KEY POINTS:
A - Arbitrage: Buying goods at a low price in one market and simultaneously selling them at a higher price to another market.
B - Bears and Bulls Market: A Bull Market is one where share prices are rising, while in a Bear Market prices are falling.
C - Capital Adjustment: The adjustment to a share price to reflect actual changes in shareholder value.
D - Dividend or Dividend Per Share(DPS): Percentage of a company's profits (after tax and expenses) paid to shareholders.
E - Earnings per share (EPS): Amount of profit calculated for each share in a company after deducting tax and earnings.
F - Float or Initial Public Offering(IPO): Where a company sells shares to investors in order to raise funds. Float and IPO often used interchangeably, but IPO specifically refers to the first time shares are floated.
G - Growth Shares: Company shares with the potential to achieve above average growth in profits.
H - Hedge: A transaction that minimises the risk of an investment.
I - Imputation: A tax credit shareholders receive with a dividend when the company's profits have already been taxed.
J - Junk Bond/ high Yield bonds: A bond issued by new or speculative companies with a low credit rating of BB(S&P) or BA (Moody's) or lower. Although Junk or high yield bonds offer investors potentially higher returns than those of the more secure blue chip companies, they carry greater risk. Rating systems are provided by two agencies, Standard & Poors and Moody's Investor Services.
K - Kangaroos: Slang term for Australian stocks.
L - Limited liability: The most common legal structure for companies, as a shareholder's liability for a company's debts is limited to the value of their shares.
M - Market capitalisation: The value placed on a company by the market. Calculated by multiplying the number of shares by the current share price.
N - Net asset or book value: The amount of the company a shareholder owns, less any liabilities from total assets.
O - Options: The right to buy or sell a security at a known fixed price(exercise price) until a certain date in the future.
P - P/E Price Earnings Ratio: Indicates the value of a company's shares. Calculated by dividing the current price of the share by the annual earning per share(dividends).
Q - Quote: The highest bid price and lowest ask price at which investors buy and sell shares.
R - Return on Equity (ROE): The return earned on a company's common share investment over a period of time.
S - Securities: A general term used to describe equity securities (shares)and fixed interest securities (bonds, debentures).
T - Total Return: A measure of a fund's performance over a specified period of time that takes into account: dividends or interest, capital gains distributions, and share price gain or loss.
U - Unit Trust: Managed by a fund manager, a unit trust invests money from a pool of private investors. In the US they are called Mutual funds.
V - Volume: The total number of securities traded during a certain time period.
W - Warrants: Certificates giving the holder the right to buy securities at a specified price within a set period of time.
Y - Yield to Maturity: The return (yield) achieved if the investment is held to maturity.
Z - Zombie Funds: With profit funds that are closed to new investors. They are a catch 22 for investors, who face heavy penalties if they try to leave and the probability of poor returns if they stay.
