Stock Investment Guide - Stock Market Terminology


Stock Market Terminology
e that bears a share transfer restriction will not constitute good delivery. Growth Stock The shares of companies that have enjoyed better-than-average growth over recent years and are expected to continue their climb. Hh Hedge A strategy used to limit investment loss by making a transaction that offsets an existing position. Ii Income Stock A security with a solid record of dividend payments and which offers a dividend yield higher than the average common stock. Income Tax Money that the government takes away from you. Index A statistical measure of the state of the stock market, based on the performance of stocks. Examples are the S&P, NASDAQ, DOW JONES , BSE, NSE, NIKKIE etc Inflation An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index. Initial Public Offering (IPO) A company’s first issue of shares to the general public. Inside Information Non-public information pertaining to the business affairs of a corporation that could affect the company’s share price should the information be made public. Insider All directors and senior officers of a company, and those who are presumed to have access to inside information concerning the company. An insider is also anyone owning more than 10% of the voting shares of a company. Insider Trading There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal. Intrinsic Value The difference between the current market value of the underlying interest and the strike price of an option. In-the-money is a term used when the intrinsic value is positive. Investment The purchase or ownership of a security in order to earn income, capital or both. Investments may also include artwork, antiques and real estate. Investment Advisor A person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products. Investment Capital Initial investment capital necessary for starting a business. Investment capital usually consists of inventory, equipment, pre-opening expenses and leaseholds. Investment Counselor A specialist in the investment industry paid by fee to provide advice and research to investors with large accounts. Investment Dealer Securities firms that employ investment advisors to work with retail and institutional clients. Investment dealers have underwriting, trading and research departments. Investment Fund A closed-end fund that offer

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