Closing Price is the price at which the last trade in a particular share happened in a given day. Typically, when historical share prices are quoted, it is the closing price that is considered. Any index like the Nifty or the Sensex is derived from share prices. Thus, using the closing price of shares, we can arrive at the closing values of the indices too.
If you are investing in a company's stock, then the beta allows you to understand if the price of that security has been more or less volatile than the market itself and that is a good thing to understand about a stock you are planning to add to your portfolio. A stock beta (b) is used to describe the relationship between the individual stock versus the market. Stock Beta is used to measure the risk of a security versus the market by investors. It is used to calculate discount rates for CAPM.
A high beta security will tend to move more than the market, and a low beta security less. This is sometimes presented as a definition of beta. This correct to an extent, but is so vague as to be misleading.
Market, strictly speaking, means a market portfolio: all of every available security. In practice an index is used rather than calculating this directly.
Beta may be calculated for a portfolio rather than for a single security, usually for performance measurement purposes, another key use of beta.
When a company or mutual fund makes profit, it may choose to distribute part of it to its shareholders or unitholders in proportion to their holding. This payout is called dividend.
The foreign exchange market (forex, FX, or currency market) is a global, worldwide decentralized over-the-counter financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency.
The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. It is also known as "share capital". This is when a company raises money by issuing stock.
Volatility is one of the standard statistical ways to measure risk. Say you want to know a risk metric for shares of Infosys. One way to do this is to measure the volatility of its daily returns. For this, you tabulate its daily closing share prices for a long enough time horizon (say three years). Then you calculate daily return:
Then you can use a simple Excel spreadsheet formula to calculate standard deviation: Stdev. You need to select the entire column of daily returns as arguments to this formula, and express the result as a percentage.
Volatility is simply the square of the standard deviation.
A promoter is an individual or a family who controls a company. In a listed company, a promoter may or may not have majority shares. But unlike mutual funds or insurance companies who may hold shares without participating in day-to-day management, a promoter has management control.
A promoter has special place in the law – it protects him to some extent from an outsider taking control of the company by buying sufficient number of shares. In India, many financial institutions are known to usually side with the promoter in the Board – giving him further protection from outside takeover.
Companies get listed on stock exchanges in order to raise funds and for liquidity of their shares and bonds. They can get listed through the process known as Initial Public Offer (IPO). Listing requirements is the set of rules established by stock exchange for firm listed on it.
It is different for different stock exchanges and is summarized in Listing Agreement of the exchange. NSE and BSE IPO requirements include that minimum paid-up capital of the company should be Rs 10 crores.
It is on dividend declaration date that a company’s directors make announcement to its shareholders about an upcoming dividend payment
On dividend record date the company paying dividend prepares list of owners of its shares as on that date who would receive dividends on payment date.
Ex-dividend date is that date on or after which the share trades without dividend. Anyone who buys the share on or after ex-dividend date will not be entitled for declared dividend.
Dividend payment date is the day on which company pays declared dividend to eligible share owners.
A demat account or dematerialized account is an online account required to be created with a depository participant (DP) for holding securities in the electronic form. Demat account is mandatory for trading in certain listed securities in India
A trading account is an account that enables one to trade in listed securities like shares and bonds and is to be opened with a broker registered on an exchange.
Bonus shares are free shares allotted to share owners in proportion to their existing holding. Though bonus shares add shares in the market they don’t raise the value of the firm and ratio of shareholders holding remains unchanged.
Circuit breaker is a measure used by stock exchanges to halt trading for a prescribed time when there is unusually large fall or rise in an index or share price. Circuit breakers are in place to allow investors to digest and act in response to extraordinary price movement.
Circuit filter is a risk management tool used by stock exchanges to stop trading of a share or index as prices touch prescribed filter levels. Also called filter breaker.
Depository participant is an agent of a depository that stores financial securities of its account holders. Investors can create demat account in a depository through a depository participant.
National Securities Depository Ltd (NDSL) is among the two depositories for equities in India. It keeps securities of its account holders in dematerialized form who open accounts through its members known as Depository Participants.
NSDL is also one of the agencies appointed by the Income Tax department for facilitating PAN applications.
Central Depository Services Ltd (CDSL) is among the two depositories in India for equities. CDSL is promoted by BSE. Being a depository it maintains securities like shares, bonds and mutual fund units of accountholders in the dematerialized form. Account can be opened through depository participants (DPs) who are members of CDSL.
CDSL is also one of the agencies appointed by the Income Tax department for facilitating PAN applications.
Draft Offer Document is the first prospectus for public issue of equity shares, mutual fund scheme or bonds, filed with SEBI for approval for a period of 21 days. SEBI may suggest changes in draft document before the final one is filed with stock exchanges and registrar of companies.
Final Offer Document is the prospectus giving details of features and terms of a public issue in equity shares, mutual fund scheme, and bonds or of takeover or rights issue and is filed with SEBI and the Registrar after Draft Offer Document has been approved. It contains complete information, including issue price and issue size, that investors needs in order to participate in the issue.
Red Herring Prospectus (RHP) is an offer document filed with securities market regulator SEBI in case of an IPO or FPO before filing the Final Offer Document. Red Herring Prospectus or Red Herring Offer Document does not have details of either offer price or issue size. Once the bidding process is over and the price band has been fixed this information is added in the prospectus and Final Offer Document is submitted.
Opening price is the price at which the share was traded in its first trade for the day on the exchange where it is listed. Opening share price can generally be expected to be close to the last closing share price but a host of factors go into setting the price of a share at any given time. From the opening price of all shares on an index the opening price of an index is determined.
An American Depository Receipts (ADR) is a certificate issued by a bank or broker in the US that represents a specified number of shares of a particular foreign company. ADRs can be listed on stock exchanges or in over-the-counter markets (OTCs). ADRs are traded just like shares; they are shares of a foreign company listed on a foreign exchange. Like the usual stocks their price also moves on supply and demand mechanics.
Usually only residents of a country can invest in shares trading on its exchanges. Through ADRs Americans can invest in shares of foreign companies listed in NYSE, AMEX, Nasdaq and OTCs in the USA. For instance an NRI can invest in stocks of Tata Motors through ADRs issued by the company in USA.
A stock broker or share broker is a firm which is registered as member on a stock exchange. Only stock brokers are allowed to buy or sell securities on a stock exchange. They may trade for themselves or on behalf of their clients, who are investors who open trading account through the stock broker.