A security which the seller can redeem before its stated maturity at a given price or date.

The unpaid installment of the share capital of a company, which a shareholder is called upon to pay.

This represents a right, but not an obligation, to buy at a given price (strike price) at or before the specified date.

Trading where the settlement of trades is postponed on the stock exchange until a future settlement period. Carry forward trading has evolved in response to local needs and in India it refers to the trading in which the settlement is postponed to the next account period on payment of contango charges (known as vyaj badla in which the buyer pays interest on borrowed funds) or the backwardation charges (aka undha badla in which the short seller pays a charge for borrowing securities).

A group organized to manipulate prices by regulating the production and marketing of a specific product. The Organization of Petroleum Exporting Countries is a good example.

It is a security, investment or a project that generates or throws off lots of funds. Sometimes the basis for this asset is an excellent customer, a monopolistic market position, or special advantage afforded by patents, licenses, or other economic properties. This cash flow can be used for many purposes. Typically this situation constitutes the fundamental franchise of a business.

It is the practice of making a final cash payment or adjustment for an open position. This process differs from early or traditional futures markets that required either a futures contract offset or the delivery of a physical commodity. The cash settlement process recognizes the insurability factor of risk management products. This trend towards cash settlements reduces instability due to squeezes, weather or other disruptive variables.

The scrips of companies that are of average type without good track record.

A mechanism by which exchanges temporarily suspend trading in a security when its price is volatile and tends to breach the stipulated price band.

The price of a security is permitted to vary in line with the market forces, in absence of official intervention; this is termed as clean float.

Is the process of financial guarantee between clearing members. This activity intends to eliminate the risk of contractual or transactional default. It also refers to the process by which all transactions between members are settled through multilateral netting.

It is a facility that serves as a buyer to the seller and a seller to the buyer. It effectively guarantees the performance of transactions between its member participants. Trades processed by a clearing house are generally assumed, though not guaranteed, to be free from financial failure.

These are investment vehicles that invest in futures and options with reference to commodities. Commodities can include the traditional grains, metals and livestock as well as stock indices, currencies and other financials.

An investor sends the certificate along with the transfer deed to the company for transfer. In certain cases, the registration is rejected because of signature difference, or if the shares are fake, forged or stolen, or if there is a signature difference etc. In such cases, the company returns the shares along with a letter, which is termed as a company objection.

The auction participant on the same side of the initiator's order. If the initiator is a buyer, then the competitor enters buy orders for the same security.

A note issued by a broker to his client with regard to his order, stating the number of securities bought or sold in the market along with the rate, time and date of contract.

The month in which futures contracts may be settled by making or accepting delivery.

It is the action of transforming a security into another security. A convertible bond, when exercised, will convert into the stipulated number of common shares.

For the security markets, it is the contractual number that indicates how many shares a convertible security can be exercised into at any point in time.

It is the number of common shares that a convertible bond or other security can be exchanged upon exercise.

It is a credit instrument that is convertible into equity. Usually this conversion is done at the discretion and exercise of the holder of the bond and not the corporation. However there may be forced conversions due to stipulated events such as take-overs in favour of the issuer.

A long-term investment strategy that works by buying shares at scheduled intervals and investing the same amount of money at regular intervals.

The minimum rate of return a firm must earn on its investments in order to satisfy the expectations of investors who provide funds to it. It is often measured as the weighted arithmetic average of the cost of various sources of finance tapped by the firm.

When a trading member enters an order, any other trading member with an order on the opposite side is referred to as the counter-party.

Tokens for payment of interest attached to bearer securities.

A share is described as cum-bonus when a purchaser is entitled to receive the current bonus in the proportion declared by the company.

A share is described so when a purchaser is entitled to receive the current rights in the proportion declared by the company.

Annual interest or dividend currently received divided by the current market price, expressed as a percentage.

The minimum/maximum price range for a security on a trading day. Buy and sell orders outside the maximum and the minimum range, is not allowed to be placed into the system. It is calculated as a percentage of the base price.

It is an order that is valid for the day on which it is entered. If the order is not matched during or at the end of the trading day, it gets canceled automatically.

A market participant who has a same-day transaction horizon. Often the positions are held for minutes or hours but they are offset by the end-of-the-market day.

Refers to buying/selling and reversing the entire position on the same day. It's an investment, speculation or risk management approach, which is limited to intra-day activity with little or no overnight carrying of positions.

It's the removal of securities, which were previously approved for trading on a recognized exchange.

Formal certificate of indebtedness that is accompanied by a promise to pay interest at a specified annual rate. It is a long-term debt instrument that may or may not be secured by a mortgage on specific property.

