
Booking Profit:Making profit by selling a share,
which has gone above its purchase price. When shares, which an investor holds, go
up in price, the investor has made only a notional profit, which is meaningless,
except in a DRY RUN PORTFOLIO. Only when he actually sells them does he make any
tangible profit.
Book value:The net asset value of a company, calculated
by total assets minus intangible assets (patents, goodwill) and liabilities.
Bottom Line: The net profit or loss figures in an
analysis of a company’s performance.
Breadth of the Market: Indicated by the percentage
of shares involved in an upward or downward movement of the stock market. If two-thirds
of the shares listed in a stock exchange participate during a trading session, the
market is said to have a good breadth, i.e., the trend it shows is representative,
and is not influenced by the price of a few heavily-traded shares.
Breakout: When shares move between the SUPPORT LEVEL
and the RESISTANCE LEVEL for sometime and then move upwards or downwards beyond
the line, they make a breakout from their price limits. Technical analysts predict
a substantial rise or fall in such situations
BSE sensitive Index or SENSEX: The index comprises
30 scrips whose weighted averages are taken. The list changes from time to time,
but comprises market heavy weights. With effect from 19 August 1996 the Sensex has
been reconstituted, as some of the scrips of the old Sensex no longer command the
same weight in market capitalization and trading volume.
Bullion: Gold, Silver, or any other precious metal
in bulk and not in the form of coins, used by Central banks for settlement of international
debts.
Bullion Market: Prolonged rise in the price of shares,
sustained by buying pressure of actual investors or BULLS News of favourable economic
growth, decontrol, political developments, lifting of price controls, budgetary
concessions, etc. can trigger off a bull market.
Business Risk: it is the inherent potential of declines
in earnings and slowdown in growth in any business or industry. Wrong business policies,
such as overproduction, uncompetitive pricing, poor marketing and publicity, unwise
diversification, over ambitious and premature expansion, may result in fall in a
company’s profit, casing a fall in its share prices.
Cc
Call: A notice for payment of an installment or
the entire unpaid sum of a partly paid share. It also means a demand by a brokerage
firm to a client for a partial payment of the client’s debt or deposit further securities
because the value of securities he had given as a collateral has fallen.
Call Option: The right to buy a fixed number of
shares at a particular price within a fixed period, in exchange for a premium.
Call Price: The price at which the issuer of a call
agreement can redeem the agreement; also known as the redemption price. The issuer
of the call has to compensate the holder for loss of income.
Capital: The money with which a company runs its
business is its capital obtained in two ways: by issuing shares, and by borrowing.
The maximum amount of capital that a company is allowed to raise is its authorized
capital, out of which the maximum it can raise by selling shares is its share capital.
The company may choose to raise the entire share capital in the first instance,
or it may choose to raise part of it. The number of shares that a company chooses
to sell is its issued capital, all or shareholders may subscribe part of which.
it then become subscribed capital, which is also called paid-up-capital.
Capital Intensive: A project that requires large
investments in capital assets, especially machinery and equipment. Automobiles,
oil refineries and steel production are capital intensive and may keep the investor
waiting for rewards, unless these make a high profit within a short time or keep
the cost of borrowing low. Capital intensive may also mean a high proportion of
fixed assets to labour or raw materials.
Capital Market: Sources from which long-term capital
is raised for the setting up and sustained growth of companies. The stock exchange
is a part of the capital market, not only because it readily provides money for
new or existing ventures, but also because it helps investors to trade in further
public and rights issues, convertible and non-convertible debentures, therefore,
becomes an attractive proposition and companies are able to raise the resources
they need. The capital market – banks and lending institutions – that provides short-term
finance.
Carry Forward: The act of postponement of the delivery
of or payment for the purchase of securities from one SETTELMENT to another.
Cartel: A restrictive trade association of a number
of independent companies banding together to monopolize a market by carving it up
among themselves, reaching an agreement to peg prices at certain levels, controlling
supplies, etc., so as to make unfair profits. Cartels are illegal in India. OPEC
is an example of an international oil cartel.
Caveat Emptor: Buyer bewares. A particularly sage
maxim in a market infested with confidence tricksters. Investors in the Indian market
are still not adequately protected, either against unscrupulous brokers or against
defaulting companies. Once the securities and Exchange Board of India gets sufficient
teeth, it is hoped that investor interest will be adequately protected, but not
till then. Beware of brokers who pay after months, who show sales at suspiciously
low prices, and who delay executing orders till opportunity is lost.
Clearing: Settlement of accounts of brokers in a
stock exchange. Dated are fixed by the stock exchange for the first and last business
days of each clearing. The period between these days, normally two weeks, is the
settlement period.
Clearing House: Each stock exchange has a clearinghouse
attached to it to affect delivery and settle contract between members.
Comex: The New York Commodity exchange, which trades
in metal futures and contracts; different from NYMEX, New York Mercantile Exchange,
which trades in oil products futures, and also some rare metals futures.
Companies Act 1956: Comprehensive legislation on
the structure, financing and operations of Indian Companies. The Act covers: type
of limited companies; their capital structure; share capital; issue of shares at
a premium, or in rare cases, at a premium, or in rare cases, at a discount; forfeiture
of shares; rights shares; bonus shares; transfer of shares; listing requirements
of shares; rights of shareholders; dividend; reserves; and liquidation of a company.
