Frequently Ask Question
WHAT IS ACQUISITION
The purchase of controlling equity interest in a company by another company. Acquisition may be financed by cash or the issuance of securities.
WHAT IS ACTIVE MARKET
A Stock Market with high transaction volumes. Such markets usually display high liquidity.
WHAT IS ASK PRICE
The lowest price offered for a security on an exchange or over-the-counter market. It denotes the lowest price an investor is willing to sell a security at a particular time. It is also called the offer price.
WHAT IS AN ASSET
An item of commercial or exchange value owned by a company, individual,government,etc. It also refers to the culmination of all the items a company owns-total assets.
WHAT IS BLUE CHIP
Companies which are widely known for good financial performance, product acceptance, high quality management and regular dividend payment. Owing to these features, blue chips securities are usually in high demand.
WHAT IS A BONUS ISSUE
Shares distributed free to shareholders out of a company's reserve in proportion to the number of shares held, e.g. shareholders could receive one new share for every two held. Such shares add to the shareholder's holdings as well as the company's outstanding shares (paid-up capital) but does not generate additional fund for the company. It is a portion of post tax profit that is declared by a company and distributed to shareholder in form of shares in proportion to the number of shares already held.
WHAT IS A BROKER/DEALER
A financial intermediary who combines the functions of a stockbroker and a securities dealer.
WHAT IS CASH DIVIDEND
The portion of after-tax profit that is declared by a company and distributed to shareholders in proportion to their holding in the company.
WHAT IS CAPITAL GAINS
Gains made at the disposal (sale) of securities by an investor. It is the difference between the price at which the securities were bought and the price at which they were sold. When such difference is positive, it is said a capital gain. When the difference is negative, this is a capital loss.
WHAT IS CAPITAL MARKET
Financial market which trade in medium to long-term financial instruments (stocks and bonds) with maturity in excess of one year. It is a net-work of participants, instruments and facilities which function basically to facilitate efficiently, the flow of savings into long-term investment for socio-economic development.
WHAT IS A CLEARING HOUSE
An organization, usually a subsidiary or an arm of a futures exchange which stands as a counter party in every futures transaction in order to guarantee performance of the contract. The clearing house thus registers, matches, monitors and settles every transaction.
WHAT IS A DEALING MEMBER
A member of a stock exchange authorized to buy and sell securities on behalf of the public or for their own account.
WHAT IS DEREGULATION
Relaxation or removal of economic and legal controls (restrictions) in a country essentially to promote competition, efficiency, and ultimately foster socio-economic progress.
WHAT IS DIVIDEND WARRANT
A cheque issued by a company to its shareholders for the payment of dividends.
WHAT IS EQUITY
Ownership capital held by individuals, corporate bodies and sometimes governments in a company. Also called ordinary shares.
WHAT IS EURO-BOND
An international bond issue sold in countries other than the one in whose currency the instrument is denominated e.g. Us dollar-denominated bond sold outside the United States.
WHAT IS FINANCIAL MARKET
A market which provides a mechanism for the efficient mobilization of funds from the surplus economic units (suppliers of funds) to the deficit economic units (users of funds). The market is made up of two principal segments- the money and the capital markets.
WHAT IS INVESTOR PROTECTION FUND
An insurance funds established to compensate clients of stock broking firms and other capital market institutions which have collapsed or defaulted on their obligations. There is often a limit placed on the amount of compensation receivable by a client.
WHAT IS INITIAL PUBLIC OFFERING (IPO)
The first public offering of securities by a corporate entity.
WHAT IS MARKET ORDER
An order given to a stockbroker by his client to buy or sell a given quantity of a security at the best price prevailing in the market.
WHAT IS RIGHT ISSUE
A new issue of securities of a company offered to its existing shareholders in proportion to their holdings. To enhance attractiveness, rights issues are usually offered at a discount to the market price of the security.
WHAT IS STOCK EXCHANGE
An organization which provides facilities for trading in securities by its members and also sets rules for the admission and trading of existing securities as well as rules to guide the business conduct of members.