Mastery over any language need not be achieved by learning the grammar rules, and mastery over any business, need not be through learning the vocabulary relating to that business. The meaning of the words and usages in the exchange is learnt by experience. But this was true about the old-fashioned stock exchange when most of the transactions were manually carried out. With the advent of internet and computerization thorough knowledge about the key terms related to the stock exchange and trade is essential. One cannot give commands to the computer unless told in the language acceptable to it, for it goes by the dictates of the software to which it has been introduced. The glossary of such terms is lengthy. Some of the more common financial and investment terms are given below that you may come across often. For the sake of convenience and easy reference the listing has been done alphabetically, with brief explanation, wherever necessary.
Accrued Interest: The interest due on any instrument like bonds, fixed deposits etc
Acquisition: Used in the context of takeover bids, for acquiring control of one corporation by another.
AMEX: American Stock Exchange.
Annual Report: The financial statement of a corporation tendered annually. All accounting information and the future perspectives related to the company which are of interest to the shareholders are given in the report.
Balance Sheet: A complete financial statement of the company.
Bear Market: A market on the decline.
Block: A big transaction of stock, usually not less than 10000 shares.
Blue Chip: A sound company; pays high dividends and regular bonus shares. Its capital base is excellent.
Bull Market: A market on the rise.
Day order/Day Trading: The order placed if not executed by the end of the day, expires automatically.
Diversification: Mainly refers to different securities in the portfolio of an investor.
Dow Theory: A market index, popularly known as The Dow Jones Index.
FINRA: The Financial Industry Regulatory Authority, created in July 2007. It does arbitration functions of the New York Stock Exchange.
Floor: The huge trading area of the New York Stock Exchange.
Fundamental research: One of the systems of stock research.
Growth stock: A share of the company with the brisk growth rate.
Institutional investor: Investment of assets held in trust like insurance companies, banks etc.
Liquidity: An important positive quality of the share. Easy to buy or sell shares.
Listed stock: The stock traded in the exchange.
Merger: Amalgamation of two or more corporations.
Mutual Fund: An investment option.
Nasdaq: An acronym for National Association of Securities Dealers Automated Quotations.
NYFE: New York Futures Exchange – A subsidiary of the New York Stock Exchange devoted to the trading of futures products.
Odd Lot: The number of stocks less than the established unit, usually 100 shares.
Penny Stocks: Low-priced stocks, whose rate is usually less than $1 a share.
Portfolio – Holdings of varied securities by an individual or institution.
Premium: Value above par.
Rally: A quick rise following a decline in the general price level of the market.
SEC: The Securities and Exchange Commission, established by Congress to help protect investors.
Speculation: Investing of funds by a speculator, disregarding the aspect of safety, with willingness to take risks.
Stop limit order: A stop order that becomes a limit order once the specified stop price has been reached.
Technical research: A system of stock analysis
Ticker: A system to provide the last sale price and the volume of the transaction of securities.
Unlisted stock: A share not listed on a stock exchange.