The Act has been amended from time to time.
Consolidation: A continued upward or downward trend,
within a narrow range, of share prices of a company, or in general, indicating an
imminent breakout in the same direction.
Contract Note: A note Sent by a broker to his client
stating that he has bought or sols a certain number of shares or a certain amount
of commodities according to his client’s instructions. It specifies the price, and
date of the transaction. If the broker’s commission is not included in the price,
the note will mention the commission charge. The note should be preserved carefully,
not only for any discrepancies in the delivery, but also for the taxman when one
is submitting returns for capital gains or loss.
Correction: A short and sharp reversal, usually
downward, in the price of an individual share or shares in general. Corrections
usually occur during any long-term move upwards or downwards, as share prices seldom
move straight up or down.
Cum-Dividend or CD: The buyer of a CD share is eligible
to receive the dividend for the preceding year. The eligibility lapses once the
company declares the share XD, or without dividend.
Cumulative Preference Shares: PREFERENCE SHARES
whose dividends accumulate until such time as the company is in a position to declare
dividends. The accumulated dividends of the preference shares are to be paid first;
only then can dividend for equity shareholders be paid. These preference shares
may have a clause guaranteeing their conversion into equity shares at par after
a stated number of years.
Current Assets: Such entries on a company’s balance
sheet include cash, sundry debtors, marketable securities, accounts receivable,
loans and advances, and inventory – all that can be converted into cash within one
year.
Current Liabilities: Accounting term for money payable
within the current accounting year, on account of trade creditors, taxation, dividends,
etc. To theses are often added provisions i.e. any charges or liabilities (various
government duties, disputed claims, etc.), which the company may have to settle
within the accounting year.
Dd
Daily Margin: An amount, to be decided by the stock
exchange, to be deposited by a member, on a daily basis, for the purchase or sale
of securities. The amount to be deposited at the stock exchange. The margin is imposed
to curb excessive speculation.
Day Order: An order, which is only good for the
day it is placed, to a stockbroker to buy or sell particular shares. If the order
is to be held till it can be executed, it is called a GOOD_TILL_CANCELLED order.
Day Trading: Buying and selling the same share during
a single day, hoping to make a profit from price fluctuations.
Debentures: A long-term instrument of debt, called
bond in the United States. A debenture holder is a creditor to the company who loans
funds for a period of 7-10 years against a fixed rate of interest. After the stipulated
loan period the debentures are redeemed. Debentures are generally secured against
the company’s assets.
Debt Instrument: Document to raise a short-term
loan, such as promissory note, bill of exchange, bond certificate of deposit or
any other legally binding document.
Capital Market: Sources from which long-term capital
is raised for the setting up and sustained growth of companies. The stock exchange
is a part of the capital market, not only because it readily provides money for
new or existing ventures, but also because it helps investors to trade in further
public and rights issues, convertible and non-convertible debentures, therefore,
becomes an attractive proposition and companies are able to raise the resources
they need. The capital market – banks and lending institutions – that provides short-term
finance.
Depreciation: The loss of value over time of a tangible
asset from use or obsolescence that accountants deduct from the book value of the
asset, whether or not the asset actually depreciates. Depreciation accounting does
not necessarily provide for additional cost of replacement or renewal.
Discount: The difference between a share’s or bond’s
face value and its current market price, if lower. The opposite of this is premium
Disinvestment: Reduction of the capital employed
by selling off assets or by neglecting to replace and used up assets, usually signifying
a restriction of the operations of a company. By disinvesting a company often gets
rid of its uneconomic units of operation.
Dividend: Payment made to shareholders, usually
once or twice a year out of a company’s profits after tax. Dividend payments do
not distribute the entire net profit of a company, a part or substantial part of
which is held back as reserves for the company’s expansion. Dividend is declared
on the face value or par value of a share, and not on its market price.
Dividend Yield: Dividend per share dividend by its
market price, multiplied by 100, e.g., 50% dividend on a share priced at Rs. 230,
face value Rs.10: Rs 5/230=.0217*100= 2.17%
DR or Depository Receipt: A depository receipt is
a tradable instrument, equivalent to a fixed number of shares, which is floated
on overseas markets. Depending on which market it is floated on; it can be ADR or
American Depository Receipt, or GDR, i.e. Global Depository Receipt. A means of
raising funds in the overseas market, several Indian companies have tried this route.
A depository house is given information on the company to provide it to foreign
institutional investors, brokers, equity analysts, and other investors. The order
is placed through an investment banker overseas, who contacts a broker in India.
The local broker picks up the shares for the depository house, which then issues
DRs against these shares at a particular ratio.
Ee
Economic Growth Rate: Annual percentage of change
in the gross national product. This is adjusted for inflation to arrive at the real
economic growth rate. If two consecutive quarters show a drop in the growth rate,
it is recession. Two consecutive rises point to an expanding economy.
Eligible Securities: Shares, debentures, and bonds,
which banks will accept as COLLATERAL for loans. Only listed shares are eligible,
although banks tend to make their own rules about what they will accept among the
eligible securities.
Entrepreneur: A person, often technically qualified,
who takes the risk of starting a new enterprise. Since at the initial stage he cannot
float a public issue he may have to approach a VENTURE CAPITAL fund, which, in return
for an equity stake, will put up the money.
