1) Common terms used:
No | Trading Terminology | Common Terms |
1 | Par Value | The stock price during the Initial Public Offering (IPO). |
2 | Market Value | The price at which the stock is trading. |
3 | Market capitalization | Simply the Share Price x Number of Share Outstanding |
4 | Warrant | A right to buy a number of shares. |
2) Profit and losses calculation
Definition: To calculate the trading profits or losses.
3) Rate of Return
Definition: The percentage change in the value of your stock investment.
4) Dividend
Definition: A reward by the company to the shareholder.
5) Capital growth stock
Definition: Maximizing the capital appreciation.
6) Classification of Shares/ Stocks
Shares can be classified as:-
· Blue Chip – Shares of major companies with long and unbroken track records of stable earnings.
· Growth – Shares of companies that are having lower share prices at the moment and those shares prices are expected to rise.
· Cyclical – Companies’ earnings that track the business cycle.
· Income – Shares that pay consistent dividend.
· Defensive – Shares that can withstand the economic downturn.
· Speculative – Shares that without strong fundamental or technical analysis support and subject to higher risk.
7) Corporate Action
Below stated some of the important corporates actions:-
· Rights issue – Giving the investors the privilege to acquire additional shares directly from the company.
· Bonus issue – Do not result in the company raising new finance.
· Convertible Unsecured Loan Stock (CULS) – A type of unsecured loan. Can be separated further to redeemable or irredeemable.
· Warrant – A right for investor to buy a specified number of the company’s shares at a stated price.
