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Glossary
 


 

AGM: Annual General Meeting. This is an annual meeting where shareholders formally approve the director's actions on their behalf during the past financial year and adopt the annual reports and accounts. It is also the meeting at which the directors generally retire and are formally appointed.
AIM: Alternative Investment Market. One of the Stock Exchanges for dealing of shares or, usually, smaller companies.
Banner: Abbreviation of 'Banner Advertisement'. A graphic or image used for advertising on the internet.
Bear: A person who expects prices of shares, and consequentially the value of the stock market itself, to fall.
Bid Price: The price in the market which a prospective seller is prepared to accept to sell the shares. The higher of the prices in the bid to offer spread. The price paid when you buy the shares and the existing shareholder accepts the Bid to buy them.
Blue Chip: The largest companies traded on the stock exchange. The constituents of the FTSE100 Index of largest companies. The most highly valued and reputable companies on the stock exchange.
Bonds: Debt instrument issued by a company or other borrower instead of shares, as a way to raise finance. Can be listed on the stocks exchange and traded like shares.
Bonus Issue: The issue of new shares to an existing shareholder, but at no extra cost. A means for a company to distribute historic retained profits to shareholders.
Broker Forecast: Brokers estimate the future performance of a company usually based on key indicators: pre-tax profit, EPS and DPS. Two future year estimates are shown for each company (the current and the next financial period). These figures are used to calculate the forecast consensus of all brokers for an individual company.
Bull: A person who expects the price of shares and consequently the value of the stock market itself to rise.
Close Period: The period, generally of two months, prior to the company's release of its interim or preliminary result, when the directors are not permitted to trade in the company shares.
Company: The separate legal entity in which an investor is able to acquire a share stake representing his part ownership of a business.
Cookies: Small files that are downloaded onto a computer from a website to a visitor's pc. Cookies hold information that can be retrieved by other web pages on the site.
Dividend: The payment by the company to its shareholders of a proportion of the profits earned during the financial period. Usually paid as an interim dividend at mid year and a final dividend once the final business accounts are prepared and the results are known.
Earnings: The profits earned by the company during the financial period, which is available to pay dividends. Usually expressed on a per share basis as earnings per share (EPS) and used as the key element of the price per earnings ratio (PER or P/E ratio) in judging comparative values.
EGM: Extraordinary General Meeting. A meeting where the shareholders discuss and approve special matters proposed by the directors, such as approval of a take over, or major acquisition.
Employee Stock Ownership Plan (ESOP): A trust established by a company for the allocation of some of its shares to its employees over time, intended to motivate employees, and often providing tax benefits to the company. Also called a stock option plan or a purchase plan.
Equity: The voting capital in the company, represented by the ordinary shares.
EX: Used to indicate that the share is currently available in the market with a lack of certain specific rights and conditions. This might be ex dividend (XD) where the purchaser is not entitled to the next declared dividend or ex rights (XR) where the holder is not able to participate in the proposed new share issue by the company to existing holders on preferential terms. Also see C.U.M.
Exercise: To implement the rights of an option, by buying (in the case of call options) or selling (in the case of put options) the underlying asset.
Final Results: The announcement and publication of the company's financial results for its latest business period, or financial year, in the form of the annual report and accounts. See also prelims.
Flipping: The practice by some institutional investors of buying initial public offerings at the offering price and then reselling them to retail investors once trading has begun, usually for a substantial profit.
Fund Manager: A professional investor, typically in an insurance company, pension fund, investment or unit trust.
In The Money: Situation in which an option's strike price is below the current market price of the underlier (for a call option) or above the current market price of the underlier (for a put option). Such an option has intrinsic value.
IPO: The first time a company sells new stock, and differs from the secondary offering, which is a public sale of previously issued securities, usually held by insiders.
Institutional Investor: Entity with a large amounts to invest, such as Investment and Unit Trusts, Insurance Companies, Pension Funds, Investment Banks and Endowment Funds. Institutional Investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves. They account for a majority of overall volume traded and the value of shares held. Also see Fund Manager.
Interim: The results covering part or the companies financial year, usually the first six months, and the dividend paid to shareholders out of the profits, or earnings, of that period.
Investment Manager: See also Fund Manager.
LSE: London Stock Exchange.
Market Capital: The total stock market value of a company's shares, being the total number of shares issued to shareholders multiplied by the current share price.
Market Maker: The Stock Exchange firms that stock brokers deal with in completing a transaction. The market middleman from whom you buy, or to whom you sell the shares in the company, if a SEAQ stock.
Market Price: The price at which the share can currently be traded in the market.
Market Value: See Market Capital.
Merger: The arrangement by which by which two companies unite without one attaining direct control over the other.
Mid Price: The normal price quoted in the press for the company's shares, being the mid point between the bid and offer spread.
New Issue: Same as IPO or placing.
Nominee: A person, or company, in whose name the shares are held, but who holds them on behalf of the actual shareholder. A means of preserving anonymity of the actual shareholder and for institutional investors to centralise the administration or individual holdings or their private clients.
NPV: No Par Value, being a class of share that does not have a designated face value. See also Par Value.
Offer Price: The price in the market which a prospective buyer is prepared to pay (Offer) to acquire the share. The lower value of the prices in the bid to offer spread. The price received when the shares are sold.
Option: The right, but not the obligation, to buy (for a call option) or to sell (for a put option) a specific amount of stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. Stock options, the amount is usually 100 shares. Also called option contract.
Ordinary Share: The main class of share capital representing the owners interest in the company.
Oversubscribed: Defines a deal in which investors apply for more shares than are available. Usually a sign that an IPO is good deal and will open at a substantial premium.
Par Value: The original face value or the company's share capital representing the owners interest in the company.
PER: This expresses the current share price (P) as a multiple of the earnings per share (E). The P/E ratio is used as a measure of how much the investor is being asked to pay for the investment. It is a means of assessing both the value of the company and also its comparative value and attraction compared to other companies.
P/E ratio: The P/E ratio shows the number of years' earnings per share (EPS) contained in the current share price. In other words, it shows the number of years at current earnings needed to cover the current share price. The price/earnings ratio (P/E ratio) is commonly used to assess the level of confidence investors have in a company. It represents the market's view of a company's growth potential.
Placing: a means of raising new capital by entering into an arrangement with major investors who agree to acquire a specific number of new shares.
Portfolio Manager: See Fund Manager.
Prelims: The preliminary announcement, being the initial report to the stock exchange of the company's financial results for the year.
Premiums: the difference between the offering price and the opening or current price during a new issue of shares through an IPO or rights issue.
Private Company: A company whose shares are not traded on the open market. Opposite of a public company.
Private Investor: An individual who purchases securities for him/herself, as opposed to an institutional investor. Also called individual, small investor or retail investor.
Prospectus: The document issued at the time of the initial issue of shares to go public, which explains all aspects of the company's business, including financial results, growth strategy, and risk factors.
Public Company: A company which has shares that investors are able to acquire in the open market.
Request: finding a page or a site through the use of a search engine or a directory.
Retail Investor: See private investor.
Reverse Acquisition: A technique used by a private company to go public without jumping through all the regulatory hoops that going public usually requires. The private company acquires majority ownership in a publicly listed company that has no assets or liabilities (called a Shell), changes the company's name, and installs its management and board of directors.
Reverse Take Over: See reverse acquisition.
Scrip Issue: See bonus issue.
SEAQ: SEAQ is the London Stock Exchange's service for mid-cap Official List securities and the most liquid AIM securities. The service is based on two-way continuous Market Maker quotes.