EPS or Earning Per Share: One of the most widely
used indicators of the worth of a share. It shows what a company has earned for
each of its shares. It shows what a company has earned for each of its shares. It
is a ratio calculated by dividing the net profit after tax (PAT) by the number of
equity shares of a company, which includes any shares the company is committed to
issuing, but has not yet issued, such as those arising out of conversion of debentures.
Equities: Ordinary shares of publicly held companies,
the owners of which are entitled to vote in the company’s resolutions, and share
the company’s prosperity by receiving dividends. If the company loses or owes money
the equity shareholder’s liability is limited to the investment he has made, i.e.
he can only lose his investment and no more. If equities are bought at a high price
the dividend yield may be low; there is also the downward market risk. However,
where the equities win, if they are bought judiciously, is in capital appreciation,
an excellent inflation hedge.
Ex-Dividend Date: A publicly announced date on or
after which a buyer will not be entitled declared on a share. The share price is
usually a shade lower on the ex-dividend date.
Exchange Rate Mechanism: A feature of the European
Monetary System involving the EUROPEAN COMMUNITY. Under this mechanism the countries
of the community have agreed to maintain the value of their currencies within narrow
limits, to maintain stability of exchange rate.
Extraordinary General Meeting: Any general meeting
other than the ANNUAL GENERAL MEETING, called to obtain shareholders’ consent to
urgent decisions, such as on takeovers and amalgamations, approval for an expanded
equity base, large-scale borrowings, sudden resignation of the Chief Executive and
the appointment of a new one, induction of a new Director into the board, etc.
Executive Share Option: A kind of perk offered to
the executive of a company to buy shares of the company at a preferential price.
Ff
Face Value: The face value, or the price of a share,
debenture, or bond that is written on the certificate. It is not the market price.
Financial Year: Now 1 April to 31 March for income
tax purposes, although previously companies count choose one-year periods of their
convenience. It is the year of profit and loss accounting.
Fixed Deposit: The principal features of this kind
of investment are: these are time bound, i.e. interest is received only for a stipulated
period; the value of the invested amount does not appreciate; the interest rates
are fixed for the period of deposit; the deposits with companies are unsecured.
Forfeiture of Shares: Shares can only be forfeited
if allotment money or call money is not paid. Once shares are fully paid for they
cannot be forfeited.
Fortune 500: An annual listing by Fortune magazine
of the 500 largest US industrial corporations by their assets, net income, equity
capital, EPS, etc. A Fortune 500 company signifies a major company. So, too, Forbes
500, the 500 largest public companies.
Forward Contract (Forward Dealing/Trading): Contracts
to buy or sell specific quantities of goods, currency, or freight at a stated price
and a stated time in the future. Buyers who wish to cover themselves against price
fluctuations, and sellers who wish to benefit from them make these contracts in
trade. Forward contracts are bought and sold in the FUTURES MARKET.
Fully Paid Share Capital: Share capital whose full
value has been realized from the investors, as against partly paid up share capital
where investors have yet to pay one or more calls.
Futures/ Futures Market: Shares or commodities bought
or sold for delivery at a future date. These can be sold at a profit before delivery
if prices in the market have changed. Market where FUTURES CONTRACTS are traded.
Such contracts are for buying and selling at a particular price on a future date.
These can be a number of such markets for trading in different types of goods.
Futures Contract: A contractual agreement to buy
or sell a specified quantity of a commodity, currency or shares at a particular
price on a fixed date in the future. It differs from an option in that it does not
provide an option to buy or sell, but is a definite contract to do either. Futures
are a hedge against price fluctuations for those who must buy at future dates. These
are speculators who buy and sell these contracts for price. A bought futures contract
can only be cancelled by a sales contract.
Gg
GDP or Gross Domestic Product: The value of all
the goods and services produced by a country in one year.
GNP or Gross National Product: The total value in
money of all finished goods and services produced in an economy in one full year,
and all net property income from abroad. The GNP growth rate is one of the most
important ECONOMIC indicators of a country’s health. The inflation-adjusted version
of the GNP is called the real GNP.
Going Short: Selling a share that the seller does
not actually possess, but hopes to pick up when the price has gone further down,
and so make a profit.
Good Delivery: A share certificate together with
its transfer form which meet all the requirements of transfer, e.g., unmutilated
certificate, the necessary endorsements, signature of the transferor tallying with
what is registered with the company, etc. The buying broker is obliged to accept
such a delivery.
Good-Till-Cancelled Order(GTC): A client’s order
to buy or sell shares, usually at a specified price, which remains valid till executed.
Different from a DAY ORDER or a FILL or KILL ORDER.
Greenshoe Option: A provision in an agreement with
the underwriters of an issue, which states that in the event of exceptional investor
interest the issuer will authorize additional shares or bonds for distribution.
The greenshoe option is often a feature of EUROBONDS
Grey Market: UNOFFICIAL PREMIUM market, in which
new, not-yet-listed shares are bought and sold. Although it gives some indication
of a share’s demand and the likely premium at which it will sell when listed, it
is by no means completely reliable.
Gross: The amount without deductions; hence gross
profit is without deduction under any of the exemption clauses, and gross dividend
income is without deduction of income tax.
Growth Rate: The growth rate is measured by the
increased earning of a company over its previous achievement, expressed in percentage.
The growth rate determines the price of a share.
