STOCK EXCHANGE

By Huda A.S. Qureshi

ARBITRAGE

Simultaneous purchase of a security on one stock market and the sale of the same security at another stock market at prices which yield a profit

Ask / Offer

The lowest price at which someone is willing to sell a security

Bid
The highest price at which a buyer is willing to buy a stock When both the ask and bid information is combined it forms the basis of a stock quote

Averages and Indices

Statistical tools that measure the state of the stock market or the economy based on the performance of stocks bonds or other components.

AVERAGING DOWN

3/20/12

The process of buying additional

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BASIS POINT

One-hundreth of a percentage point

The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point. So, a bond whose yield increases from 5% to 5.25% is said to increase by 25 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points.

BEAR MARKET

A market in which stock prices are falling

BULL MARKET
A market in which stock prices are rising

BLUE CHIP STOCKS

Stocks of leading and nationally known companies that offer a record of continuous dividend payments and other strong investment qualities

BUY-IN

When an investor is forced to repurchase shares because the seller did not deliver the securities in a timely fashion, or did not deliver them at all.

OPTION

The right but not the obligation , to buy or sell certain securities at a specified price within a specified time.

TYPES OF OPTIONS

Call Option An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

TYPES OF OPTIONS

Put Option An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.

CLEARING DAY

Any business day in which the clearing corporation is open to effect trade clearing and settlement

OVER THE COUNTER MARKET

Issues not listed in a stock exchange Unlisted market

CLOSED-END INVESTMENT FUND

An investment trust that issues a fixed number of securities that trade on a stock exchange or in the-over-thecounter market

COMMISSION

The fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client

CUM DIVIDEND

The owner of shares purchased is entitled to an upcoming already declared dividend

CUM RIGHTS
The owner of shares purchased is entitled to forthcoming already declared rights

EX DIVIDEND

The owner of shares purchased is not entitled to an upcoming already declared dividend but is entitled to future dividends

EX RIGHTS

The holder of shares purchased is not entitled to already declared dividend is not entitled to already declared rights, but is entitled to future rights

DAILY PRICE LIMIT

The maximum gain or loss on a derivative contract, such as options and futures contracts, that is allowed in any one trading session.

DELIST

The removal of a securitys listing from a stock exchange.

DOWNTICK

A transaction on an exchange that occurs at a price below the previous transaction.

HEDGE

A strategy used to limit investment loss by making a transaction that offsets an existing position

INSIDER

Directors and senior officers Those having inside information Anyone owning more than 10% of the voting shares

INSIDER TRADING

Two Types Insiders trading in the stock of their company Trading securities based on material information that is not public knowledge

AUTHORIZED, ISSUED, and OUTSTANDING

AUTHORIZED SHARES

ISSUED SHARES

OUTSTANDING SHARES