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Stock Market Terminology
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strong>This refers to how easily securities can be bought or sold in the market. A security is liquid when there are enough units outstanding for large transactions to occur without a substantial change in price. Liquidity is one of the most important characteristics of a good market. Liquidity also refers to how easily investors can convert their securities into cash and to a corporation’s cash position, which is how much the value of the corporation’s current assets exceeds current liabilities.
Listed Stock
Shares of an issuer that are traded on a stock exchange. Issuers pay fees to the exchange to be listed and must abide by the rules and regulations set out by the exchange to maintain listing privileges.
Listing Application
The document that an issuer completes and submits to an exchange when it applies to list its shares on the exchange. The issuer must disclose its activities, plans, management and finances in the application.
Long
A term that refers to ownership of securities. For example, if you are long 100 shares of XYZ, this means that you own 100 shares of XYZ company.
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Margin Account
A client account that uses credit from the investment dealer to buy a security. A client needs to deposit a margin amount with the balance advanced by the investment dealer against collateral such as investments. The investment dealer can make a margin call, which means the client must deposit more money or securities if the value of the account falls below a certain level. If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The investment dealer also charges the client interest on the money borrowed to buy the securities.
Market
The place where buyers and sellers meet to exchange goods and services. It also represents the actual or potential demand for a product or service.
Market Capitalization
The number of issued and outstanding securities listed for trading for an individual issue multiplied by the board lot trading price. Should a trading price not be available, a bid price, a price on another market, or if applicable, the price for an issue of the same issuer which the first issue is convertible into, may be used. Total market capitalization for a market is obtained by adding together all individual issue market capitalizations (warrants and rights excluded).
Market Order
An order to buy or sell stock immediately at the best current price.
Minimum Fill Order
A special term order with a minimum fill condition will only begin to trade if its first fill has the required minimum number of shares. For example, an order to buy 5,000 shares with a minimum volume of 2,000 shares can only trade if 2,000 or more shares become available.
Minimum Guaranteed Fill (MGF) Orders
These orders are guaranteed a complete fill upon entry. A Registered Trader will provide the stock should the book be below the required limit. To be eligible for MGF, an order has to be a tradable client order with a volume less than or equal to the MGF size, which varies from stock to stock.
Minimum Price Fluctuation
The minimum price change or tick on a futures contract.
Mixed Lot or Broken Lot
An order with a volume that combines any number of board lots and an odd lot.
Money Market
Part of the capital market established to buy and sell short-term financial obligations. These include government treasury bills, short-term Government bonds, commercial paper, bankers’ acceptances and guaranteed investment certificates. Longer-term securities are also traded in the money market when their term shortens to three years.
Minimum Fill Order
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