Refers to a relationship, which obligates a borrower to pay interest and principal. The terms are often in writing and define the relationship. Indentures are common types of written instruments of indebtedness.

It is a debt instrument issued with a very low coupon. They sell at substantial discount to their par value and are therefore referred to as deep discount bonds. A case of deep discount bond with no coupon is called a zero coupon bond.

It is the legal transfer and receipt of ownership rights.

It's the invoiced price for a futures contract.

It's the measurement of the price sensitivity of an option relative to the underlying instrument. Typically the delta range is expressed between -1.0 to +1.0.

Shares that exist in electronic form only; their physical certificates have been destroyed, so that they are now dematerialized. Transfer of such shares also takes place electronically and the National Securities Depository Limited (NSDL) maintains records of these transfers.

A process by which shares in the physical/paper form are canceled and credited in electronic form maintained on a highly secure system at the depository.

It is an entity (mainly the National Securities Depository Limited), which maintains an electronic record of all dematerialized (demat) shares and all subsequent transactions and transfers therein.

Commonly referred to as a DP. Normally a broker or a bank, which facilitates dematerialization of shares. Investors can open demat accounts with such DP's (example: Investsmart Online.com) to convert their physical shares to demat or electronic form.

It's a financial product, which is based upon another product. Futures are based on commodities, financial indices or securities. Options are based on futures, securities or cash markets. Forwards are extensions of the cash market across time. Generally derivatives are risk management tools; however they are also used for investment or speculative purposes.

The general downward effect on earnings per share and book value per share if all convertible securities were converted or all warrants or stock options were exercised.

The system provides a facility for entering orders with quantity conditions. A DQ order allows the member to disclose only a part of the order quantity to the market.

When future cash flows are multiplied by a series of discount factors to arrive at a fair value to pay for a company's share, the process is called discounted cash flow method.

The process of finding the present value of a series of future cash flows. Discounting is the reverse of compounding.

It is an order, which a client gives to the broker. The discretion is in terms of price or time and not in terms of buy or sell, instrument or quantity.

It is an account whereby another party holds limited or full Power of Attorney over the trading or investment account of another.

It is the allocation of assets among various types of investments, primarily as a measure to reduce risk.

Is computed by dividing the dividends paid on common shares by the net income, which would be available for common stockholders.

Amount distributed out of a company's net profit to shareholders.

It normally refers to an annualized (cash) dividend rate of return. This is computed by dividing the cash dividend by the price per share at the time of purchase. If the stock were trading at Rs100 and the dividends equaled Rs2.80, then the yield would be 2.80%. It is stated as the percentage of the share's market price.

These are reversal patterns. It is a decline or advance twice to the same level (plus or minus 3%). It indicates support or resistance at that level. A double top occurs when the market is unable to overcome a previous resistance peak. A double bottom is the opposite.

A company's earnings report that differs (either positively or negatively) according to analyst's expectations (consensus forecast), this often causes an unexpected movement in its share's price.

It's the process whereby customers or their representatives can directly place orders and receive reports and statements via the Internet. It can also include trading on terminals over dedicated telephone lines.

A company's net worth comprises equity capital, retained earnings and certain reserves. The equity capital is that part of the total net worth that represents ownership of the common shareholders. An equity share is therefore a title to ownership that is tradable, transferable and negotiable. An equity capital of a publicly listed company is usually distributed among a large number of such equity shareholders.

The rate at which one currency may be exchanged for another.

It's the predetermined level at which an option of an underlying instrument is priced upon its exercise. The exercise price is also called the strike price.

It is the composite of market sentiment or the forward looking aspect of what traders expect to happen within their trading horizons.

A weighted average using the probability of each event to weigh the outcomes of each action. It is viewed as an anticipated, theoretical or fair value of an instrument.

It's the forward-looking aspect of volatility or variability. It compares historic and current or implied volatility.

It's the expiration date of a derivative.

A share is described as ex-rights when a potential purchaser is not entitled to receive the current rights, the right of which remains with the seller.

It is viewed as the indifference point from a modeling perspective as to whether to buy or sell an instrument. If the market price were higher than fair value, it would suggest selling the security. And if the security were trading less than its fair value it would suggest buying it.

An agreement for the future delivery of the underlying commodity or security at a specified price at the end of a designated period of time. Unlike a future contract, a forward contract is traded over the counter and its terms are negotiated individually. There is no clearinghouse for forward contracts and the secondary market may be non-existent or thin.

Orders entered into the system with price outside the operational range and orders with quantity greater than the order quantity freeze percentage are sent to the exchange for approval. Such orders are not reflected in the books and are frozen till the exchange approves them.

