Agent means a securities firm which is classified as an agent when it acts on behalf of its clients as buyer or seller of a security. The agent does
not own the security at any time during the transaction.
All-or-None Order is an order which must be filled completely or the trade will not take place.
American-Style Options are Options which can be exercised any time during their lifetime. These are also known as open options.
Annual Report is a publication, including financial statements and a report on operations, issued by a company to its shareholders at the company's fiscal year-end.
Arbitrage means the simultaneous purchase of a security on one stock market and the sale of the same security on another stock market at prices which yield a profit.
Ask or Offer is the lowest price at which someone is willing to sell the security. If combined with the bid price information, it forms the basis of a stock quote.
Ask Size is the aggregate size in board lots of the most recent ask to sell a particular security.
Assets is everything a company or person owns, including money, securities, equipment and real estate. Assets include everything which is owed to the company or person. Assets are listed on a company's balance sheet or an individual's net worth statement.
Assignment means the notification to the seller of an option by the clearing corporation which the buyer of the option is enforcing the terms of the option's contract.
At-the-Money means if the price of the underlying equity, index or commodity equals the strike price of the option.
Averaging Down means buying more of a security at a price which is lower than the price paid for the initial investment. The aim of averaging down is to reduce the average cost per unit of the investment.
Basis Point means one-hundredth of a percentage point, e.g. the difference between 5.25% and 5.50% is 25 basis points.
Bear Market is a market in which stock prices are falling.
Beta means a measurement of the relationship between the price of a stock and the movement of the whole market.
Bid is the highest price a buyer is willing to pay for a stock. If combined with the ask price information, it forms the basis of a stock quote.
Bid Size means the aggregate size in board lots of the most recent bid to buy a particular security.
Black-Scholes Model is a mathematical model which is used to calculate the theoretical price of an option.
Blue Chip Stocks are stocks of leading and nationally known companies which offer a record of continuous dividend payments and other strong investment qualities.
Bonds are promissory notes which are issued by a corporation or government to its lenders, normally with a specified amount of interest for a specified length of time.
Book is an electronic record of all pending buy and sell orders for a particular stock.
Booked Orders are orders which do not trade immediately upon entry. These orders are also known as outstanding orders.
Bought-Deal Underwriting means a type of underwriting where the brokerage firm acts as principal. The brokerage firm risks its own capital to purchase all of the securities to be issued. When the price of the securities decreases before the brokerage firm has had a chance to resell the securities to its clients, the firm absorbs the loss.
Broker or Brokerage Firm means a securities firm or a registered investment advisor affiliated with a firm. Brokers are the link between investors and the stock market. If acting as a broker for the purchase or sale of listed stock, the investment advisor does not own the securities but acts as an agent for the buyer and seller and charges a commission for these services.
Bull Market is a market in which stock prices are rising.
Business Day means any day from Monday to Friday, excluding statutory holidays.
Buy-In means when a broker fails to deliver securities sold to another broker on the settlement date, the receiving broker can buy the securities at the current market price of the stock and charge the delivering broker the cost difference of such a purchase.
Call Option is an option that gives the holder the right, but not the obligation, to buy a fixed amount of a certain stock at a specified price within a specified time. Calls are purchased by investors who expect a price increase.
Capital means machinery, factories and inventory required to produce other products. To investors, capital means their cash plus the financial assets they have invested in securities, their home and other fixed assets.
Capital Gain or Loss is the profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property.
Capital Gains Distribution means a taxable distribution out of taxable gains realized by the issuer. It is generally paid to security holders of trusts, partnerships, and funds. Like all distributions, it can be paid in securities or cash. The amount, payable date, and record date are established by the issuer. The exchange which the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement.
Capital Stock are all shares representing ownership of a company, including preferred and common shares.
Cash Dividend/Distribution means a dividend/distribution which is paid in cash.
Cash Settlement is the settlement of an option contract not by delivery of the underlying shares, but by a cash payment of the difference between the strike or exercise price and the underlying settlement price.
Certificate is the physical document which shows ownership of a bond, stock or other security.
Clearing Day means any business day on that the clearing corporation is open to effect trade clearing and settlement.
Clearing Number is the trading number of the clearing Participating Organization or Member.
Client Order is an order from a retail customer of a Participating Organization.
Closing Transaction is an order to close out an existing open futures or options contract.
Commission means the fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client.
Commodities mean products which are used for commerce which are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.
Common Shares or Common Stock mean securities which represent part ownership in a company and generally carry voting privileges. Common shareholders may be paid dividends, but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation.
Complete Fill means if an order trades all of its specified volume.