Guaranteed Stock: Stocks guaranteed by someone other
than the issuer, as to their business soundness.
Hh
Haircut: The difference between the buying price
and selling price of a market marker.
Half-Yearly Results: It is now mandatory for companies
to report summary half-yearly results of their operations to the stock exchange
authorizes. Many companies also advertise these in newspaper and financial journals.
The Requirement of reporting half-yearly results seeks to provide investors with
more frequent information and thereby a better capability for monitoring the performance
of companies as against the earlier system of only the annual results being made
public. A word of caution: the half-yearly results are invariably unaudited and
in a compressed and summary form. It is not infrequent to find them having undergone
considerable therefore, be inadvisable to rely only on half-yearly results for investment
decision-making. They must be seen in the context of the company’s previous full
year results, especially so in the case of companies operating in industries characterized
by sharp seasonalities, e.g. tea companies.
Heavy Market: A market with larger quantities of
share for sale than there are buys Reducing exposure toers, resulting in falling
prices.
Heavy Share: A high-priced (relative to the market)
share which investors are not able to buy in large numbers. These shares are therefore
often split, reducing heir par value.
Hedging: Reducing exposure to risk. In the investment
of one’s funds in the share market, it is done by buying different kinds of shares,
so that if one falls in price another will rise, or investing in different kinds
of assets, e.g., shares, debentures, bonds, gold and silver, real estate etc. hedging
against inflation is putting one’s money on assets which will neutralize inflationary
increases. Hedging is a feature of the commodities and currency markets where prices
are likely to fluctuate.
Historical Cost: An accounting term, meaning the
original or acquisition cost of an asset. In historical cost accounting all values,
whether of assets or liabilities, incomes or expenditure, are stated at their original
value. This means that these sums are of historical relevance and do not reflect
the current cost of production. In times of inflation this may produce quite a wrong
picture of the profitability of a company. Also deprecation provisions made on historical
costs may prove quite inadequate for replacements or renewals.
Ii
Immediate or Cancel Order:
An order to buy or sell, wholly or partly, as soon as bidding on the floor starts.
The part of the order that is not executed is cancelled. Such instructions usually
accompany large orders.
Inactive Shares:
Shares, which are seldom bought and sold in the stock exchange, although they are
listed. A share, which is transacted less than four times a year, may be called
inactive or dead. It is quite difficult to find a buyer or a seller for such shares.
The SPREAD between buying and selling prices can be large.
Index: A measurement of the trend of share prices.
It is not just an average of share prices, but weighted to reflect the number of
shares outstanding for individual scrip. Thus, a 25% price fluctuation in scrip
with a small shareholding may have a much less impact on the market than a 3% fluctuation
in widely held scrip. The index thus gives an idea of the value change in share
prices rather than just price change.
Inefficient Market:
THE EFFICIENT MARKET hypothesis holds that the stock market, at any time, is possessed
of full information on the shares and that nothing is unknown, which can have, further
influence on a share’s future prices. In an inefficient market the potential of
all shares is not fully known or remains neglected. Shares of small companies with
growth potential may remain low-priced in such a market, or turnaround situations
may pass unrecognized for some time.
Inflation: Not just price increase of this or that
commodity once in a while but a general and sustained price increase, resulting
in the fall of the real value of money which can buy only less and less. If inflation
were not a reality, people would not have been quite happy with fixed income investments
and not bothered with stocks and shares which carry a risk, but which nevertheless
appreciate a step ahead of inflation.
Insider Trading:
An illegal activity in which persons in a company having confidential information,
such as expansion plans, financial results, takeover bids, etc., take advantage
of such information to make a profit on the stock exchange by buying or selling
shares.
Institutional Broker: A broker who buys and sells
shares and bonds from the stock market for mutual funds, Unit Trust, the LIC, banks,
or other institutions. He usually deals in large volumes and charges a lower commission
than ordinary investors pay.
Interim Dividend:
An advance instalment of the dividend finally declared. More often one, but sometimes
two such payments are made. The final dividend is often at least equal, and sometimes
more. The interim dividend is a fair indication of a company’s profitability, during
the working year.
Intraday: High and low prices of a traded stock
in course of a day.
Investor Protection:
Theoretical measures to ensure that investor interest is protected by regulating
the promotion of new companies by scrutinizing the claims they make in their prospectuses
meant for the public, making audit, and their control by the stock exchange. The
office for investor, which is supposed to deal with erring companies. Another supposed-to-help
office is the grievance cell attached to each stock exchange. The Indian investor,
however, remains slaughter chicken, as ever.
IPO: Initial Public offering: new shares offered
to the public in the PRIMARY MARKET. IPOs are sometimes preceded by very liberal
bonus issues to existing shareholders as a reward for their faith in staking money
when the venture was new.
Issue Price:
It is the price, at which new issues are offered to the public, at par, or at a
premium, i.e., at a price above the face value. The issue price is fixed in consultation
with the lead manager, which may be bank or a financial institution. If there is
a premium, the company is required to state in the prospectus for the public and
in the issue advertisements as well what premium the erstwhile CONTROLLER OF CAPITAL
ISSUES would have permitted. The trend now is to fix a premium at as high a level
as the investors can be made to accept, as if the premium is a matter of company
prestige.
Issued Capital:
The amount of authorized capital issued by a company. A part of authorized capital
may be withheld for subsequent issue, at par or at a premium.