An exchange traded contract generally calling for delivery of a specified amount of a particular financial instrument at a fixed date in the future. Contracts are highly standardized and traders need only agree on the price and the number of contracts traded.

The rate of change for delta with respect to the underlying asset's price. Mathematically, gamma is the first derivative of delta and is used when trying to gauge the price of an option relative to the amount it is in or out of the money. When the option being measured is deep in or out of the money gamma is small and when the option is near the money, gamma is the largest.

When physical share certificates along with transfer deeds are delivered in the market, there are certain details to be filled in the transfer deed. Any improper execution of these details result in a bad delivery. A bad delivery may pertain to the transfer deed or the share certificate. Sebi has formulated uniform guidelines for good and bad delivery of documents. Bad delivery may pertain to the transfer deed being torn, mutilated, overwritten, defaced etc.

A share certificate together with its transfer form, which meets all the requirements of title transfer from seller to buyer, is called good delivery in the market.

If any quantity of a GTC order is left untraded, the order is not cancelled by the system until it is cancelled by the dealer or after a parameterized number of days.

If any quantity of a GTD order is left untraded, the order is not cancelled by the system until the Good Till Date is mentioned in the order.

These are mutual funds that invest in stocks of companies, which are expected to outperform most other firms. This out performance depends on faster growth than that of comparable firms in the same industry. Also these industries can be those that are expected to experience growth rates in excess of an average.

The difference between prices at which a market maker can buy and sell a security. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.

It is the act of protecting a position. Hedges can be either long or short. Hedges are often done with derivative products. A long hedge refers to a position whereby a derivative contract is purchased to protect against a short actual position. A short hedge is a position whereby a derivative is sold to protect against a long actual position.

They are alternative investment vehicles. Their trading styles are quite variable from one fund to another. Some place positions on movements in broad economic groups such as currencies, credit, equity and derivatives markets. Others are more focused on narrow specialties, such as convertible securities or mortgage backed securities. These funds operate as limited partnerships. There are limitations on the number of partners, minimum financial standards and commitments and liabilities.

It is the process of protecting a position. It is the placement of a position to offset exposed cash or physical market position.

It often refers to an unsolicited and unwanted bid by the target company. It rejects this bid and indicates that the company does not want to be acquired by that bidder.

When an IOC order is entered, the system will immediately try to match this order as much as possible and cancel the remaining quantity, if any at all. In this attempt, the order might find a partial match.

Funds that seek to match the returns of a market index by buying into securities that make up the corresponding index (such as S&P CNX Nifty). When you invest in index funds, you are essentially seeking to "buy the market" and not trying to outperform it. Investing in index funds is also known as passive investing.

These are index derivatives, which allow people to alter their risk exposure to an index (this is called hedging) and to implement forecasts about index movements (this is called speculation). Hedging using index derivatives has become a central part of risk management in the modern economy. These applications are now a multi-trillion dollar industry worldwide and they are critically linked up to market indexes.

An option whose underlying security is an index. For instance, a trader can buy BSE Sensex options and bet on the direction of the index, whenever permitted.

Linking the value of a security (usually the acquisition value) to the value of a specified index and adjusting it accordingly. This is an important element in calculating tax liability on long-term capital gains because inflation otherwise tends to distort the capital gain and hence artificially increases the tax liability.

It means investing for market returns by purchasing shares in an index fund (a mutual fund that invests only in shares that comprise an index). This is distinct from indexation.

It is the amount of funds and/or securities required to establish a position.

It is the initial offering to the public of a company's securities. After the initial offering, the securities trade in the secondary market.

The initiator is the trading member who starts the auction. The initiator can be a buyer or a seller.

Trading in a company's shares by a person having material non-public, price-sensitive information such as expansion plans, financial results, take-over bids etc, by the virtue of association with that company or its employees is called insider trading.

An institution, which invests in assets or those funds, held in trust for others (for example, pension funds, insurance companies, mutual funds and so on).

It refers to items such as goodwill or intellectual properties. Among the latter are copyrights, patents and trademarks.

This is a virtual circuit through which the system can send messages to a specific workstation and vice versa.

A call option is said to be in the money when it has a strike price below the current price of the underlying commodity or security on which the option has been written. Likewise when a put option has a strike price above the current price it is said to be in the money.

The rate at which future cash flows must be discounted in order to equal the cost of the investment.

It takes up fee-based activities like advisory services related to securities market. It can also act as underwriter and take the devolved portion of the issue on its books.

A jumbo share certificate is a single composite share certificate formed by consolidating/aggregating a large number of market lots. This is issued by the company in favor of the custodian of the shares and is used to reduce the problems of multiple share certificates for large trades.