Continuous Disclosure is a company's ongoing obligation to inform the public of significant corporate events, both favourable and unfavourable.
Convertible Security means a security of an issuer - e.g. - bonds, debentures, or preferred shares - which can be converted into other securities of that issuer, in accordance with the terms of the conversion feature. The conversion normally occurs at the option of the holder of the securities, but it may occur at the option of the issuer.
Corporation or Company is a form of business organization which is created under provincial or federal laws which has a legal identity separate from its owners. The shareholders are the corporation's owners and are liable for the debts of the corporation only up to the amount of their investment. This is known as limited liability.
Daily Price Limit is the maximum price advance or decline permitted for a futures contract in one trading session compared to the previous day's settlement price.
Day Order is an order which is valid only for the day it is entered. When the order is still outstanding when the market closes, it will be purged overnight.
Debenture is a long-term debt instrument which is issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.
Defensive Stock is a stock purchased from a company which has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn.
Delayed Delivery Order is a special term order in that there is a clear understanding between the buying and selling parties that the delivery of the securities will be delayed beyond the usual three-day settlement period to the date specified in the order.
Delist means the removal of a security's listing on a stock exchange. This is done if the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.
Delisted Issue is the status of a security which is no longer listed on the stock exchanges. The security could trade on another market.
Delivery means the tender and receipt of the underlying commodity or the payment or receipt of cash in the settlement of an open futures contract.
Delivery Month is the calendar month in that a futures contract can be satisfied by making or taking delivery.
Delta is a ratio which measures an option's price movement compared to the underlying interest's price movement. Delta values have a range of 0 to 1. Deep in-the-money options have deltas that approach 1.
Demand means the combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, that are, in part, determined by supply.
Diversification is a limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.
Dividend is the portion of the issuer's equity paid directly to shareholders. It is generally paid on common or preferred shares. The issuer or its representative provides the amount, frequency - monthly, quarterly, semi-annually or annually - payable date, and record date. The exchange which the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement. An issuer is under no legal obligation to pay either preferred or common dividends.
Dividend Reinvestment Plan means of reinvesting dividends, that would otherwise be paid to the shareholder in cash, in additional stock of the company.
Dividend Yield is equal to the indicated annual dividend rate per share divided by the security's price. E.g. when the indicated dividend rate is Re. 1 and the closing price is Rs. 50, Re. 1 divided by Rs. 50 equals 2%.
Dividend/Distribution Payable Date is the date set by the issuer on that the dividend/distribution will be paid.
Dividend/Distribution Record Date is the date on that a security holder has to be registered as a holder of an issue to receive the dividend/distribution.
Rupee Cost Averaging means investinga fixed amount of dollars in a specific security at regular set intervals over a period of time. Rupee cost averaging results in a lower average cost per share, compared with purchasing a constant number of shares at set intervals. The investor buys more shares if the price is low and buys fewer shares if the price is high.
Equities are common and preferred stocks, that represent a share in the ownership of a company.
Equity Option is an option contract which grants the holder the right to buy or sell a specific number of shares of stock at a specified price during a specific period of time.
Equity Price is the price per share traded.
Equity Value means the total dollar value of volume traded on one side of the transaction for a specified period. It equals price multiplied by volume.
Equity Volume is the total number of shares traded on one side of the transaction.
Escrowed Securities are the outstanding securities of an issuer which are not freely tradable, because they are subject to an escrow agreement that restricts the ability of certain security holders of that issuer from trading or otherwise dealing in those securities until certain conditions are satisfied.
European-Style Option is an option which can be exercised only on their expiration date.
Ex Dividend means the holder of shares purchased ex dividend is not entitled to an upcoming already-declared dividend, but is entitled to future dividends.
Ex Right means the holder of shares purchased ex rights is not entitled to already-declared rights, but is entitled to future rights issues.
Exchange-Traded Fund (also known as ETF) is a special type of financial trust which allows an investor to buy an entire basket of stocks through a single security, that tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and traded like a stock.
Exercise is the act of an option holder who chooses to take delivery (calls) or make delivery (puts) of the underlying interest against payment of the exercise price.
Expiration Date is the date at that an option contract expires. This means that the option can not be exercised after that date.
Face Value means the cash denomination of the individual debt instrument. It is the amount of money which the holder of a debt instrument receives back from the issuer on the debt instrument's maturity date. Face value is also referred to as par value or principal.
Filing Statement means a disclosure document submitted by a listed company to outline material changes in its affairs. Filing statements are not used for the purposes of a financing.
