Stock Investment Guide - Stock Market Terminology


Stock Market Terminology
/> The shares or stock sold by a company to provide start-up capital before carrying out an initial public offering (IPO). Self-Regulatory Organization An organization recognized by securities administrators as having powers to establish and enforce industry regulations to protect investors and to maintain fair, equitable and ethical practices in the securities industry. Examples include Toronto Stock Exchange and the Investment Dealers Association. Settlement The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security. Settlement Date The date when a securities buyer must pay for a purchase or a seller must deliver the securities sold. Settlement must be made on or before the third business day following the transaction date in most cases. Settlement Price The price used to determine the daily net gains or losses in the value of an open futures or options contract. Share Certificate A paper certificate that represents the number of shares an investor owns. Short Selling The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference. Special Trading Session A session during which trading in a listed security is limited to the execution of transactions at a single price. Speculator Someone prepared to accept calculated risks in the marketplace for attractive potential returns. Split Shares Capital and preferred shares issued by a split-share corporation. A split-share corporation holds common shares of one or more companies. The corporation then issues two classes of shares - capital shares and preferred shares. The objective is to generate fixed, cumulative, preferential dividends for the holders of preferred shares and to enable the holders of the capital shares to participate in any capital appreciation (or depreciation) in the underlying common shares. Spread The difference between the bid and the ask prices of a stock. Standing Committees Committees formed for the purpose of assisting in decision-making on an ongoing basis. Stock Dividend/Distribution A dividend/distribution paid in securities of the same issue or a different issue of the same issuer or another issuer. A stock dividend/distribution can be used as a means to list a new issuer. The issuer or its representative provides the amount, payable date, and record date. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement. Stock Index Futures Futures contracts which have a stock index as the underlying interest. Stock List Deletion A security issue that is removed or delisted from the list of tradable security issues of an exchange. It is usually accompanied with a reason for deletion and the deletion date. Stock Price Index A statistical measure of the state of the stock market, based on the performance of certain stocks. Examples include the S&P Composite Index and the S&P Venture Composite Index. Stock Split A corporate action that increases the number of securities issued and outstanding, without the issuer receiving any consideration for the issue. Approval by security holders is requir

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