The Market Makers quotes on this service are maintained by competing investment banks whose prices are displayed on more than 100,000 terminals around the world. These prices enable investors wanting to trade these securities to easily find a buyer or a seller at a fair and transparent price. For the FTSE 250 securities on SEAQ there is an additional electronic execution facility allowing you to seek execution at market makers mid-prices, SEAQ Crosses. These crosses run at 09:30, 11:00, 15:00 and 16:45.
SETS: SETS is the London Stock Exchange's blue chip market where all UK FTSE Eurotop 300 equities are traded. The market is based on an electronic order book.
Search Engine: Facility to enable internet users to search the World Wide Web to find specific pages or a site.
Securities: The Term used for any financial instrument issued by the company and traded on the stock exchange.
Share: Representing one unit of ownership in a company.
Share Certificate: The document that records the shareholders stake in the company. An indication of ownership to be returned upon the sale of the holding.
Share option: See option
Shareholder: A person, institution or company who owns shares in a company or mutual fund. For company shareholders along with the ownership come a right to dividends and the right to vote on certain company matters, including the board of directors. Also called a stockholder.
Shell: A company with no real assets or operations.
Site: A specific group of pages.
Spread: The difference between the bid and offer prices.
Stock: An instrument that signifies an ownership position, or equity, in a corporation, and represents a claim on its proportionate share in the corporate assets and profits. Also called equities or equity securities or corporate stock. See also share.
Stock Exchange: A market on which shares or other securities are bought and sold. Examples include the London Stock Exchange (LSE). AIM and Dow Jones.
Stockholder: Taking the traditional definition, stockholders are lenders and are accounted among the company's creditors. Interest on stocks must be paid ahead of any dividend to shareholders. Share or equity capital is money permanently supplied in exchange for a stake in the ownership of the business. See also shareholder.
Take-over: When one company approaches another company, making an offer to the latter's shareholders, seeking to acquire their shares in sufficient quantities to take control of. If the company that is being taken over is listed on the stock exchange, a strict protocol of rules and regulations exist to protect the interest of the shareholders. A time limit is set for the acceptance of the offer. If the company making the offer gets control of 90% or more of the shares, it has the legal right to acquire the remaining 10% of the shares at the offer price. A takeover bid may be friendly, recommended by the board of the company being taken over, or it may be hostile, rejected by the board with the company making the offer by going directly to the shareholders.
Vesting Period: The period of time before shares are owned unconditionally by an employee stock option plan. If his/her employment terminates before this period ends the company can buy back the shares at the original price.
Web User: Someone who accesses sites via the World Wide Web.