GLOSSARY OF SECURITIES MARKET TERMS 2

Nominee : A person or company holding securities on behalf of others, but who
is not the owner of such securities.

Odd-lot : An amount of stock less than the established unit of trading.
Option : The right (but not the obligation) to buy or sell securities at a fixed
price within a specified period.
Ordinary shares : The most common form of shares, which entitle the owners to jointly
own the company. Holders may receive dividends depending on
profitability of the company and recommendation of directors.
Portfolio : A collection of investments
Price/earning : The P/E ratio is ameasure of the level of confidence (rightly or wrongly)
ratio (P/E ratio) investors have in a company. It is calculated by dividing the current
share price by the last published earnings per share.
Primary Market : Where a company issues new shares, either for the first time, or at the
time of issuing additional securities.
Privatization : Conversion of a state-owned company to a public limited company
(plc) status.
Private Limited : A company that is not a public company and which is not allowed to
Company offer its shares to the general public.
Profit & Loss : A financial statement which shows the amount of money a company
Account has earned during the period.
Proxy : A person who represents the shareholder, on the basis of written
authorization, in the annualmeeting of a company. A proxy does not
have the right to speak, though hemay vote onbehalf of the shareholder.
Proxy in also used to refer to the instrument by which the shareholder
authorizes another individual, who may not be a shareholder, to so
represent him.
Public Limited : A company whose shares are offered to the general public and traded
Company (plc) freely on the open market and whose share capital is not less than a
statutory minimum.

Retained : Profits earned and retained in the business tomeet operating expenses
Earnings or for acquiring additional assets or for any other purpose.
Rights Issue : The issue of additional shares to existing shareholders when companies
want to raise more capital.
Securities : A broad term for shares, corporate bonds or any other instrument of
investment in the capital market.
Settlement : Once a trade has been executed, the settlement process transfers stock
fromseller to buyer and arranges the corresponding exchange ofmoney
between buyer and seller.
Short covering : Buying stock to return stock previously borrowed to make delivery on
a short sale.
Short sale : It occures when a person sells shares that he does not own. A short
sale is usually made in the hope that a subsequent market decline will
enable the seller to ‘cover his position’ at a profit, that is, to buy at a
later date and at a lower price the shares he needs to deliver against
his original short sale.
Speculate : To assume a business risk in hope of gain, especially to buy or sell in
expectation of profit from market fluctuations.
Split : The division of shares of a large denomination into shares of smaller
denominations.
Spread : The difference between the bid and offer price of a market maker.
Stock : Securities that represent an ownership interest in a company. If the
company has also issued preferred stock, both common and preferred
having ownership rights, but the preferred stock normally has prior
claim on dividends and in the event of liquidation on assets.

Stockbroker : A member of the stock exchange who deals in shares for clients and
advises on investment decisions.
Stock dividend : A dividend paid in securities rather than cash.
Stock Market : The market place where shares of public listed companies are bought
and sold.
Unit trust : An open-ended mutual fund that invests funds in securities and issues
units for sale to the public. It can repurchase these units at any time.
Yield : Also known as return. The dividend or interest paid by a company
expressed as a percentage of the current price or, if you own the security,
of the price you originally paid. The return on stock is calculated by
dividing the total of dividend paid in the preceding 12 months by the
current market price.






Bid and Asked : The bid is the highest price any one has offered to pay for a security
at a given time; the asked is the lowest price any one has offered to
accept for a security at a given time.
Blue Chip : Alargewell-established companywith a history of profitable operation.
Bonds : Fixed-income securities, which entitle the holder to a pre-determined
return during their life and repayment of principal at maturity.
Book Closing : The closure of books by a company to determine the shareholders’
rights to receive bonus, dividend, rights, etc. No transfers are recorded
during this period.
Boom : Denotes greater activity on the stock exchange.
Bull : An investor who anticipates for a ri se in stocke prices.
Bull Market : A market in which stock prices are rising in general. If the market isrecovering from a deep decline, the early stage of the up trend is called
an up reversal, turnaround, rally or recovery.