Jj
Jobber or Taravaniwallah:
A person who trades in shares, and who is located at a particular trading post on
the floor of the stock exchange. He buys and sells for a small difference in price,
which is called the SPREAD. If he bids at Rs. 64 and offers at Rs. 66, it means
he will buy a share at on the demand and supply of a share in the stock market.
In London Stock Market he is known as a Market Maker, while in New York he is called
a specialist. He has no contact with the investing public.
Joint Stock Company:
Now called LIMITED COMPANY. In the U.K it is called Public Limited Company or PLC.
Ll
Leverage:
A company’s long-term debt in relation to equity in its CAPITAL STRUCTURE. The larger
the long-term debt, the higher the leverage. Leverage, by itself, is not a bad thing.
Under conditions of BOOM, a highly leveraged company can make more profit, as the
cost of interest on debt can be lower than the tax burden on the profit before tax.
Since interest on debt is not taxed, the post-tax profit tends to be larger.
Liability:
Any claim for money against the assets of a company, such as bills of creditors,
income tax payable, debenture redemption, interest on secured and unsecured loans,
etc. Although on the balance sheet shareholder’s equity is shown under liability,
it has no claim on the assets of a company, unless it goes into liquidation.
Limit Order:
The client gives the stockbroker a price limit above which he cannot buy or below
which he cannot sell. There will also be a time limit. In a sharply rising or falling
market such an order may result in no buying or selling.
Liquidity:
It is the state of having cash, or possessing assets, which can be quickly converted
into cash. However, at throwaway prices almost any asset can be turned into cash.
To be properly liquid, or to have high liquidity, an asset must be convertible into
cash at its fair market price. When it refers to a stock it means that there are
enough units of it to make large transactions possible without a substantial support
or drop in its price. A company, which has issued large number of shares, has liquid
stock in the market.
Listed Shares:
Shares of companies, which are registered by a stock exchange for trading in its
floor. They have a quotation on the official list of the stock exchange. Listed
shares have the following advantage:
1. They are traded in the stock exchange, which is a fair market place.
2. They are liquid.
3. The price is determined fairly.
4. There is continuous reporting of their prices.
5. Full information is available on the companies.
6. There are strict regulations for the protection of those who buy and sell shares
on the stock exchange.
A share may be listed on more than one stock exchange. Also, a share may be listed,
but very infrequently or not at all traded.
Long Position:
Holding of securities in the expectation of a price rise in the future, when a sale
will realize profit.
Mm
Make a Market:
When a JOBBER maintains firm bid and offer prices in a particular share by his willingness
to buy or sell market lots at publicly quoted prices, he makes a market in that
share. He is also called a market maker. Under recent regulations of the Bombay
Stock Exchange, every company with a subscribed capital of over 3 crores is required
to have a market maker on the stock exchange.
Management Audit: A review, by an independent firm
of management consultants, of the management functions in a company. The review
covers all the aspects of management --- Production, Marketing, Sales, Finance and
Accounts, and Personnel. The review may result in restructuring the existing management
system towards greater efficiency.
Margin:
The difference in prices at which a JOBBER will buy and sell. Also called a HAIRCUT.
Margin Call:
Demand from a stockbroker to a client to deposit fresh securities or cash to maintain
the requirements of a minimum margin initially agreed upon. If the customer does
not respond, the stockbroker may sell off the securities he is holding on the MARGIN
ACCOUNT.
Market Capitalization:
The total market value, at the current stock exchange list price, of the total number
of equity shares issued by a company.
Market Share:
The percentage of an individual’s sale of a product in relation to the total sales
of that product by all companies.
Market Timings:
The decision when to buy or sell a share or when to switch from one share to another.
Technical analysis claims to advise investors correctly about market timing.
Memorandum Of Association:
For public limited (whose shares constitute the substance of the stock market) at
least seven persons must subscribe to a memorandum of association for registration
as a company. This must contain the following information: the name of the company;
the state in which it has its registered office; the objects of the company; a guarantee
to the effect that then liability of its members will be limited; the amount of
share capital proposed and the denomination of each share; and declarations are
unalterable, except with the permission of the Company Law Board.
Money Market:
Comprises institutions such as discount houses, merchant banks, and sometimes even
the government’s central bank, which deals in very shirt term loans, such as treasury
bills, bills of exchange, commercial paper, certificates of deposits, etc.
Moving Average:
An average of share prices for specified periods - one week, a fortnight, a month,
or a year or years – and showing trends of price movements, rather than daily fluctuations.
For example, a weekly moving average will take a week’s prices till yesterday, and
for tomorrow’s average it will drop the earliest day and include to day in its stead.
Nn
Naked Option:
A CALL OPTION for which the seller does not own the supporting shares, and which
he hopes to buy from the market, believing that the price will fall. If it does,
he makes profit on the difference; if it doesn’t, and rises, the seller, the seller
is caught in a naked position, and must sustain a loss by buying at the higher price.
Narrow Position:
One that is not hedged from market risk. If one writes a call or put option without
a corresponding long or short position on the security, one’s potential risk or
reward is on the high side, compared to a covered position.
Narrow market:
An inactive or sluggish market in which there is a low volume of trading and great
fluctuations in prices compared to the trading volume.
