Glossary

Annual Report

A yearly report prepared by a company to provide information about its financial performance, management strategy, and future prospects

Arbitrage

The practice of taking advantage of price differences in different markets to make a profit

Averaging Down

Buying more shares of a stock as its price decreases, in order to lower the average cost per share

Bear Market

A prolonged period of declining stock prices, typically accompanied by a pessimistic economic outlook

Beta

A measure of a stock's volatility in relation to the overall market

Bid

The price at which a buyer is willing to purchase a security

Bid-Ask Spread

The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask)

Blue-Chip Stocks

Shares of large, well-established, and financially stable companies with a history of reliable performance

Bond

A fixed-income security that represents a loan made by an investor to a borrower, typically a government or corporation

Bull Market

A period of rising stock prices, typically accompanied by an optimistic economic outlook

Buyback

A company's repurchase of its own outstanding shares from the market

Capitalization

The total value of a company's outstanding shares of stock, calculated by multiplying the share price by the number of shares

Capital Gains

Profits made from the sale of a capital asset, such as stocks, bonds, or real estate

Common Stock

The most basic form of ownership in a company, which entitles shareholders to voting rights and a share of the company's profits

Current Ratio

A measure of a company's ability to pay its short-term debts, calculated by dividing its current assets by its current liabilities

Day Trading

The practice of buying and selling securities within the same trading day, with the goal of making quick profits from short-term price fluctuations

Debt-to-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total debt by its shareholders' equity

Diversification

Spreading investments across different assets or asset classes to reduce risk

Dividend

A payment made by a company to its shareholders, usually in the form of cash or additional shares of stock, as a share of its profits

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price

Derivative

A financial instrument whose value is derived from an underlying asset, such as a stock, bond, or commodity

Dow Jones Industrial Average (DJIA)

A stock market index that represents 30 large, publicly traded companies in the United States

Earnings per Share (EPS)

A company's profit divided by its outstanding shares of common stock, used to measure its profitability on a per-share basis

Economic Bubble

A rapid increase in the price of an asset, followed by a sudden and significant decrease, often caused by speculation and a lack of underlying value

Equal Weight Rating

A rating given to a stock by analysts, indicating that it is expected to perform in line with the overall market

Equity Income

A type of investment that focuses on generating income from stocks, typically through dividends

Exchange

A marketplace where securities, commodities, derivatives, and other financial instruments are traded

Exchange-Traded Funds (ETFs)

Investment funds that are traded on stock exchanges, similar to individual stocks, and typically track a specific index or sector

Expense Ratio

The annual fee charged by a mutual fund or ETF to cover its operating expenses

Futures

Financial contracts that obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price

Going Long

Buying a security with the expectation that its price will rise, allowing the investor to sell it at a higher price and make a profit

Going Short

Selling a security that the investor does not own, with the expectation that its price will decline, allowing the investor to buy it back at a lower price and make a profit

Growth and Income Funds

Investment funds that aim to provide both capital appreciation and regular income, typically by investing in a combination of growth stocks and income-generating assets

Growth Stocks

Shares of companies that are expected to grow at an above-average rate compared to other companies in the market

Head and Shoulders Pattern

A technical analysis chart pattern that indicates a reversal in a stock's price trend, with three peaks resembling a head and two shoulders

Hedge Fund

An investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex strategies and high risk

Index Funds

Investment funds that aim to replicate the performance of a specific market index, such as the Nifty 50 or Sensex

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power

Initial Public Offering (IPO)

The first sale of a company's shares to the public, allowing it to raise capital from outside investors

Limit Order

An order to buy or sell a security at a specific price or better

Liquidity

The ease with which an asset can be bought or sold without causing a significant change in its price

Margin

Borrowed money that is used to purchase securities

Market Capitalization

The total value of a company's outstanding shares of stock, calculated by multiplying the current share price by the number of shares outstanding

Market Index

A measure of the overall performance of a specific market or sector, calculated using the prices of a group of stocks

Market Volatility

The degree of variation in the price of a financial instrument over time

Moving Average

A calculation used to analyze data points by creating a series of averages of different subsets of the full data set

Mutual Funds

Investment funds that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities

NASDAQ

A global electronic marketplace for buying and selling securities, primarily consisting of technology and growth companies

Non-Fungible Token (NFT)

A unique digital asset that represents ownership or proof of authenticity of a specific item, such as artwork or collectibles

Options

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and within a specified period

Order Imbalance

A situation in which the number of buy or sell orders for a particular security is significantly higher than the number of available shares, potentially leading to a large price movement

OTC Stocks

Over-the-counter stocks, also known as unlisted stocks, are securities that are not listed on a formal exchange but are traded directly between parties

Outstanding Shares

The total number of shares of a company

Portfolio

A collection of investments, such as stocks, bonds, and mutual funds, held by an individual or institution

Price-Earnings Ratio (P/E Ratio)

A valuation ratio that compares a company's current share price to its earnings per share, indicating the market's expectations for the company's future earnings growth

Return

The gain or loss on an investment, typically expressed as a percentage of the original investment

Risk

The potential for loss or uncertainty in an investment's return

Securities

Financial instruments that represent a claim on the assets and earnings of a company, government, or other entity, such as stocks, bonds, and options

Sensex

The stock market index of the Bombay Stock Exchange (BSE), consisting of 30 of the largest and most actively traded stocks on the BSE

Stock

A type of security that represents ownership in a company and a claim on a portion of its assets and earnings

Trading

The buying and selling of financial instruments, such as stocks, bonds, and options, with the goal of making a profit

Volatility

A statistical measure of the dispersion of returns for a given security or market index, indicating the level of risk or uncertainty in the investment