A lead manager handles initial public offers, right issues of companies. As per SEBI guidelines and net worth criteria, only category I merchant bankers can be lead managers.

Popularly known as LBO, it is a method of obtaining control of a company through debt financing. This transaction relies on borrowing funds, which are secured by the assets of the company to be acquired.

Orders that have thresholds--a useful safety measure. For example, you could place a limit order to buy 100 shares of Infosys for Rs.8, 000 or better (or less). With that order, you could buy the Infosys stock for Rs.8, 000 or for less than Rs8, 000. If the price is over Rs.8, 000, you will not have your order filled.

It is the uncertainty introduced by the secondary market for an investment. Securities are first sold in the primary market and then all subsequent transactions take place in the secondary market.

Securities in which trading is permissible on a recognized stock exchange.

It is a type of a commission charged by a mutual fund to recover the extra costs that are involved in managing a fund. A front-end load is charged when you buy shares of a mutual fund while a back-end load is charged when you exit a fund.

Bearishness in market.

An advance payment of a portion of the value of a stock transaction. The amount of credit a broker or lender extends to a customer for stock purchase.

It is the phrase used to represent a call for additional funds. This demand for more funds in either cash and/or securities is to restore an account to its initial margin requirement level. Generally this occurs when the price action is adverse to the account holder's position. It can also reflect an increase in margin requirements.

It is the amount of funds necessary for a position.

What the market says the equity of a company is worth: the number of shares outstanding multiplied by the market price.

A variety of indices that give an indication of the overall direction and strength of the market.

The minimum number of shares that must be transacted on the stock market. Though the market lot for most companies was traditionally restricted to a minimum 50 or 100 shares, dematerialization has rendered the concept useless. Demat shares can be traded in multiples of one or above.

It is a party who is prepared to buy and sell securities from all parties at the market maker's bid and offer.

An order by an investor to buy or sell a share regardless of price on that day.

When a buy order and a sell order satisfy the price-time priority, they can result in a trade. This process is known as matching. The match can be full or partial, depending on the order conditions.

The date at which the face value and the final interest on a debt instrument become payable.

It is the valuation process, which provides prices for positions on a daily basis or some other prescribed time-frame, marking the portfolio held at the end of a period (a day or a settlement) to market prices.

It's a sudden decline or collapse in financial values. The term ends to be used for broader indicators such as market indices or asset classes.

This is one of the special conditions where a minimum quantity is specified for an order. The quantity of the trade involving an order with an MF attribute should at least be this minimum quantity specified.

It assumes that the stock markets are efficient (the price of securities incorporates all publicly known information about them). It also proposes that a diversified portfolio of risky assets will be less risky than the sum of the individual assets.

The securities (other than equities and foreign exchange) market dealing in securities with maturity period of less than a year or more.

When two or more indicators, indexes or averages fail to show confirming trends.

Two trading members can negotiate a trade outside the system. However this trade is accepted by the system only if control approves. Both the parties enter each side of their trade in the system, specifying each other's identity.

The amount and direction of a security's price change since its previous close.

The excess of all revenues and gains for a period over all expenses and losses.

Gross sales reduced by inter-divisional transfers and excise duty equal net sales.

It is the sum of fully diluted equity capital and free reserves less miscellaneous expenditure to the extent not written off. Revaluation reserve is excluded from free reserves.

When a company announces a date for the book closure, the stock exchange sets a no-delivery period for that security. During which time trading is permitted in that security and these trades are settled only after such period is over. This is to ensure that investor's entitlements to corporate benefits are clearly determined.

Fluctuations in the market, which can confuse one's interpretation of market direction.

It is a transaction, particularly for a mutual fund, whereby no assessment is charged for either the purchase or redemption of the fund's shares. Transactions are executed at the single net asset value. There is no separate and distinct bid and offer price.

A nominal rate or nominal yield is also the annual interest that would be earned from a fixed income investment if the security were purchased at par value. Actual rate of return is usually different. It is same as coupon rate.

Also referred to systematic risk or market risk, it is a risk that stems from the influence of certain economy-wide factors like money supply, inflation, level of government spending and industrial policy, which have a bearing on the fortune of almost every firm. Hence this risk cannot be diversified away.

The orders entered in the system for normal trade matching depends primarily on a price/time priority. These orders can be Regular lot, Special terms, Stop loss orders or Negotiated trade entries. Each order must be equal to or be a multiple of the regular lot for that security.

Whenever a book closure or record date is announced by a company, the exchange sets a no-delivery period for that security. During this period, trading is permitted in that security. However these trades are settled only after the no-delivery period is over. This is done to ensure that investor's entitlement to corporate benefits is clearly determined.