Fill or Kill (FOK) Order is eligible to receive a full fill and when not fully filled is cancelled immediately.
Floating Rate Security is a security whose interest rate or dividend changes with specified market indicators. A floating rate is one which is based on an administered rate, such as a prime rate.
Frequency refers to the given time period on an intraday, daily, weekly, monthly, quarterly or yearly perspective. Typically, choosing a weekly or monthly perspective if looking at several years of data makes it easier to identify long-term trends. Daily charts are useful for active traders and short-term time period charts. The "Daily", "1-Minute", "5-Minute", "15-Minute" and "Hourly" frequency are used for intraday charts and the remaining choices are applicable to end-of-day charts. This term refers to a TSX Group Historical Performance charting feature.
Front Month is the closest month to expiration for a futures or option contract.
Futures are contracts to buy or sell securities at a future date.
Growth Stock means the shares of companies which have enjoyed better-than-average growth over recent years and are expected to continue their climb.
Hedge is a strategy used to limit investment loss by making a transaction that offsets an existing position.
Income Stock means a security with a solid record of dividend payments and that offers a dividend yield higher than the average common stock.
Index is a statistical measure of the state of the stock market which is based on the performance of stocks, e.g. the Sensex and Nifty.
Inflation is an overall increase in prices for goods and services, normally measured by the percentage change in the Consumer Price Index.
Initial Public Offering (also known as IPO) is a company's first issue of shares to the general public.
Inside Information means 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 means 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 consists of two types: The first type occurs if 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 if anyone trades securities based on material information which is not public knowledge. This type of insider trading is illegal.
International Securities Identification Number (ISIN) means the international standard which is used to uniquely identify securities. It consists of a two-character alphabetic country code specified in ISO 6166, followed by a nine-character alphanumeric security identifier (assigned by a national security numbering agency), and then an ISIN check-digit.
Intrinsic Value is 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 if the intrinsic value is positive.
Investment means the purchase or ownership of a security in order to earn income, capital or both. Investments can also include artwork, antiques and real estate.
Investment Advisor is 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 is initial investment capital necessary for starting a business. Investment capital normally consists of inventory, equipment, pre-opening expenses and leaseholds.
Investment Dealer is a security firm which employs investment advisors to work with retail and institutional clients. Investment dealers have underwriting, trading and research departments.
Investor Relations is a corporate function, combining finance, marketing and communications, to provide investors with accurate information about a company's performance and prospects.
Issue means any of a company's securities or the act of distributing the securities. Issued shares refer to the portion of a company's shares which have been issued for sale. A company does not have to issue the total number of its authorized shares.
Issue Status is the trading status of a class or series of an issuer's listed securities, such that a class or series of listed securities of an issuer may be halted, suspended, or delisted from trading.
Last Trading Day is the last day on that a futures or option contract can be traded.
Liabilities are the debts and obligations of a company or an individual. Current liabilities are debts due and payable within one year. Long-term liabilities are those payable after one year. Liabilities are found on a company's balance sheet or an individual's net worth statement.
Limit Order is an order to buy or sell stock at a specified price. The order can be executed only at the specified price or better. A limit order sets the maximum price the client is willing to pay as a buyer, and the minimum price they are willing to accept as a seller.
Liquidating Order is an order to close out an existing open futures or options contract. A liquidating order involves the sale of a contract which has been purchased or purchase of a contract that has been sold.
Liquidity refers to how easily securities can be bought or sold in the market. A security is liquid if 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, that is how much the value of the corporation's current assets exceeds current liabilities.
Listed Issuer means an issuer which has at least one class of securities listed on Bombay Stock Exchange or National Stock Exchange.
Listed Stock is a share of an issuer which is 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 is the document which an issuer completes and submits to an exchange if it applies to list its shares on the exchange. The issuer has to disclose its activities, plans, management and finances in the application.
Long refers to ownership of securities. E.g. when you are long 100 shares of XYZ, this means that you own 100 shares of XYZ company.
Margin Account is a client account which 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, that means the client must deposit more money or securities when the value of the account falls below a certain level. When 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 is 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 means the total value of the issued shares of a publicly traded company; it is equal to the share price times the number of shares outstanding.
Market Order is an order to buy or sell stock immediately at the best current price.
Mixed Lot or Broken Lot means an order with a volume which combines any number of board lots and an odd lot.
Mutual Fund is a fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.
Naked Writer means a seller of an option contract who does not own a position in the underlying security.
Net Change is the difference between the previous day's closing price and the last traded price.
Net Worth is the difference between a company's or individual's total assets and its total liabilities. Also known as shareholders' equity for a company.
