Alphabet of Share Market: Basic terminology of Stock exchange

Alphabet of Share Market: Basic terminology of Stock exchange
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Investment in the stock market, is it in your dreams? But the lack of knowledge is preventing you to accomplish your goal? Yes, your hesitation is aptly suited because this market is full of risk and you are investing your hard-earned money in it. With proper knowledge and patience, you can be “The Big Bull” of the market. Before diving into the market, you need to be well-equipped. For understanding the language of the market, first, you need to understand some basic terminology that is used frequently in the market.

1. Agent

An agent is a person who can advise you about the stocks you should buy, sell or hold for gaining maximum profit from the invested money. He is not involved in the transaction process.

2. Ask-Bid Spread

A bid-ask spread is the difference between the highest price that a buyer is willing to pay for the share and the lowest price that a seller is willing to accept, that is the difference between what buyer want to spend and what seller want to get.

3. Ask Price

Ask price is a specific price at which owner of the share is willing to sell the share in the stock market.

4. Assets

Everything the company owns to its name, including all the cash, instrument, land, technology etc. which reflects the total value of the company.

5. Authorized Shares

This is the total number of shares that a company can trade in share market.

6. Bear Market

A market in which stock prices are expected to fall or falling consistently.

7. Beta

Beta shows the measure of relationship between a stock’s volatility with overall stock market. A stock’s beta of more than 1 shows a higher risk than the market means stock’s volatility is more then market. A beta of less than 1 shows that stock is less risky than the market.

8. Bid Price

A bid price is the price you wish to pay for a particular share for buying.

9. Blue Chip Stock

These stocks are less risky than other and are well-established and financially stable. As a rule, these have a relatively high market capitalization with a long track record of consistently strong financial performance.

10. Bombay stock exchange (BSE Limited)

It is the oldest stock exchange in Asia, located in Dalal street in Mumbai, established in 1875. Known for the maximum number of companies enlisted into this stock exchange.

11. Broker

A broker is a person who buys and sells shares on your behalf, and in return, they charge a certain amount of money called commission or fee.

12. Bull Market

A bull market is a market condition where stock market performing in an upward trend and investors are expecting prices to rise. A single stock and a sector can behave bullish at one time and bearish at another time.

13. Capitalization (Market cap)

Refers to the total value of all of the company’s shares of stock or value of a company in share market. It is calculated by multiplying the price of a share by the total number of shares of the company.

14. Day Order

A day order is an instruction to a broker to execute a trade at a mentioned price that expires at the end of the trading day. If the order is not matched with noted price during the day, the order gets cancelled automatically at the end of that trading day.

15. Dividend

Dividend is the amount that a company distributes to its shareholders from the profit and is determined by the company’s directors

16. Float

This is the number of shares that can actually be available for trading after deducting the shares held by insiders.

17. Follow-on Public Offering (FPO)

FPO is the further public offering by an already listed company in the stock exchange by issuing new shares to the existing shareholders or to the new investors.

18. Initial public offering (IPO)

Initial Public Offering is the first sale of shares to the public by a privately owned company in share market. Through this the private company becomes a publicly traded company.

19. Limit Order

A limit order is an order to buy or sell a stock with a restriction limit on the maximum price to be paid or the minimum price to be received (the “limit price”).

20. Market Order  

A market order is an order which is accomplished as quickly as placed at the market price.

21. National Stock Exchange (NSE)

NSE was established in 1992 as the first electronic exchange in the country. It was founded by the Indian government to provide solutions to simplify participation in the stock market and make it more accessible to all interested parties.

22. Nifty

Nifty is derived from the combination National and Fifty as Nifty. The NIFTY 50 is a benchmark Indian stock market index and 50 represents 50 of the largest Indian companies listed on the National Stock Exchange. It is one of the two main stock indices used in India.

23. Portfolio

The full record of investments owned by you.

24. Secondary Offering

The term secondary offering refers to the sale of shares owned by an investor to the general public on the secondary market to raise more money from the public. These are shares that were already sold by the company through an initial public offering (IPO).

25. Sector

A group of stocks in the same sector for example Banking sector will involve all the listed Banking company.

26. Share  

For proper functioning and running, every company needs money. When companies do not have enough money for scaling up their business, they meet their working capital requirements by enrolling themselves in the stock market. Companies invite ordinary people like you and me to invest some money into their company so that they can run it in a more efficient way and in return, all investors get some share of the company. If the company grows, then the value of share will be increased and its converse will also hold true. So, there is decent probability that the investor’s money may sink.

27. Stock Exchange Sensitive Index (SENSEX)

The full form of SENSEX is Stock Exchange Sensitive Index and is a figure that indicates all the relative share prices that are listed on the Bombay Stock Exchange (BSE). It is a free float, economy-weighted index of 30 financially sound and very well-established companies listed on BSE.

28. Stock Market

The stock market is a place where stocks or shares of companies are bought and sold. This market provides a home for a company to sell its share to the public to raise money for the growth of the company and allows investors to buy and sell shares of the companies.

29. Stock Symbol

A one to three-character alphabet root symbol which represents a company listed on the list of exchange.

30. Volatility

Volatility shows how fast a stock moves up or down. The rate at which the price of a share increases or decreases over a particular period.

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