Stocks Dictionary

Stock : Part of Ownership in Company

IPO : Initial Public Offer. First issuance of Securities to General public

Primary Market : IPO's issuing Market

Secondary Market : Financial Market for trading Shares,Bonds,Mutual Funds etc. ex.BSE

Dividends : Distribution of companies earnings to its investors

Ask: Offered price of the underlying securities by the seller. This is usually also followed by the volume.

Bid : Offered price of the underlying securities by the buyer. This is usually also followed by the volume

Bull : Investors who anticipate a rise in the market

Bear : Investors who anticipate a fall in the market.

Blue chip : Stocks which are well respected and well established. Ex. Infosys is a blue chip stock

P/E Ratio : Valuation of the company compared to its per share earnings

Margin Account : Account in which brokerage lends money to trade securities .

Bonus Issue : Securities might offer some more securities to its existing investors instead of increasing dividends

ADR : Securities listed in American exchanges are called ADR or American Depository Receipts .

Lock in Period : Period in which this security can not be traded in the market

Penny Stock : Stocks which are trading below there is market value. Ex. If the stock was issued at Rs.10 but now trading at Rs.1 , then it can qualify for Penny stock

Index Funds : These consist of all the shares traded in the market. Traded in the market just like stocks .

Stock Splits : Splitting a security into smaller chunks to allow more investors to participate.

Floor Price : The Minimum Price at which the security is traded, used during IPO process.

Book Building Process : Securities are priced within a price band i.e. the bid has a higher price and a lower price.
The final price is decided after the bidding process ends.

Underwriters : Institutions/persons who guarantee the sale of the IPO'ed securities.

Merchant Banker : Institutions which certify the companies to be compliant to SEBI Rules and regulations

Secondary Offering : Securities of Companies which are listed on the market

Face Value : Actual price of the Security

Fully Subscribed : Situation in which the underwriter is successfully able to sell all the available securities of that particular IPO

GDR : Securities which could be traded in multiple locations around the world.

Growth Stock : Companies which are expected to grow at above average, relative to the market.

Value Stock : Companies which are trading below their worth

Stop Order : an order to buy/sell a security once it reaches a particular value

Float: Number of shares available to actually trade in the market.