National Stock Exchange:
The National Stock Exchange is a computerized, floorless exchange leading to an
openness, which is lacking in the regional stock exchanges, as no one knows while
trading who is buying to selling what.
Net Book Value:
The value of an asset as it appears on the books of a company as at the date of
last balance sheet, after depreciation has been applied. It is not the market value
of the asset.
Net Dividend:
Dividend paid by a company to its shareholders less tax deducted at source, if any.
Net Worth:
- (1) For the purpose of ratio analysis net worth is taken to represent
shareholder’s funds, i.e. equity share capital plus reserves.
(2) A company’s net worth is the sum of its assets minus its liabilities.
It has been pointed out, however, that this definition is misleading on at least
two counts; the book value of the assets is usually taken into consideration, whereas
the market value should be more relevant; also, the goodwill of a company, an intangible
asset, does not even feature on a company’s balance sheet. Therefore, in order to
arrive at the true net worth of a company these must be assessed and taken into
calculation.
Niche:
A marketing term, indicating a particular area of the market for a specialty product
in which a company has quite large market share. With little or no competition,
such markets can offer large margins of profit.
Non-cumulative Preference Shares:
Preference shares whose dividends do not accumulate to be paid with retrospective
effect when the company is able to pay a dividend. On these shares, if dividends
are skipped, the shareholders get nothing for the year. Most preference shares,
however, are cumulative, and their dividend arrears must be cleared before paying
the equity shareholders.
Oo
Odd Lot:
In the stock market shares are generally bought and sold in MARKET LOTS, which are
easy to trade. Any number of shares less than the market lot makes an odd lot. Odd
lots typically arise from BONUS or RIGHT issues. Apart from the difficulty in buying
or selling odd lots, there is another disadvantage: you may have to sell an odd
lot at a considerably lower price than that quoted for a market lot.
Offer Price:
The price at which units can be bought from a Trust. It may or may not include an
entry fee. The term also refers to the price at which the market maker is proposed
to sell.
Operating Profit or Loss:
Profit or Loss arising out of the principal business of a company, before extraordinary
items (such as investments) are taken into the accounting.
Opportunity Cost:
Where there are alternative investment possibilities, a company must compare the
benefit derived from choice. A with the possible benefit from choice B. Build a
new factory, or buy one that is in the market; increase production of the same commodity,
or diversify – such are the choices in which a company must set the projected returns
of one choice against the other.
Option:
The right choice, bought at a price called premium, to buy or sell a particular
commodity or stock or currency at a particular future date at a particular price,
called the strike or exercise price; he will do so only if it is not obliged to
buy or sell at the exercise price; he will do so only if suits him. The buyer may
let the option lapse, in which case all that he loses is the premium, which is also
called option money. An option to buy is called a Call Option, whereas an option
to sell is called a Put Option.
OTC: Over the counter market.
OTCEI, or Over the Counter Exchange of India:
Approved by the Government of India in 1989, it came into operation in 1991. it
has no particular marketplace or stock exchange floor. In OTC, buyers and sellers
operate on negotiated prices acceptable to both. Inactive issues, less liquid shares,
issues with limited public holding, and issues listed with the OTC comprise the
OTC market. The objectives of the OTC are liquidity, fixed and fair price, simplified
process of buying and selling, quick disposal of orders, and a cheaper method of
public sale of new issues.
Overbought:
Term used in TECHNICAL ANALYSIS to indicate a sharp rise in the price of a share
or shares as a result of hectic buying by investors and speculators in the hope
of further rise. An overbought share or market is prone to an imminent CORRECTION,
as there are few buyers left to push the price up any further.
Oversold:
A term used in TECHNICAL ANALYSIS to indicate that the price of a share or shares
has fallen too fast as a result of excessive selling and there are few sellers left.
An oversold share or market is prone to an imminent rise in price. An oversold situation
can be detected by a GAP in which the opening price is considerably below the closing
price of the previous trading day.
Oversubscribed Issue:
When there are more shares applied for than are to be issued. In such cases a minimum
number of shares, say, 100 shares, is allotted to lucky applicants whose name may
come up in the drawing of lots, where the odds depend upon the number of shares
applied for, i.e., the larger the application, the better the odds. In a bull market,
good public issue tends to get oversubscribed, sometimes more than 97 times.
Overvalued Shares:
Shares which have caught the investor’s fancy, and who therefore are willing to
pay a price for them, which are not justified by their EPS (earning per share) or
P/ E ratio. Justifiably high-priced shares can become overvalued as a result of
a company’s fall in profitability, the emergence of competition and the loss of
market share, prolonged labour unrest, or foreign exchange fluctuations.
Pp
Paid-up Capital:
Capital acquired by selling shares to investors, as distinguished from capital accumulated
from earnings or from earnings or from secured or unsecured loans.
Paid-up Share:
A share whose issue price has been paid in full. In Indian new-issues market seldom
do companies ask for the share price in full with the application. Often it is half
with the application, and the rest on allotment. Sometimes, however, when the price
is high, there may be part payment with application, part or allotment, followed
by one or two calls. The last call, before the share is fully paid up, is the final
call.
Penny Shares:
Shares with a very low market price, often bought by small investors because, since
these are low-priced, a large number can be acquired, and even a small price rise
represents substantial price appreciation, e.g., if a three-rupee share rises to
five rupees, the capital appreciation is 66.6%. Investors, who buy these, believe
that a sufficiently low point has been reached and there is not so much downward
risk. On the other hand, if the company recovers, there is a lot to be gained.
