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Glossary - A

Glossary - A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

American Depository Receipt (ADR)

A certificate of trading on a U.S. stock exchange that represents shares of a foreign corporation.

Analyst

A person with expertise in evaluating financial investments. He performs investment research and makes recommendations to institutional and retail investors to buy, sell or hold. Most analysts specialize in a single industry or business sector. The problem is that no two analysts are usually in agreement in their recommendations. In the USA , there is a "Consensus Rating" below. Do not blindly follow analyst's recommendations; you should learn to make your own judgments based on the fundamental strengths of the company whose shares are recommended by the analyst's reports, you have to sign a waiver that no liability attaches to the analysts in case his recommendations do not come true.

Annuity

A contract sold by life insurance companies that guarantees a specified payment at some future time, usually retirement.

Appreciate

An increase in any investments value. For example, if shares of stock you own in a company have risen from five to ten, it has "appreciated". Not quite the word to use to describe your blood pressure after you finds you have just invested in a dud stock.

Approved List

The list that tells you which shares are approved for the purpose of pledging them with the bank against loan. Only these shares will be eligible for "loans against shares" facility. This list of approved securities is periodically revised.

Arbitrage

Buying in one exchange and selling in another to take advantage of price difference.

Asset Allocation

The process of dividing your funds among different classes on investment such stocks, bonds or real estate. You could further allocate your stock funds into value, growth, foreign, etc.

Assets

Any possession that has value in exchange in the sense that it has buyers. In the stock market, money is the medium of all exchange. In other words, exchange value on the stock exchange is always in terms of money.

Auction

A mechanism used by the Stock Exchange to fulfill its obligation to the buyer of a security. It is done when the seller is unable to deliver the script sold by him. The security in question is offered by a member who has ready possession of the script.

Average Daily Share Volume

The number of shares traded per day, averaged over a period of time, usually one year. Helps in determining the level of activity of the share on the market and in choosing only currently active stocks.

Average Maturity

The average time to maturity of securities held by a mutual fund. Changes in interest rates have greater impact on funds with longer average life.

Average P/E Ratio

Average price/earnings ratio of stocks owned by a mutual fund.