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Glossary - D
A street in Mumbai, India, where the Mumbai Stock Exchange building is located. A street paved with hopes and broken dreams.
The quantity that remains untraded is not cancelled until the end of the day.
Total long term debt divided by total shareholder equity.
Total (short and long term) debt divided by total shareholder equity.
Long-term debt divided by shareholders' equity, showing the relationship between long-term funds provided by creditors and funds provided by shareholder; a high ratio may indicate high risk, low ratio may indicate low risk.
Failure to pay back a debt.
Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid.
When a share is bought or sold for the purpose of receiving or effecting deliveries.
It is a process by which an investor gets physical certificates converted into electronic balances maintained in his account with the Depository Participant (DP). In other words, the shares are 'dematerialized'.
An organization which holds securities of investors, on request in electronic from through a registered Depository Participant (DP). It can be compared with a bank. It holds securities in an account, transfers securities between accounts on the instruction of the account holder, facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. Minimum net worth stipulation required by SEBI for registering a DP is Rs. 100 crore.
A DP is a representative of the depository in the system. The DP maintains the client's securities account balances and keeps him informed about the status of holdings. According to SEBI regulations, financial institutions (FI's), banks, custodians, stockbrokers, etc. can become DPs. It is comparable with a branch of a bank if a Depository is likened to a bank. A DP is offered depository services only after it gets proper registration from SEBI.
A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period.
A financial contract between two or more parties based on the future value of an underlying asset. Options and similar other instruments are examples. For instance, the value of a call option on reliance (derivative) fluctuates with the price of reliance stock.
The value is totally 'derived' from the value of the underlying asset such as securities, commodities, bullion, currency, live stock, etc. it is any hybrid contract of a pre-determined fixed duration such as forward, future, option, etc. linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities.
A drop in the price of a stock that is temporary making it the ideal time to buy the stock. A precept common to all businesses: buy low sell high. Never forget, 'highs' and 'lows' are relative not absolute. Any increase over your purchase price is a gain, and vice versa. One usually gets into trouble when giving in to the thoroughly human instinct for the gap to increase (in case of gains) or decrease (in case of losses). Book your profits (or cut your losses) as you go; don't allow them to accumulate too long.
The difference between a bond's face value and when to trade a security.
The acquisition of a group of assets in which returns on the assets are not directly related over time. Proper investment diversification is intended to reduce the risk inherent in particular securities. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables.
For example, an investor would not want to combine large investment positions in airlines, trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. Of course, diversification is essentially for investors not traders. A lot of thought goes into deciding on investment avenues because you are not looking so much at the present status of the industry but at its short- or mid-term future.
This, in turn, requires that you take into an account innumerable factors that could affect the health of the industry. Of course, you can always take an analyst's help, but you should also learn to recognize factors that may impact a particular industry. This calls for clear thinking and common sense. You can do it!
Cash payment made to the shareholders out of the profits of the company. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. Generally, the percentage of corporate earnings paid out runs from 40 to 80 per cent, but many times it is less, even zero, where the corporation keeps its entire earnings.
A stock dividend gives the shareholders additional shares of stock or a fraction thereof, rather than cash. It is not mandatory for accompany to distribute dividends. At the same time, if a company is stingy on its dividend policy, it is not going to find many investors.
The amount of dividend paid out per share. (Dividend rate x nominal value of share)/100. The price used is usually the market price at the end of the period under review, for instance, the end of a financial year.
Total of 12-months' dividend paid (historical or forecast) divided by the latest share price.
The papers that are needed to process your loan application.
A stock index (one of many) commonly used as an indicator of changes in the general level of the stock market prices in United States . In this index, there are 30 industrial stocks thought to be representative of industrial stocks in general. Dow Jones & Company, a financial and investment publisher based in New York , also calculates averages for utility stocks, transportation stocks and bonds.
Just a few of the 30 companies in the DJIA are: American Express, AT&T, Bethlehem Steel, Boeing, Chevron, Disney, Coca-Cola, General Motors and IBM. You will not be directly concerned at what happens on the Dow.
But remember, the Dow average is global leader and is usually reflected by exchange around the world. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices; you also have to keep in touch with global trends. Is that fat fee you are paying your stock analyst looking more reasonable now?
Valuation in stock markets affects your drawing power and hence your loan taking ability as it is reviewed from time to time as per the applicable market value adopted by the bank. It is like an overdraft limit. But in this case it is based on the market values of shares put up as collateral against a loan. The limit fluctuates in line with the market price of the shares.
The process whereby an in-depth examination of a company's business prospects is conducted. Usually when a merger, sale or acquisition of a company is intended.