Portfolio:
Combined holding of many kinds of financial securities – shares, debentures, government
bonds, Unit trust certificates, and other financial assets. Making a portfolio is
putting one’s eggs in different baskets with varying elements of risk and return.
Reducing risk by diversification and maximization of gains are the primary objects
of making a portfolio.
Preferential Allotment:
Preference given to existing shareholders of a parent company or group companies
when shares are offered to the public in a newly floated company, as a sort of reward
for belonging to the family. The application forms are different and clearly marked
as preferential. Some allotment may be expected.
Premium:
- (1) A prices above the face value of a share other financial security.
(2) Price paid for buying an OPTION.
Profit Booking:
Selling shares when their prices have risen above their purchase price.
Profit and Loss Account:
A statement of account of the profit and loss of a business during the accounting
period. It summarizes the income, costs, and expenses of the company over the period,
and together with the balance sheet, constitutes a company’s financial statement.
Public Limited Company:
a LIMITED LIABILITY COMPANY, whose shares can be bought by the public on the stock
exchange. In Britain, such companies have plc after their names.
Public Offering:
Offering shares to the investing public, as distinguished from rights offering to
existing shareholders, or private placement.
Put Option:
The right to sell shares at an agreed OPTION price.
Qq
Quick Assets:
These are liquid or near-liquid assets, such as cash, money in bank, gold, etc.
In financial statement analyses these mean current assets minus inventory.
Quoted Price: The price at which a share last bought
and sold on the stock exchange.
Rr
Rte of Return:
The dividend received divided by the price of the share, multiplied by a hundred.
The total return on an investment is the sum of dividend received and the appreciation
in the price of one’s shares.
Recovery: Rise in share prices after a period of
fall.
Recovery Stock:
A share that has fallen in price, but which has potential to rise again to the previous
level.
Redemption:
Buying back a loan instrument by paying off the lender. In the case of debentures
or preference shares redemption means paying back the investor, either in cash,
or through equity shares.
Red Herring:
An exploratory prospectus for a new company, which seeks to find out if the market
will subscribe to the issue of shares. It is less detailed than the actual prospectus,
which must satisfy conditions of full disclosure. Financial and pricing details
may omit from the pathfinder (known in the USA as red herring).
Registrar:
A professional agency, which keeps an account of stock and bondholders and is responsible
for the issue and dispatch of bonus certificates and transfer of shares. Where a
company appoints a registrar, the registrar handles all investor matters subsequent
to an issue of shares.
Repatriation:
Strictly speaking this means the transfer of assets from a foreign country to the
home country. The Indian government does not allow the transfer of assets from the
country, but transfer of dividends is allowed. That is why companies with large
foreign shareholdings are liberal in their distribution of dividends, as also frequent
issues of
Retail Investor:
He is the individual buying shares for himself, as opposed to the institutional
investor who buys for others. The retail investor buys in small numbers and pays
higher brokerage than institutional investors who can negotiate brokerage. Also,
since institutional investors now dominate the market, their buying and selling
can, and does, affect the retail investors’ fortunes.
Return on Equity: Net income of a company as a percentage
of its equity capital.
Risk:
The possibility of loss, inherent in any investment, which one would do well to
give suitable weight to while comparing alternative investment prospects. There
are four principal risks:
- Business Risk,
- Market Risk,
- Interest Rate Risk, and
- Currency Risk.
Roll Over:
Transfer of funds from one investment to another. For example, a particular share
may be sold when its price is ruling high, and the proceeds rolled over to buy another
share whose prospects may seem to bright. Also, the proceeds can be PARKED for some
time, and rolled over to buy a larger number of the same share when its price drops.
Ss
Sauda Book:
A book used by members of a stock exchange or their authorized assistants to record
sales and purchase transactions.
Scrip: Share certificate.
Secondary Market:
Place where already issued and outstanding shares are bought and sold. Distinguished
from the primary market in which the issuer sells shares directly to the investor.
Securities: Financial documents which give the owner
specific rights of ownership; these include:
- Equity and Preference Shares,
- Debentures,
- Treasury Bills,
-
Consols,
- Government Bonds,
- Units of Mutual Funds, and
- Any other
marketable documents.
Share:
A share is one unit of ownership of a company. If a company has issued 1,000,000
shares, and a person owns 1000 of them, he owns .001% of the company. His share
of the company makes a further public or rights issue and he can’t pick up his entitlement
to maintain the percentage of his holding.
Share Certificate:
Documentary evidence of the ownership of a block of shares, this will have the following
information: the face value of the share, the number of shares represented by the
certificate, their distinctive numbers, the certificate number, the holder’s name
and the folio number on the register in which the holder’s name is entered. In the
case of transferred shares, bought in the secondary market, the last two items will
appear at the back, endorsed by the company. In the past the certificate could be
an elaborate and impressive affair. Now the certificates are quite plain and small
in size.
Share Capital:
Capital with which a company is started, consisting of shares issued to investors.
At the start of a company, it is authorized to issue a certain number of shares
amounting to a certain sum of money. This is the authorized share capital. This
may be raised subsequently by a resolution approved by the shareholders. However,
not all of the initially authorized share capital needs to be issued. That part,
which has been issued, is called issued share capital all subscribed share capital.