New Issue means a stock or bond issue sold by a company for the first time. Proceeds can be used to retire the company's outstanding securities, or be used for a new plant, equipment or additional working capital. New debt issues are also offered by governments.
New Issuer Listing occurs concurrently with the posting of the new issuer's securities for trading. The preconditions for listing include the acceptance by the Exchange which all listing requirements and conditions have been satisfied. The effective listing date is the date if the listed securities open for trading.
New Issuer Listing - IPO (Initial Public Offering) is an issuer's first offering of its securities made to the public in accordance with a prospectus. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.
New Listing means a security issue which is newly added to the list of tradable security issues of an exchange. It is accompanied with a new listing date.
Odd Lot means a number of shares which are less than a board lot, which is the regular trading unit decided upon by the particular stock exchange. An odd lot is also an amount which is less than the par value of one trading unit on the over-the-counter market. E.g. when a board lot is 100 shares, an odd lot would be 99 or fewer shares.
Offset means to liquidate or close out an open futures or option contract.
One-Sided Market is a market which has only buy orders or only sell orders booked for a particular security.
On-Stop (O/S) Order is placed with the intention of trading at a later date if the price of the stock reaches the specified stop price. An on-stop order becomes a limit order once a trade at the trigger price has occurred.
Open Interest means the net open positions of a futures or option contract.
Open Order is an order which remains in the system for more than a day.
Option is the right, but not the obligation, to buy or sell certain securities at a specified price within a specified time. A put option gives the holder the right to sell the security, and a call option gives the holder the right to buy the security.
Option Type is a call or put contract.
Option Writer is the seller of an option contract who may be required to deliver (call option) or to purchase (put option) the underlying interest covered by the option, before the contract expires.
Over-The-Counter (OTC) Market means when the market is maintained by securities dealers for issues not listed on a stock exchange. Almost all bonds and debentures, as well as some stocks, are traded over-the-counter. An OTC market is also known as an unlisted market.
Par Value means a security's nominal face value.
Penny Stock means low-priced speculative issues of stock selling at less than Re. 1 a share.
Portfolio means holdings of securities by an individual or institution. A portfolio can include various types of securities representing different companies and industry sectors.
Position Limit is the maximum number of futures or options contracts any individual or group of people acting together may hold at one time.
Preferred Share is a class of share capital which entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated rupee value per share in the event of liquidation. It normally does not have voting rights, unless a stated number of dividends have been omitted.
Premium means an option contract's price.
Price-Earnings (P/E) Ratio is a common stock's last closing market price per share divided by the latest reported 12-month earnings per share. This ratio shows you how many times the actual or anticipated annual earnings a stock is trading at.
Private Placement is the private offering of a security to a small group of buyers. Resale of the security is limited.
Prospectus is a legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commission regulations. Prospectus documents normally disclose pertinent information concerning the company's operations, securities, management and purpose of the offering.
Put Option is a contract which gives the holder the right to sell a specified number of shares at a stated price within a fixed time period. Put options are purchased by those who think a stock may decline in price.
Rally means a brisk rise in the general price level of the market or price of a stock.
Real Estate Investment Trust (REIT) is typically a closed-end investment fund which trades on an exchange and uses the pooled capital of many investors to purchase and manage income properties. Equity REITs primarily own commercial real estate, such as shopping centres, apartments, and industrial buildings. By taking advantage of the trust structure, REITs offer tax advantages (beyond traditional common equity investments) to investors and provide a liquid way to invest in real estate, which otherwise is an illiquid market.
Redeemable Security is a security which carries a condition giving the issuer a right to call in and retire that security at a certain price and for a certain period of time.
Registered Traders are traders employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill.
Retractable Security means a security which features an option for the holder to require the issuer to redeem it, subject to specified terms and conditions.
Revenue is the total amount of funds generated by a business.
Rights means a temporary privilege which lets shareholders purchase additional shares directly from the issuer at a stated price. The price is usually less than the market price of the common shares on the day the rights are issued. The rights are only valid within a given time period.
Risk means the future chance or probability of loss.
Securities are transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.
Settlement is the process which follows a transaction if the seller delivers the security to the buyer and the buyer pays the seller for the security.
Settlement Date is the date if a securities buyer has to pay for a purchase or a seller hast to deliver the securities sold. Settlement hast to be made on or before the third business day following the transaction date in most cases.
Settlement Price is the price used to determine the daily net gains or losses in the value of an open futures or options contract.
Share Certificate is a paper certificate which represents the number of shares an investor owns.
Short Selling means the selling of a security which 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 which they will be able to buy the stock at a lower price.