Stock Market Definitions

Stock Market  Definitions 

What is stock Market?

Stock Market is a public entity and place where securities of listed companies of stock exchange are traded.

Importance of Stock Market

It is most important to company to increase their capital by selling their shares. Business organizations get a chance to trade them self publicly. Increasing in per shares price helps to increase the investment.

How do shares trade?

Share trade is, in which buyer of share offers a certain price at the same time seller demands a certain price for the stock.  When their demand matches the trade occurs.

What is the purpose of Stock Market?

The purpose of stock market is to provide a marketplace for buyers and sellers in order to exchange securities and real information.

Who are the market participants?

There are many kinds of market participants those are mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations who are trading their own share.

What is preferred share?

Preferred is such a share if one person buy this share, he has the right to get dividend. Generally preferred stock holder get dividend before the common share holder, and has a less risk to decrease the stock price than the common share.

What is broker house?

Broker house is such a place where the share is sold and bought. For buying and selling the share the broker house charges commission.

What is warrant?

Corporation issues this warrant that means that share stock holder can purchase the common share stock at a predefined price.

What are stock indexes?

This is a cluster of stocks which shows the stock market as a full or a specific part. In the stock indexes, the daily trading or performance is recorded so that the investors can understand the market performance.

What is book?

It is a record in electronic way that represent pending buy and sell of a specific share.

Beta

It is a way to measure relationship between the stock price and the movement of stock market.

Security

Security is usually a fungible, negotiable financial instrument representing financial value.

IPO

It stands for Initial Public Offering. It refers to the first sale of the stock of any company to the public. As the result of an Initial public Offering a private company turns into a public company.

Paid –up capital

Paid-up capital is the total amount of shareholder capital that has been paid in full by shareholders. The amount of money that company has received from sell of its share and it is not borrowed. It sold all of it’s available share. And the company cannot increase its capital unless through debt or authorized to sell.

Paid – up capital

Paid up capital is the capital that company has received from sell of its share. It is fully paid by the shareholders.

Annual Report

It is the publication of financial statements and a report on operations, issued by a company to its shareholders, at the end of the fiscal year.

Agent

Agent is a securities firm that acts as buyer or seller of securities on behalf of its clients. But agent is not the owner of the firm.

Broker

A person who buys or sells stocks, bonds, commodities, this is called broker. 

Dividend

Dividend is the portion of a company’s profit which is given back to the investors. Such payments are made on either an annual or quarterly basis.

Ask Size

The total size in board lots of the most recent ask to sell a particular security.

Bid

Bid is the highest price that a buyer is willing to pay for a stock.

Bid-Ask-Spread

The bid-ask spread or, "the spread" is the difference between a security's bid price and its ask price.

Bid-To-Cover Ratio

Is a ratio used to express the demand for a particular security during offerings and auctions. In general, it is used for shares, bonds, and other securities.

Bear Market

When the stock price is falling, it is called bear market.

Bull Market

When stock price is rising, it is called bull market.

Option Series

It is an individual option contract for a given security.

All-or-None Order

An order that must be filled completely otherwise the trade will not take place.

Day Order

 An order is entered & is valid only for that day. If the order is still outstanding when the market closes, it will be purged overnight.

Share

A share is a single unit of ownership of corporation or mutual fund or any type of organization.

Bond

A bond is a flexible permit that acknowledges the gratitude of the bond issuer to the holder.

Penny Stock

Low priced speculative stock selling at less than $1.00 a share.

Portfolio

Portfolio means the holdings of securities by an individual or institution.

Stock Repurchase

It happens when company its self purchases it’s share

Liquidity

This term refers to the ability of organization to pay off its debt as early as possible.

Rate of return (ROR)

Is the ratio of money gained or lost on an investment comparing to the amount of money invested.

Face Value

Face value is the fixed value of the share. When shares are issued in the market in a certain vale, then it is called face value. It does not change.

Book value

Book value is the value of the share which is shown in the balance at the end of the year. Book value is the present value of the share. It generally changes.

Circuit breakers

Measures instituted to stop trading temporarily when rises or fall too far.

Primary market

It is the part of the capital markets that deals with the issuance of new securities.

Electronic communication network (ECN)

ECN is a computer system that facilitates trading of financial products outside of stock exchanges.

Daily Price Limit

The maximum price that is increase or decrease & permitted for a future contract in one trading session compared to the previous day's settlement price.

Position Limit

The position limit is the maximum number of futures or options contracts, which is acted together by an individual or a group of people hold at one time.

Debt Value

The total dollar value of volume traded on one side of the transaction for a specified period. It equals price multiplied by volume divided by 100.

Debt Volume

The number of debt instruments traded on one side of the transaction for a specified period multiplied by the face value of the debt instrument.

Market Capital

By multiplying number of outstanding shares and current price per share we get market capital

Partial Fill

When partial fill trades only one part of its total committed volume, that time an order receives it.

Stock broker

A stock broker is a regulated professional person who buys and sells shares and other securities through market makers or agency.

Market maker

A market maker is a company, or an individual, that buy and sell price in a monetary tool or commodity held in inventory, to make a profit.

Trader

A trader is a person who buys and sells financial instruments such as stocks, bonds, commodities and derivatives.

Dividends

Dividends are payments made by a corporation to its shareholder.

Call Money

Money loaned by a bank that must be repaid on demand. It is used as a short-term source of funding to cover limit accounts or the purchase of securities.

Camel Rating

The Capital, Asset, Management, Earning, Liquidity and Sensitivity (CAMELS) rating of corporations

Off-exchange

Refers to buy and sell financial instruments such as stocks, bonds etc directly between two parties.

Stock valuation

Is the way of counting intangible assets of companies and their stocks. It helps to predict future of the company, market price etc.

Intrinsic value

It is the basic value of securities.