Share Transfer:
When share are bought on the stock exchange, the broker will found in course of
time, give the buyer the certificate along with share transfer forms. These forms
will have the transfers attested signatures. The buyer of the shares, the transferee,
with then have to fill in these forms, affix shares transfer stamp and send the
certificate for the registration in the buyer’s name.
Spot Market:
Commodities market in which goods are sold against cash and delivered immediately.
Soft Market:
A market dominated by sellers, with few buyers. A slight selling pressure causes
the prices to drop further. Soft, because easily depressed.
Stock Exchange:
A market place where shares change hands for a consideration. It is usually a building
or part of a building, where members of the exchange, acting as brokers or dealing
on their own, buy and sell shares, sometimes as BULLS and sometimes BEARS.
Stock Splits:
A US term, which means issue of bonus shares, which dilutes the value of each individual
share, as well as division of high-priced shares into a number of low-priced shares,
e.g., the splitting of Rs 100 TISCO and TELCO shares into 10 each of Rs 10 shares.
Stock splits increase the number a outstanding shares and create a wider and more
active market for a company’s shares.
Stop Limit:
A sell order, which stipulates that a share is to be sold only after a bring to
an end PRICE has been reached, e.g., if the stop price is Rs. 280 per share and
the market has reached it, the share is to be sold at Rs. 281.
Stop Loss:
A client’s order to his broker to sell a share if its market price falls to a certain
level below the current price. It is a means of protecting one’s profit, or reducing
one’s loss, while waiting for the market to recover.
Tt
Take Delivery: physical acceptance of shares, which
have been bought on his account, by a client.
Target Price:
When an investor has bought a share, usually he has a higher price in mind, which
he expects the share to reach. This is the target price. It is wise in the long
run to fix such a target price for every share bought and book profit when the share
has reached it, rather than hold it indefinitely, hoping that the price will rise
further. Most gains are made in the stock market by acting on the target price,
as most losses are the result of holding on to a share market by acting on the target
price, as most losses are the result of holding on to a share in the hope that it
has an endless possibility of appreciating.
Trading Account:
A part of profit and loss account in which the cost of goods sold is compared with
the sales is compared with the sales realization to arrive at the gross profit margin.
Transfer Deed:
A stamped document used to transfer property from one person to another. For transfer
of shares a share transfer form has to be obtained from the stock exchange, all
particulars filled, and share transfer stamps affixed. It then becomes a transfer
deed.
Turnover:
The total revenue of a company derived from the provision of goods and services,
less trade discount and other taxes. It also means the rate at which some asset
is turned over, i.e. replaced, in course of an accounting year. For example, stock
turnover rate indicates how fast a company can grow without further capital injection.
Uu
Undersubscription:
Not enough applications for the purchase of an issue of shares; the possible reason
being doubtful prospects of the company, too frequent visits to market by the company,
audacious premium asked for the share, or any of the reasons inducing the investor
to stay away. The issue is said to have bombed then. In the event of undersubscription
the underwriter of the issue has to take up the remaining shares. The issue has
devolved on them.
Undervalued Shares:
Shares selling below their book value or the price-earning ratio which analysts
believe they deserve. There may be many reasons for this: the industry is out of
favor, or the company has current labor trouble, or it is well-known enough or,
this is quite common, the company hasn’t yet caught the investor’s fancy. Fundamental
analysts often identify and recommend such shares are often targets of takeovers
as their shares can be acquired cheaply.
Unlisted Share:
A share, which is not registered with any stock exchange and therefore does not
feature on any stock exchange list. Owners of such shares are deprived of the protection
that the holder of a listed share enjoys from the stock exchange. These shares are
also very difficult to sell and carry large risk. Usually, the more exchanges at
which a share is listed, the greater is its liquidity.
Vv
Volume:
Refers to total volume of shares traded on a particular day and over a period. It
shows the strength or weakness of the market movement up or down. An increased volume
shows strength of the movement, while a decline shows a weakening movement. If a
low volume extends over weeks or months the market is lethargic, with only small
advances or declines. Volume, represented by bar charts, read along with price charts,
is an important indicator in technical analysis. This is a concept of the Dow theory.
Ww
Wall Street:
Popular name for New York Stock Exchange, which is located at the corner of Board
Street. Figuratively, Wall Street means high finance.
Warehousing:
Accumulation of shares in large numbers by brokers in anticipation of sizable orders,
particularly from institutional investors.
Weak Market: A market in which there are more sellers
than buyers, resulting in a decline in prices.
Working Capital:
In accounting terms it is the difference between CURRENT ASSETS and CURRENT LIABILITIES.
Sometimes called circulating capital, as current assets and current liabilities
are continually turned over in the course of a business year. Working capital is
not fixed assets.
Xx
XD: Ex-Dividend:
The price of a share without the benefit of the declared dividend. Shares registered
for transfer after the RECORD DATE does not carry the dividend, which goes to the
previous owner.
Yy
YO-YO Stock: Highly volatile shares which go up
and down, up and down, like a yo-yo.
Zz
Zero-Coupon Bond:
A coupon is an interest warrant attached to a debt instrument, and the coupon rate
is rate of interest. A zero-coupon bond carries no interest, but is sold at a discount
to its face value, which is the maturity value. The difference between the discounted
price and the maturity value represents the interest on the bond.
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