Stock Market Terms
August 18th, 2009 • Related • Filed Under
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Thought would try to define some of the commonly used terms in equity arena and I am sure this would be handy for new comers as well as to those who are looking at some definitions.
- Acid Test Ratio
- Ratio of company’s current Asset to current liabilities. It reflects the financial strength of the company and is also known as quick ratio.
- Annual Report
- Financial results of the company.
- Asking Price
- Price at which someone is willing to sell his securities.
- Bear Market
- Continuous phase of declining share prices.
- Bid
- Highest price at which someone is willing to buy the securities. When Asking price and Bid price match there is a deal.
- Blue-Chip
- Stock of well known companies with stable business.
- Bonds
- Bond holder is the creditor of the company and normally bonds are issues with a minimum of 3 years time frame with specific interest rate.
- Bonus Shares
- Bonus shares are shares given to share holder at no extra cost.
- Book Value
- It is the value at which you carry the asset into the balance sheet. The book value is calculated by dividing the equity reserve of the company by the number of shares issues for the same.
- Brokerage
- Brokerage is the commission charged by the broker for a transaction which can be upto 2.5% as per SEBI.
- Bull Market
- Continuous phase of rising share prices.
- Buyback
- Repurchase of its own company or bonds from the holders.
- Carry forward
- The process of postponement of purchase from one settlement to other by paying a charge.
- Circuit
- The limit imposed by exchanges to control the fluctuation of share prices.
- Closing price
- Last traded price of a stock.
- Close Ended Funds
- Close ended funds are funds where investors can subscribe only during the New Fund Offer (NFO) period only.
- Demat trading
- Demat trading is trading of shares in electronic or dematerialized form.
- Dividend
- Dividend is the amount of money that any company gives to the share holders for each share held.
- Equity / Stock / Share
- Representation of ownership of a company.
- ETF
- Exchange Traded Fund: A mutual fund that is traded on a stock exchange and holds a basket of securities like mutual funds. They can be traded like a stock in trading hours of the day. Price movement is like stock varying on a trading basis and not like Mutual Fund which is once everyday.
- Face Value
- The nominal value of share. This is the actual price of the share. Many west countries allow the face value to be consistent and of Re. 1 but in India we have Face value in range of Re. 1 to Rs 10.
- Forward Trading.
- The Scrip is traded today would be settled at future date which can even be settled or carried forward.
- IPO
- Initial public offer which refers to the first offering of equity shares to the general public. Top 5 Indian IPO’s
- Nifty
- What is Nifty
- Open Ended Funds
- Investors can purchase and sell units even after the New Fund Offer (NFO) period.
- Open Interest
- Open interest are open contracts which refers to the total number of contracts, that have not been settled or squared off. For each buyer there must be a seller. So when either of the buyer or seller opens the contract and till he does not square off the contract, it is open and sum total of all such open contracts is called open interest.
- P/E Ratio
- Price of the stock divided by the net earning of the company.
- Resistance
- Resistance, is the point at which sellers (bears) take control of prices and prevent them from rising higher.
- SEBI
- Securities and exchange board of India.
- Sensex
- What is Sensex
- Settlement and Settlement Date
- The date at which transaction between users is settled by deliver of shares.
- Share Premium
- Premium paid over the face value for acquiring the share in the company.
- Support
- Support is a level at which bulls (i.e., buyers) take control over the prices and prevent them from falling lower.
- Undervalued Shares
- Shares which are traded lower than the book value.
- Volume
- The number of shares or contracts traded in a security or an entire market during a given period of time.
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Dear Shabbir,
Indian Oil Corporation is i guess finalising a bonus shares issue do u think it is worth a buy @ 641 per share or bonus shares arnt too profitable …
Thank s
Melwyn
I am not fan of Oil companies where there is Government intervention
Very good info ! Thank You for sharing !
thnx for the update. So is there any relationship between the performance of a stock with its open interest and volume?
Saurav, I have created complete detailed answer here
http://shabbir.in/open-interest/
Let me know if you have more queries on this.
Hi Sir,
Thanks for writing to me & would appreciate for writing to me in future in the same manner. I have gone through your book & really benefited with that.
I have come acrossed few questions, which i believe you could answer me in good manner by your level of knowledege & understanding.
Questions are as follows.
1. Meaning of Dual Listing (Case 1. Take recent story of BHARTI & MTN)
2.Delisting of Companies (Case 2. Satyam have been asked to furnish Financial Accounts within give time. (NYSE)
3.Meaning of Venture Capital & Buy Back Of shares.
Would also appreciate if you can provide me link to get all information or send Book similar to Make Money in Equity.
Thanks & Regards,
Sanjay Singh
I can answer all of them but adding them here would not help but I would try to make a post if possible because you not only want meaning but also referring to some case studies.
If we open a trading and demat account with a company, then should we have to give the dmat AMC compulsorily? Is there any company who dont charge AMC for demat account?
I have no idea on AMC being waived off but you can ask that when opening demat account.
That is a real informative page for a beginner. One should definitely bookmark this page for future.
how does co issue bonus.where does the bonus share of co comes from
Brijesh, See http://shabbir.in/reliance-bonus-issue-dividend/
thanx for e-book.
Can you please explain the significance of P/E ratio while interpreting the value of share price.
In India how does the P/E is interpreted in mutual funds investment?
hi
how do u see the future of sensex heading from now
and your thoughts on futures and option, i am a starter with respect to this business.
help me out to learn better
Hey, its a great help.
I am planning to get certified on NSE certification exams
Do you think it will help me to understand Finance better. any other suggestion.
hey…I want to know about beta factor of scrips in bank nifty ..how & from where do I get that.Could you please help me out
i bought3000share of unitech @74.60 it is going to down what i do
Saini you should have some stoploss and what was that.
Their is a Typo.. IT should be Blue-Chip instead of Blue-ship.
Thanks for reporting and it is now corrected.