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Glossary - I
A record of a company's sales and expenses over a particular year or quarter.
Stocks that have consistently paid high dividends. Contrary to what you might think after some time on the stock exchange, there really are such stocks. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks, you can afford to speculate in higher risk stocks. But remember you have to keep an eye on the fundamentals of the company. Consistent does not mean “for ever”.
An index is managed and publishes either by a stock exchange or a professional financial and investment body. It is representative of the market sentiment. Normally the index components are the highly traded stocks of that exchange. Usually they represent about 80 to 85 percent of the market capitalization and trading. Sectored indices like Industrial, banking, Utilities, etc is made up of the highly traded stocks in that particular sector. The BSE Sensex is based on 30 stocks as is New York 's Dow average. These 30 stocks, in number, are a miniscule percent of the total listed shares, but in terms of value of trade and market capitalization, they represent anything up to 85 per cent.
Companies in related businesses.
Increase in the prices for goods and services. For the common man, this means he pays more for what he uses. For the stock market player, it could be both good and bad news. If cement prices are going up, is it because there is a shortage in output, a surge in construction activities or higher government taxes? There could be a number of reasons, each of them having a different impact on the fundamentals of the cement industry. If you are holding cement shares, should you hold on to them, buy more or sell? Try and figure it out. If you can't leave it your analyst.
An important economic indicator. The rate at which prices are rising. So, when the inflation rate is 2 percent, it means it is rising at the rate of 2 percent per year based on current prices. It does not mean that anything you buy will now cost you 2 percent more than it did last time.
Any knowledge about a company, its products, or securities not generally available to the public gained from a source inside the company. For instance if your daughter-in-law's sister's husband is working for a large public limited organization and lets fall during a family get-together that his company is planning to buy company XYZ and you immediately place a buy order for XYZ shares, that would be insider trading. It is legally in most countries for anyone to make a securities trade based on what they believe to be inside trading result in large fines or imprisonment or both. In India , SEBI is trying to improve its monitoring system, but the system is so widespread and disparate and the judicial system, which it's numerous levels of appeals, so time consuming and cumbersome that most insider trades are seldom reported or detected. But the system is being tightened up so think twice before you place that buy order for XYZ shares.
Shares of a company owned by pension funds, mutual fund, banks, financial institutions, etc.
Soft assets such as patents, trademarks, etc.
Money charged by a lender to a borrower for the use of his or her money. Payment made at periodic investments on an investment.
A measure of a company's ability to pay interest on its debt (operating income divided by interest expenses).
Stock trading tracked in periods shorter than one day. For instance the trades during the first two hours or last two hours of the trading day.
A term favored by value oriented fundamental analysts to express the actual value of a corporation, as opposed to the current value based on the stock price. Usually calculated by adding the current value of estimated future earning to the book value.
Raw materials, work in process, and finished goods that have not been shipped to customers.
Anything of value purchased to provide capital appreciation and /or income.Examples include stocks, bonds, mutual funds, unit investment trusts, certificates of deposit, money market funds and collectibles (not lottery tickets; that would be speculation not investment). Investments may also include artwork, antiques and real estate. Also, your wife's jeweler is an investment, so spend lavishly on her.
An organization, usually a stock brokerage firm, involved in taking a new company public IPO, consulting on mergers and acquisitions, handling corporate borrowing, etc. An intermediary between an issuer of securities and the investing public. They handle the distribution of blocks of previously issued securities, either through secondary offering or through negotiations, maintain markets for securities already distributed, and act as finders in private placement of securities.
Equity or other issue which is presented to the market for the first time.
Internal Rate of Return is the rate at which the lender accounts for interest.
Any securities of a company, or the act of distributing such securities.